America's Cup: Dispute over Cup future triggers Swiss exit and wind-down
by Richard Gladwell/Sail-World.com 19 Apr 04:28 UTC
Alinghi Red Bull Racing - Race 20, Day 5 - Round Robin 2 - Louis Vuitton Cup - September 5, 2024 © Ivo Rovira / America's Cup
Twice America's Cup winner Alinghi has issued a statement saying they will not enter the 38th America's Cup, after taking issue with some measures in the draft Protocol.
Our information is that the team members were told last week. A media statement was issued Saturday afternoon (CET).
Alinghi Red Bull Racing finished fourth in the Louis Cup Challenger Selection Series after breaking two masts, one new with only 20 minutes of use. They damaged their AC75 after it had been eliminated when they struck an underwater object with one of their foils while training. The hull damage was sufficient to require pumps to be put on board.
Alinghi first defended the America's Cup in Valencia in 2007, with the event under a commercial organisation making a surplus of €60 million (about US$82 million at the time), which was split among the Defender and Challenging teams.
"Despite all our efforts, we - Alinghi Red Bull Racing - have not been able to find agreement with the Defender of the America's Cup for the future of the event. We would like to have seen more accountability, greater transparency and new opportunities to perform not only individually but as a group. That way we might all of us together could have delivered a commercially viable event capable of attracting global TV coverage, spectators, and sponsors," the team told Sail-World in a written statement.
"So, it is with great disappointment that we have begun an orderly wind-down of the Alinghi Red Bull Racing team."
"The brands that have formed that team will always be part of the America's Cup history, and the last few years have been an incredible journey. We thank every team member, every sponsor and every supporter for their belief, trust, and commitment throughout."
Draft Protocol leaked
The point of contention is the production of a draft Protocol, which was sent to the teams in confidence but, as always happens, was leaked to some sailing media.
One of those recipients was the San Francisco-based live webcast show, Sailing Illustrated, hosted by 40yr America's Cup veteran Tom Ehman. He received two copies. Ehman was a central figure for two US teams, Defender and Challenger when the parties went to the New York Supreme Court in 1988 and 2007-2010 to get interpretations of the Deed of Gift. He won both, one against Michael Fay's New Zealand Challenge and the other against Alinghi's Ernesto Bertarelli.
In his mid-week show, Ehman revealed several of the points of contention with the draft rules document negotiated between the Defender, Royal NZ Yacht Squadron, represented by Emirates Team NZ, and the Challenger of Record, Royal Yacht Squadron, based in Cowes and represented by Athena Racing, led by Ben Ainslie.
The America's Cup is controlled by a Deed of Gift, the 19th century document lodged with the New York Supreme Court, by the owners of the yacht America, which won £100 Cup in 1851, which became one of the most prestigious trophies in sport.
Cosy arrangement
The Deed contemplates a single Challenger and single Defender, who are allowed to negotiate some of the terms of the upcoming Match under what are known as the Mutual Consent provisions of the Deed of Gift. Otherwise, for the event to be an America's Cup, the racing must comply with the prescriptions of the Deed of Gift.
Many are unhappy with the cosy arrangement in which the Challenger and Defender in the last Match in Barcelona agreed before the Match was finished that each would fill these two key roles for the other. That move denied the other teams the opportunity to be the first to hand over their Letter of Challenge, become the Challenger of Record and negotiate more aggressively with the current holders towards achieving a winnable Match for a Challenger.
In the opinion of some of the challengers who competed in Barcelona, the Royal Yacht Squadron has been beating their Kiwi counterparts with a feather in the Protocol negotiations.
The frustration of the Swiss team has boiled over in the last fortnight with the decision, now formally confirmed by Alinghi Red Bull Racing, that they will not be entering the next America's Cup. Another team is understood to be close behind the Swiss.
Need for change
Since the America's Cup left Fremantle in 1987, there has been an increasing awareness that the organisation of the America's Cup needs to escape the 19th century and enter the 21st.
Emirates Team New Zealand has tried to introduce a provision into the draft Protocol where a commercial consortium is put in place to have overall control of the Cup commercial and competition organisation. That is not contemplated under the Deed of Gift and would need to get the approval of the New York State Supreme Court.
The Protocol is believed to have tried to skirt this limitation by imposing substantial financial penalties on a subsequent Defender who dares to be different. A similar mechanism of a $20 million payment has been used to ensure the continuance of the AC75 class.
Another issue is negating the "constructed in country" provision of the Deed of Gift, which gets watered down in every Protocol and has now been changed to allow the hull of America's Cup boats to be built anywhere in the world. There are good reasons for this change, but for all the good intentions, it is against the strict provisions of the Deed of Gift.
There has been no significant alteration of the quite draconian nationality clauses. However, with its multiplicity of exceptions, the former rule has been packed into a new rule which restricts sailors to sailing only for the same team they sailed with in the 2024 America's Cup. This restriction is a setback for Alinghi, who would have preferred to be able to engage multi-national crews as they did in the 2003 and 2007 Cups. While the Defenders have been accused of bringing this rule in to prevent its former helmsman Peter Burling from sailing for another team, Sail-World understands that this was not the idea of the Kiwi team.
A second point of contention between the draft Protocol and the Deed of Gift is the provision that if the current Challenger of Record, Royal Yacht Squadron, falls by the wayside for whatever reason, then the Defender can choose the next Challenger of Record. The Deed of Gift does not give the Defender this prerogative, but instead, it says that "And when a challenge from a Club fulfilling all the conditions required by this instrument has been received, no other challenge can be considered until the pending event has been decided." In other words, they must be taken in the order received.
Wobbly Challenger of Record
The split between the two potential Challenger of Record teams, INEOS Britannia and Athena Racing, has caused further angst amongst the other challengers.
On January 24, 2024, INEOS announced that they had split with their racing team, Athena Racing, and would go alone with a Challenge via another yet-to-be-named club. Two and a half months later, they were out of the Cup completely, citing delays in their divorce proceedings with Athena Racing.
"The decision has been taken after a protracted negotiation with Athena Racing Ltd following the conclusion of 37th America's Cup in Barcelona," INEOS Britanni said in a written statement.
"The agreement that had been reached with Athena would have allowed both parties to compete in the next Cup, but it depended on a rapid resolution. INEOS Britannia had agreed on the substantive terms very quickly, but Athena failed to bring the agreement to a timely conclusion. INEOS Britannia is of the opinion that this six-month delay has undermined its ability to prepare for the next Cup and so has reluctantly withdrawn its challenge."
Alinghi has followed the same path over the apparent delay in venue announcement and rules that will apply for the next Cup and Preliminary Regattas.
Athena Racing has not announced how it will fund an America's Cup team. It also runs a SailGP team with Emirates Airline as the naming rights sponsor.
Of course, the Defender has the ability to back away from all the issues that are coming out of this draft Protocol, and the Deed of Gift conflicts will be immediately resolved. In earlier Cup cycles, the publication of unrehearsed Protocols triggered a raft of changes within a week or two, as the shortcomings were pointed out.
However, while there is plenty of pressure on the Kiwis to deliver a Venue and Protocol, a look back to 2003 when the Royal NZ Yacht Squadron lost the America's Cup to Société Nautique de Genève (Alinghi), the Protocol and Venue announcement shows it usually takes eight months, with the exception being in 2017 when Royal NZ Yacht Squadron won and the Protocol and Venue (Auckland ) took just three months, it took 12 months for the venue arrangements to be confirmed.
So far, the Royal NZ Yacht Squadron/ Emirates Team NZ has been six months into the Protocol and Venue process.