America's Cup: Defender rebuffs New York Yacht Club's surprise Challenge

Royal New Zealand Yacht Squadron © Carlo Borlenghi

The America's Cup Defenders, along with the Challenger of Record, have rebuffed the surprise Challenge lodged by the New York Yacht Club, on May 6, and announced earlier today.

The Cup holders issued a statement two hours after the release of the Challenge and draft Protocol submitted by New York Yacht Club who successfully defended the trophy from 1870 to 1983.

"RNZYS and Emirates Team New Zealand (as the current Defender of the America’s Cup) welcome the New York Yacht Club’s interest in the next America’s Cup, but questions their motives for such a presumptuous statement when entries do not open for some time.

"There have been some valid points raised by NYYC, a number of which are already being considered in developing a progressive and forward thinking Protocol between the Defender and Ineos Team UK and the RYS as (Challenger of Record for the 37th America’s Cup) who are the two parties responsible for developing the next Protocol," the statement concluded.

The RNZYS/ETNZ position was backed up by the Royal Yacht Squadron Ltd and INEOS Team UK who expressed similar sentiments:

"As the Challenger of Record for the 37th America’s Cup, we are working collaboratively with the Royal New Zealand Yacht Squadron and Team New Zealand to write the Protocol that will define the rules moving forward.

"We are delighted to hear that the New York Yacht Club are interested in continuing participation in the America's Cup and we will keep them informed as we move forward", the statement concluded.

TVNZ reports that the New York Yacht Club move is expected to be matched with support from long time AC challenger, Luna Rossa who are guaranteed the hosting for AC38 under the deal. Another is expected to Swiss based challenger Alinghi, Ernesto Bertarelli - who created a very commercial Cup for the 2007 event, but went too far with his proposals for the 33rd America's Cup, making a grab for the effective merging of commercial rights between Defender and Challenger. The move was stopped in the New York Supreme Court after a three year battle and Match under the default provisions of the Deed of Gift.

In the hiatus, the Cup went into intensive care with exhibition regattas being held in the Northern and Southern hemispheres, but even so Challenger numbers dropped from 11 Challenger teams in 2007 to three in 2013. Numbers increased in 2017 to five Challengers, however it was never clear how many had financial assistance from Golden Gate's software mogul, Larry Ellison. In November 2016 five of the teams signed a document, "the Framework" with many of the aspirational goals repeated in the New York YC draft Protocol. That document was never released publicly but would have committed the teams to sailing the AC50 wingsailed foiling catamarans, used in Bermuda.

Unfortunately for the five signatory teams, the sixth, Emirates Team NZ went on to win the Cup and while the Kiwis said they liked several aspects of the document, it quickly dipped below the 36th Cup America's Cup horizon.

The TVNZ story can be viewed by clicking here

156 page draft Protocol

The draft Protocol put forward by New York Yacht Club seeks to extend a Protocol agreement to cover successive Cups and sets out a process for venue determination for the Cup regardless of which club actually holds the trophy. This breaks a fundamental tenet of the America's Cup which is that the Defence should be conducted in its home waters.

Under the NYYC document, for the next four cycles, venues are shared around the four teams that competed in the 36th America's Cup in Auckland. The document prescribes that for the next four cycles the Cup should be contested every three years. As the current Defender the Royal NZ Yacht Squadron would be required to declare the venue for AC37 by June 21st - 10 days inside the deadline for negotiation of the venue with the NZ Government.

After AC40 the Cup reverts to a two year cycle with the venue being the country of the Defender from six years earlier. There appears to be no way to "bid the venue" nor to have any realistic basis of negotiation for a Host Venue Fee with a Host City that knows it already has the right to stage the Cup.

The draft Protocol sets up the slightly bizarre situation where the Cup Defender could be required to set up and defend in a foreign country, with one of the challengers sailing from their home town.

The Protocol, which runs to almost 150 pages, also endeavours to impose budget caps on campaign budgets of US$75million per cycle, with other budget limits nested within that period. Typically these have been over $100million per cycle.

Cost control

The budgets and actual spend by teams are reported back through an Auditor, which is a reputable company appointed by the Commercial Director. The Auditor is required to be neutral, and will establish Uniform Accounting Practices and regulations. It will audit all Cup bodies including competitors. It reports breaches to the Commercial Director who refers the matter to the Arbitration Panel, which can remove the competitor from the Cup.

Team size limitations will also be introduced, with a maximum team size of 85-120 people of which 20 are allowed to be designers.

Existing teams will be allowed to build only one new AC75. New teams will be permitted to build two new boats. The Protocol objective is to create a fleet of over 100 AC75's over a period of five America's Cup cycles. Surrogate boats like ETNZ's Te Kahu are not permitted.

Limitations are proposed on testing time on the water, time spent in observation of other teams and similar measures. Generally testing time is limited to 100 days per year and only allowed during the summer months of the northern or southern hemisphere. Clearly the objective is so teams based in UK and around New York don't have to shift south in their winter to continue training.

The draft Protocol prescribes that the America's Cup Class shall be fitted with an engine, but it is not clear if this is as an auxiliary, or for running pumps or another purpose. However the make of engine shall be determined by the Commercial Director

Commission to control Cup

The Protocol calls for the establishment of a Commission to be a permanent body for the control of the Cup, with members appointed by the Defender and Challenger of Record. The Commission comprises the New York Yacht Club, others from the group of Clubs known informally as the "Cup Trustees", but must have been involved in one of the last three Cup cycles. Others can be appointed to the Commission which is the central control and consulting body for the Cup.

A new Defender inherits three Corporations, incorporated in New York, and set up to run the Cup on an ongoing basis, which are controlled by the Commission, whose members are appointed by the Defender and Challenger of Record. The Cup Corporations are not allowed to hand over a deficit or liabilities to the incoming Defender. If there is a surplus from a Cup cycle 40% goes to the Defender, 10% to the Match Challenger, 5% to the Season Champion and the balance is split equally between the Competitors.

Events comprising the America's Cup Season racing will be held with both the Challengers and Defenders competing. A Challenger Selection Series will be held at the Cup venue, in which the Defender cannot participate. The Defender and winner of the Challenger Selections Series will contest the America's Cup Match.

The draft Protocol requires that a Debrief of the operational bodies be held within one month of the conclusion of a Match, and their recommendations be passed onto the Rules Committee to "improve the Event, increase its value and quality of the racing, while reducing costs". The Rules Committee must produce the Match Debrief within four months of the end of a Cup cycle.

The purpose of announcing the comprehensive Protocol and Challenge is not clear, as the New York Yacht Club would surely have been aware that a Challenge had already been lodged by Royal Yacht Squadron Racing and accepted by RNZYS.

There is currently a three phase process underway over negotiation of a Protocol with RYSR, and venue negotiations with the New Zealand Government, due to end on June 30, 2021.

Emirates Team NZ also has responses to its Venue Selection Process which gained more credibility after the conclusion of the 36th America's Cup, when RNZYS/ETNZ were confirmed as Defenders of the 37th America's Cup Match.