Team New Zealand's demand for a 'hosting fee' has the potential to take the America's Cup away from Auckland in 2021.

Government minister David Parker told Newstalk ZB's Tony Veitch that Team NZ were asking for a 'significant' hosting fee as Cup defenders, on top of their infastructure expenses.

Asked about the negotiation process Parker said: "I think we've been making significant progress in the last couple of weeks. If any one of the parties become unreasonable then we could lose it."

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Parker, who is also Minister of Economic Development and Environment, with responsibility for the America's Cup, has the job of striking a deal that meets Team New Zealand's needs and is acceptable to the Government and Auckland Council.

There's a wide range of issues to be resolved, not least the effect of the options on the environment, planning issues, cost and the practical requirements of Team New Zealand.

Also hanging over an agreement to host the event in Auckland, is Team New Zealand reserving the right to hold the event in Italy, or even Tauranga, if suitable infrastructure is not made available.

Team NZ helmsman, Peter Burling and Team NZ boss Grant Dalton hold aloft the America's Cup. Photo / Photosport
Team NZ helmsman, Peter Burling and Team NZ boss Grant Dalton hold aloft the America's Cup. Photo / Photosport

"It's never an endless budget for anything really," Parker said. "On one level extra money the government spends on this sort of thing is less money that can be spent on replacement hips and housing for people who need homes. Having said that, the economic case for this is quite strong because there are some economic spinoffs and improved tourism.

"And also some money spent on boat repairs and the boat industry for those who are participating as well as the wages, and the money spent into the economy by the teams as they are here. Whilst there is obviously a bottom line beyond where we would think we would be unreasonably pushed - and we wouldn't be pushed beyond that - we also recognise there are benefits and that's why I think all three parties are trying to find a solution.

"I think there's a point beyond where they [Team New Zealand] wouldn't be pushed either. And they've got to have some things which make this viable for them and that's the nature of the negotiation."

The 'hosting fee' has been standard in the America's Cup since 2007 when Alinghi took the Cup to Valencia. Each subsequent Cup has had a hosting fee.

"I'm not going to speculate as to the amount," Parker said. "It will be significant."

How confident is Parker that the Cup will be in Auckland?

"Reasonably confident. It's not in the bag. But as I said, I think good will and reasonableness is so far being shown by the three parties in the negotiation.

Team New Zealand suffered a blow on Thursday when their preferred America's Cup base was officially taken off the table, at an all-day meeting with Auckland Council where it was voted to remove the 220m extension at Halsey St Wharf as an option.

The option offered the chance for a more village-like feel for competing crews and the public alike, but would have cost nearly $190 million and taken up to 18 months to complete.

Instead, two options - a dispersed base at Wynyard Point and a clustered base at Wynyard Basin - were voted as the sole options to be considered by the Government and Team New Zealand.