America's Cup: Wind is back in sails

By Paul Lewis

The budget for the next America’s Cup won’t be less, writes Paul Lewis

Team New Zealand has secured funding from the NZ Government. Photo / Getty Images
Team New Zealand has secured funding from the NZ Government. Photo / Getty Images

Cabinet is expected to recommend funding for Emirates Team New Zealand tomorrow for a new America's Cup campaign, possibly to be held in 2017.

It is likely to cost about $100 million and also seems likely to involve a re-energised managing director, Grant Dalton.

The size of the Government funding is not known, though may be close to the $36 million granted last time; it could, however, be a smaller amount initially - helping ETNZ move quickly to secure key personnel against overtures from rival syndicates and perhaps increasing the funding when Team NZ have secured or re-secured private sponsors.

Skipper Dean Barker has been at the forefront of Team NZ's rather stunned course through waves of public adulation. That followed their devastating loss to Oracle Team USA in that classic comeback which saw the US-based syndicate turn an 8-1 deficit into a 9-8 win last month.

Dalton, Barker and ETNZ chief operating officer Kevin Shoebridge met Science and Innovation Minister Steven Joyce last week.

They have now forwarded to Cabinet what Barker calls a business case for Government to help fund another crack at one of sport's most prestigious trophies and a campaign which transfixed much of the country.

In a wide-ranging interview, Barker talked of his amazement at the public embrace of the defeated team, reinvigorating team members (including Dalton and himself) who thought their day was done.

He also spoke of how the team is taking the first steps towards another campaign which he expects to be run at much the same financial levels - if not greater - than last time.

Budgets of about $100m were generally accepted as necessary to be competitive and Dalton said at one stage that Team NZ's budget was "somewhere north" of US$100m($118m).

"You know that it will not cost less," says Barker of the new campaign. "It never does."

Vital details such as venue, date and the type of boat have yet to be released by Oracle Team USA, who are drawing up new America's Cup guidelines (the Cup protocol) for the next event; the protocol is expected to be agreed and published in the early months of next year.

Without that, it is impossible to know the extent of expenditure required but Barker said he doubted that efforts to reduce budgets would amount to much.

OTUSA chief executive Sir Russell Coutts and others in the Oracle team have talked about reducing the size of the boats to save money and attract more challengers. Reducing team sizes - personnel costs are the single biggest budget item for all America's Cup syndicates - has also been a big focus.

Barker says: "There is an absolute requirement for the boats, design and people to cost less. People are the biggest cost component-quite often they can add up to 50 per cent of total costs, just as in business.

"They will have to find ways to reduce the people side of things and maybe the size of the boats; they can drop the sailing crew by one or two people, maybe, and come up with ideas like increasing the one design componentry of the boats to cut costs.

"But while you might make savings there, you still have to turn around and spend on technology. That's where it is at-systems and technology - so you still end up spending the money, maybe in a different direction, to gain an edge."

OTUSA and those close to the Oracle camp have also talked at length about the need to take the America's Cup out of its three-yearly or four-yearly cycle and make it an annual event to attract sponsors.

One suggestion was an annual event at different international venues with the winner of the international series gaining the right to take OTUSA on in an America's Cup match. It is not yet clear how such a format lends itself to reduced expenditure.

So the team's first step, assuming Cabinet approves the expenditure tomorrow, is to re-sign key personnel in the design, sailing and shore teams before other syndicates raid Team NZ's pantry.

That is now a real threat-Barker says they have to move within the next two weeks or other teams will strike.

"The last America's Cup match generated a huge amount of interest," he said. "Early indications are that there will be a lot more viable challengers next time round [Australia's] Hamilton Island Yacht Club [backed by Australian wine billionaire Bob Oatley] have been confirmed as Challenger of Record [the challenger who works on the new protocol with Oracle], Luna Rossa will be in, Ben Ainslie [OTUSA's tactician in the last Cup] is trying to put together a UK team and there is also Artemis.

"So there are four credible challengers beginning to line up even before we get involved. The Louis Vuitton [the regatta held to find the team to challenge the defender for the Cup] will probably be a big step up from the 2013 version."

While the initial funding will go towards people, Barker says the Government is in no doubt about payback - and were happy to act as a sponsor rather than insisting on a more transparent financial regime which details the use of public money, including revealing salaries.

"We know that even before we left New Zealand last time that the $36 million had been recouped just through GST and PAYE. That's even before you get into all the exposure that New Zealand got and all the business deals that were done and contacts made in the waka [the meeting place for New Zealand and US businesses in the waka-shaped lounge on the Emirates Team NZ base], though that is pretty hard to quantify."

Barker also says the Government had accepted its role was that of a sponsor, rather than an agency like High Performance Sport New Zealand (formerly Sparc). HPSNZ funds top end athletes and teams but the uses to which the money is put is far more transparent than TeamNZ's has been.

"The government didn't want that. They want to remain very much a sponsor, working things through Trade & Enterprise. They were clear they did not want to be like an owner or a manager and that they wanted to have the same rights and entitlements as other sponsors - and we don't give out financial information to other sponsors.

"It was good that Steven Joyce was in San Francisco as long as he was and was able to see first-hand the value of what was going on in the waka and other places," says Barker. "There were new business deals done and new contacts created. I was focusing on other things but it blew me away a bit when I understood what had been going on.

"If San Francisco is the venue [for the next Cup], that will work well for New Zealand. The time zone works well and there are many other links there that benefit us. I think that is one of the reasons the Government have been so incredibly strong in their support since we have been back. That in itself has given us a lot of confidence that we can push ahead."

Having said that, Barker is quick to point out that TeamNZ's funding is a balance between private and public money. Other sources have confirmed the little-known fact that the last campaign was funded on a 2 for 1 basis-with the Government's $36m put up on the understanding that Team NZ would raise $2 for every $1 of Government money; a target they achieved.

Dalton leaves for Europe next month to meet sponsors, including the likes of Emirates, Nespresso and Omega - a journey that will be key to Team NZ's future fortunes.

"He'll see them and see what they thought about the whole experience.

The sponsors will want to assess whether the sponsorship has been a valuable experience for them and whether it has brought rewards. That will help them decide if they want to give it another go. It all takes time-which is why the Government funding is so important.

"We haven't heard that anyone wants to pull out next time but all the companies involved will want to know that we are putting together a viable challenge."

One happy by-product is that Dalton, a dejected figure after the loss to OTUSA, has been reenergised.

Previously he has said he would get what financial ducks he could in a row before deciding on his future with TeamNZ.

Barker said: "He is very much enthused now by all the support we have had
from within New Zealand."

- Herald on Sunday

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