Team New Zealand's future in the America's Cup is in serious doubt after the Government confirmed the loss of the qualifying round in Auckland would mean zero funding.

Cup organisers told media this afternoon that Auckland would not be hosting a qualifying round after Team New Zealand opposed a move to smaller boat sizes yesterday.

Economic Development Minister Steven Joyce told the Herald that without a presence in Auckland, there would be no money.

"We are interested in being involved as a sponsor as a much lower basis than last time, and on the basis there is a qualifying series in Auckland," Mr Joyce said. "If that was to change then we could not be involved."

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Team New Zealand sources moved to soften the blow, saying things are very much still up in the air and that they have a signed agreement ensuring the cup will come to Auckland.

In a statement, Grant Dalton said a decision was yet to be made. The choice was down to smaller boats or larger boats, and it was supporting the larger option which would see Auckland remain in the mix.

The crisis was triggered when Italian billionaire Patrizio Bertelli threatened to pull Luna Rossa Challenge out of the America's Cup if Oracle Team USA didn't follow the rules in deciding whether to downsize the boats to be used in the 2017 regatta.

In a video uploaded to team's Facebook page tonight, Dalton said Team New Zealand would oppose the proposal to move to smaller boats from race organisers.

He said teams had been offered two options - stay with the bigger boats and keep Auckland, or move to smaller boats and skip it.

While he supported cost-cutting, losing Auckland was not an option and it was an "easy decision" to support the status quo. He said it was too late to make a fundamental change to the rules unless all the teams agreed.

Sources within the camp had earlier said the latest development was nothing but the "customary arm wrestling" that occurred prior to any America's Cup.

They said Team New Zealand had an agreement with the cup - signed by Mr Schiller himself - that there would be a qualifier series in Auckland.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11424260This is all news to us, here's the signed...

Posted by Emirates Team New Zealand on Thursday, March 26, 2015

Steve Armitage, a spokesman for Auckland Tourism, Events and Economic Development, said: "We have not been advised of any decision regarding today's announcement from the America's Cup Events Authority."

Cost-cutting

Luna Rossa, which is backed by the fashion house Prada, said the opening event of this year's America's Cup World Series in Sardinia would be in jeopardy if Oracle Team USA didn't "quickly announce a public clarification" to a proposal to downsize the class of boats to be used in the 2017 regatta in Bermuda.

In a cost-cutting measure, organizers want to go from 62-foot catamarans to either souped-up 45-foot cats or a boat that could be up to 52 or 54 feet long.

Oracle Team USA is owned by software billionaire Larry Ellison, whose decision to defend the America's Cup in Bermuda rather than in the United States has made it difficult for some teams and the event itself to raise sponsorship money.

In a statement posted on its website, Team Luna Rossa Challenge said it "is distinctly opposed to the proposal ... to change the Class Rule for the 35th America's Cup and therefore the boat that was previously accepted by all challengers on June 5th 2014".

"Luna Rossa does not believe that a sporting event should be disputed in a courtroom and does not intend to initiate a lengthy litigation process that would only bring prejudice to the event. If the principle of unanimity of all challengers required to change the Class Rule were not to be respected Luna Rossa will be obliged to withdraw from the 35th America's Cup."

Bouncing back and forth

Emirates Team New Zealand later posted a statement on its Facebook page saying it agreed with Luna Rossa Challenge.

Emirates Team New Zealand agrees with Luna Rossa Challenge . It would be unfair to change the rules at this stage unless...

Posted by Emirates Team New Zealand on Thursday, March 26, 2015

A few hours later, America's Cup Commercial Commissioner Harvey Schiller notified Team New Zealand that a qualifying regatta in early 2017 would not be awarded to Auckland.

While there were a number of reasons, Schiller told Associated Press the biggest was Team New Zealand "bouncing back and forth on support" for the unprecedented mid-course downsizing.

Dalton told the AP that was a negotiating ploy.

However, Team New Zealand's government funding is triggered by economic value, including an Auckland regatta.

Asked if that could be the end of the Kiwi team, Dalton said he wants to wait and see how next week plays out.

Dalton said that while the Kiwis support cost reduction, they're "completely in line with Prada" and feel any decision on boat downsizing should be unanimous.

European teams were believed to oppose a regatta in Auckland because of the cost of shipping their boats halfway around the world. It's also believed that America's Cup officials were pressured by Bermuda to keep all the racing in that British territory.

Bermuda outbid San Diego to host the America's Cup by promising a financial package worth up to $77 million.

Dalton has sparred in recent years with Russell Coutts, a fellow Kiwi who is both CEO of Oracle Team USA and director of the America's Cup Event Authority.

Asked about the chance Team New Zealand could be forced to drop out, Coutts said: "We've got everyone's interests to consider, not just one team."

Troubled bid

Team New Zealand's bid had been in trouble this month, with crisis meetings held over problems with the proposed locations for the team bases.

An announcement confirming Auckland had secured the qualifying regatta in early 2017 had been originally planned for earlier this month but was pushed back to put some distance between the fallout over Dean Barker's axing.

Auckland Council bodies had struggled to agree on the waterfront locations to house the team bases after the preferred site at Westhaven Marina was found to be unsuitable within the short timeframe.

Senior figures from Auckland Tourism Events and Economic Development (Ateed), which had the job of assessing the viability of the event, had been looking at potential fixes and evaluating the cost to ratepayers of hosting the regatta.

The complication followed a stand-off between America's Cup organisers and the European challengers over the selection of Auckland to host the event. The teams are unhappy with the costs and the time that will be lost shipping their operations to and from New Zealand and are seeking amendments to the protocol to negate any competitive advantage defenders Oracle Team USA may get while the teams are out of action.

There has been some suggestion the syndicates might even decide to pay the US$1 million fine for skipping the regatta as it could work out cheaper.

With Team NZ's bid for government funding contingent upon Auckland hosting the America's Cup qualifiers, the Kiwi syndicate's entire future had rested on the event getting off the ground.

- With AP