America's Cup: Bases filling as Challengers go unconditional

by Richard Gladwell Sail-World NZ 6 Dec 2018 11:27 GMT 7 December 2018

Emirates Team New Zealand dropped a bombshell at 6.15pm last Friday when they issued a media release saying that eight new Challenges had been received when the Challenge period finally closed 75 minutes earlier.

The Challenges all came in the final days, with three coming in the just five minutes ahead of the entry deadline.

“We’d been actively working with six of them, so it wasn’t a complete surprise”, Emirates Team New Zealand Chief Operating Officer, told the Auckland Council today. “We’d been working with some of these teams for over six months, to try and encourage them into the event,” he added.

“As of today, there are two of those Challenges which are immediately capable of Acceptance. Immediate Acceptance means that all their requirements under the Protocol and Deed of Gift have been satisfied.”

“We also have several, what we call Conditional Entries. They are looking for variations of what is set out in the Entry document. These could be a World Series Regatta or pre-regatta in 2019 or 2020, in their home port. Or, they might be looking for a variation of terms on their entry payments.”

“All the entries have come from credible yacht clubs, although we are cautious we are very respectful of the entries they are putting in. They have all put in a huge amount of effort and taken a big step. It has taken a lot of courage for them to submit their entry. So we are treating them all with the respect they deserve.”

Shoebridge explained that the Defender was working through the vetting process as quickly as possible, as the team wanted to be able to tell the NZ Government and Auckland Council the entry numbers as soon as possible.

He was hoping to have most of it completed by the end of next week or earlier. “But it could take up to Christmas before we get the final number confirmed” he added.

“The situation is that there are two that are capable of immediate acceptance, and we think there is definitely another couple that is possible.”

“For all my time in the Cup, I have never before seen such high numbers of Challengers trying to enter.”

With now three confirmed, “Super Teams” entered, another two teams unconditional, and two teams capable of being unconditional, then the Challenger teams would increase to seven.

In the current plan, there are three single AC75 bases left – which means three Challengers get accommodated.

“We’ve always known that there are just six Challenger bases and you are the seventh; then we’ll have to try and help you in other ways. I think that will be a struggle. But one step at a time, I think we will be clear in another week, and by the end of the year, we will definitely be clear. It’s not that far away, ” he told Sail-World after the Council meeting had concluded.

It does not appear that the Government’s escape clause will be exercised - as spelt out in Emirates Team NZ’s media release sent last Friday: “Should less than three of the late challenges be accepted, the Government and Council will then have the option of not proceeding with the Hobson Wharf extension for the 36th America’s Cup, which would result in considerable cost savings."

It is believed that although the new Challenges are late, they are intending to be in the America’s Cup for the long-term, planning on Challenging for two or three cycles.

The situation with the Challenges seems to be quite fluid.

Initially only one of the eight was unconditional. Less than a week later there are two unconditional Challenges, and two others apparently are capable of becoming unconditional. That means they can be accommodated without changing the Protocol, or only small changes are required to the “living” Protocol document, which was changed 16 times in the previous America’s Cup cycle.

Changes to the Protocol need the consent of both the Challenger of Record, Circolo della Vela Sicilia and Defender, Royal New Zealand Yacht Squadron.

Any of the six conditional Challenges can decide at any time to drop their pre-conditions and make their Challenges unconditional. In that case, subject to vetting by the Defender, the Royal New Zealand Yacht Squadron is obliged to accept their Challenge.

Conditions seeking an America’s Cup World Series event will need careful negotiation. The Protocol also requires that for each America’s Cup World Series, the teams need to each contribute USD$300,000. While they may have allowed for two ACWS regattas in 2019 and three in 2020, any more could have significant budget implications.

Sail-World understands that where the Challenge is conditional or missing crucial information or documents, then the team will have the opportunity to provide or correct that information.

It is understood that there could be small changes to the Protocol to accommodate some of the requests, but these will not be such that a late Challenger could in some way gain a competitive advantage over accepted Challengers.

As matters stand, the Entry Fees and Performance Bond, totalling USD$4million (NZD5.8million) have to be paid by the end of December 2018, unless the time payment option is taken for the second entry fee which can be spread until August 2019.

Today’s meeting of Auckland Council’s Governing Body agreed to contribute a further $14.5million, being a half-share of the residue of a $100million project underestimation of costs for the base development project.

The underestimation was put down to delays in deferring the base location decision until the end of March and after the first Resource Consent process was in its public submission process. The $100million was reduced by $70million with some adjustments to Capex and design refinements.

Emirates Team New Zealand told the meeting that the Cup was in jeopardy if additional the expenditure was not approved.

To control any further cost escalation, an arrangement is in place with the Wynyard Alliance who is responsible for the construction where the Council and the Alliance share any further cost escalation on a 50/50 basis, and similarly, they share on the same basis any cost reductions effected over the project.

The sites for the teams on Wynyard Point are expected to be ready in the last quarter of 2019. The teams are responsible for building their own bases, subject to Council design and specification approval.

There is currently no plan in place if the Challengers go unconditional and there are more bases required than is currently planned. Under the Protocol for the 36th America’s Cup, RNZYS is required to allocate temporary space to a Challenger for a base and building.

All competitors are required to be located at the venue for the 36th America’s Cup, however in previous Cup planning locatuons like the Naval Dockyard have been considered to take spillover Challengers.