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Home / New Zealand

Yachting: Man in the eye of the storm

By Jane Phare
Herald on Sunday·
8 Mar, 2008 04:00 PM10 mins to read

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Grant Dalton, head of Team New Zealand, down in the boatshed at the team's headquarters at Auckland's Viaduct. Photo / Janna Dixon

Grant Dalton, head of Team New Zealand, down in the boatshed at the team's headquarters at Auckland's Viaduct. Photo / Janna Dixon

KEY POINTS:

Grant Dalton doesn't particularly want to be in New York right now, suing one of the world's richest men for tens of millions of dollars. He'd rather go sailing. Or at least get Emirates Team New Zealand ready to go sailing.

Instead, he's spent the past two weeks
in secret meetings with high-powered New York lawyers and, when the news of the two law suits broke, wearying hours on the phone giving interviews to news organisations around the world.

The legal broadside from Team New Zealand seems to have caught Alinghi unawares, although Dalton says Bertarelli would be "naively underestimating us" if he didn't expect a reaction.

The irony is not lost on Dalton. While Bertarelli's back was turned, fending off court action by another billionaire, Larry Ellison (Oracle), a little buzzy bee from a far away country darted in and stung him where it hurts.

It is testimony to a tight team that news of what Dalton was up to did not leak out before the two cases were filed in the state and federal courts last week.

The wider team knew he was up to something, knew he was away. The inner guard knew more. But Dalton wasn't so concerned about leaks.

What worried him more was having to make 25 people he'd worked with for years redundant, in order to preserve dwindling cash reserves. When he signed up for another round after Valencia, he wasn't expecting that.

It is on this subject, and Bertarelli's role in it, that the only hint of bitterness creeps into Dalton's normally level tone.

He doesn't mince words. It is "through the actions of one guy [Bertarelli]" that he had to tell those people they were out of a job, and to further reduce the hours of other staff. In the quiet of the boardroom at Team New Zealand's Viaduct headquarters, before heading to New York, his words weigh heavily.

"The tragedy of it is that no one deserved it. They're all fantastic people, all great contributors." Some had been with Team New Zealand since 1992.

"They're not just people who wandered into a campaign and hopped off in Valencia. This is their career."

Two weeks later, in his New York hotel room, Dalton refers again to those who have lost jobs. He knows the legal road ahead will be long, expensive, and it could get rough.

"I just feel sorry for those guys who are on the street and their families. That will always give me energy to keep this going. I won't run out of energy. I'll just think of those guys."

Should Team New Zealand win, any money awarded will be too late. The tens of millions in damages Team New Zealand is suing for are unlikely to arrive in time to benefit this campaign and Dalton knows it won't be a quick fix.

"We're not about to disappear off the face of the planet tomorrow. We will still be here when this is over."

Dalton won't put a dollar figure on the millions Team New Zealand is seeking in damages. But he says the $50 million bandied about is just a starting point. That's the amount Team New Zealand asked Bertarelli for last November in a letter, pointing out Alinghi was in breach of contract.

Team New Zealand never got a reply, never mind a cheque for $50 million. If Bertarelli thought Dalton would go away by simply ignoring him, he was wrong.

Team New Zealand took legal advice, with Dalton making several trips to New York for legal opinions. The core of the case is that Team New Zealand had a contract with Alinghi that the America's Cup would be held in 2009. Dalton went ahead and sold sponsorship on that basis and he has enough money to compete in a regatta then. Now, with the cup on hold and not likely to be held before 2011, he's got little left to sell in the way of sponsorship.

So that $50 million figure will go up, to take into account consequential damages, huge legal costs (being funded by "a friend") and continuing damage to the Team New Zealand brand.

And that's just the breach of contract suit, filed in the New York Supreme Court. Then there's the other action, in the Federal Court, claiming Bertarelli's Alinghi team and cup organisers, America's Cup Management, have acted in an anti-competitive manner, abusing an effective monopoly. That "unreasonable power" gave Alinghi an unfair advantage, not just over Team New Zealand but over all the other challengers. Dalton almost spits out his objection to Alinghi forming "a bogus agreement with a sham club [the Spanish CNEV] to control the market to their own ends".

Under the Sherman Act, America's antitrust law, damages awarded by the court - based on the amount by which Team New Zealand has been economically disadvantaged - will be automatically trebled.

Asked if the final figure could reach $100 million, Dalton doesn't disagree.

"This is a serious claim," he says.

And, so far, things are going New Zealand's way. Team New Zealand successfully asked for New York judge Justice Herman Cahn to be allocated the case. It was Cahn who, in November, ruled against Alinghi in the court case brought by Oracle, giving Oracle the right to a "Deed of Gift" challenge. The Spanish CNEV was no longer the challenger, which would have allowed Alinghi monopolistic power over the rules, and Oracle was back in the running.

The Kiwis were also successful in getting a court order requiring Alinghi to preserve all relevant documents.

So far so good. But Dalton knows that this is the quiet before the Swiss storm. Bertarelli wants to win at any cost and observers who know him say that apart from a fiercely competitive streak, a huge ego is fuelled with enough dosh to preserve it.

But, in the end, Dalton doesn't "give a damn" how Bertarelli will respond. He's more concerned about how Kiwis will react. In the past few months he and his inner team have weighed this up carefully. Dalton can accept losing the last America's Cup, even a court case, but he doesn't want to lose New Zealanders.

"I do care very much how New Zealand will respond because it [the legal action] is not a natural thing for a New Zealand team to do."

But, in the end, it came down to a sense of fair play, a belief that New Zealanders are brought up with a sense of right and wrong.

Dalton is keenly aware that two billionaires squabbling over control of the America's Cup is a turn-off to New Zealanders. And he's also aware that to see Team New Zealand popping up in a legal wrangle might be an even bigger turn-off. But, he says, he hopes Kiwis will see the move for what it is, a commercial decision to "protect the legacy of the past" and the team's future. And, he adds, Team New Zealand wasn't going to "lie down because Alinghi thinks we should".

"We believe we've been wronged and we won't accept that."

Dalton says the damage is widespread and ongoing - to the America's Cup brand, Team New Zealand's brand and potential global TV viewership. "Because of their actions, the cup isn't even on and, because of that, they are still influencing the market."

Dalton is due back in Auckland later this week, back to a smaller team and a quiet base. Next door to the offices, in a huge warehouse, the two black boats sit on cradles, minus their keels and masts. No one knows if they'll see another competitive regatta or when the next America's Cup will be. Design work on the new 27.4-metre AC class boat, which includes a 4.5-metre bowsprit, has slowed. The sponsors, major and small, who backed the team in Valencia, are ready to go again.

The Government has already contributed $10 million and is likely to at least match the $33 million it pitched in for the last cup challenge.

Dalton's crew is spread around Europe, racing in carefully selected and fiercely competitive regattas that are designed to hone their skills for the America's Cup, whenever that may be. All this delay is frustrating for Dalton who just wants to get on with it.

When he gets the go-ahead, when he gets a date, he'll be back on the road selling. It's a skill he is remarkably good at.

Last year, in an interview in Dubai, Emirates senior vice president, Boutros Boutros told the Herald on Sunday that Dalton was a born salesman.

Four years ago, the weather-beaten sailor from New Zealand sat in the Emirates boardroom and did the impossible - sold a dream to an airline that knew little, and cared even less, about sailing.

Dalton convinced a company that each day turns down dozens of sponsorship requests, including from other America's Cup syndicates, to fork out millions to back a boat race.

For a company that knew about horse racing, rugby, soccer and cricket (many of the senior management are British), but nothing about sailing, it was a coup.

Boutros on Dalton: "He was very persuasive. His presentation was almost perfect."

Dalton credits his success to the fact the team has never used a sports marketing company to sell its story. Instead, he fronted every meeting personally.

"You've got to actually really believe yourself," Dalton said in Valencia last year. "And that's why we never, ever use a middle man. We are very passionate about what we're doing and what we're selling and the belief in what we can deliver."

But this time, Dal-ton doesn't have much of the boat left to sell. He does have enormous goodwill and the potential backing of a conglomerate of largely anonymous, wealthy backers from New Zealand and Europe.

If the Cup ran in 2011 he'd need to find another 30 per cent. He won't say 30 per cent of what but the budget for Valencia was about $120 million.

Dalton concedes that he will largely be selling goodwill. As for the two court cases, he is not laying bets.

He's a sailor and he's learned from experience.

"You go into a protest room in a yachting contest and you can be 100 per cent in the right and still lose. So I don't think any lawyer that I've talked to would give you odds. But we personally, as a team, would not take this on frivolously."

And he knows that even if New Zealand won one or both cases, any damages are unlikely to benefit a team he'll be running. The outcome could be "years away" and will benefit a team not yet formed.

At 50, Dalton knows this is his last run with Team New Zealand.

It was touch and go whether he would be grinding those big stern winches and repacking giant sails in the cramped, hot space below the foredeck in a 2009 regatta. It's even less likely in 2011.

"The clock's ticking," he grins.

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