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America's Cup: Economic benefits set to take a hit from closed borders

by Richard Gladwell/Sail-World.com/nz 26 May 16:07 BST 27 May 2020
Northern side on INEOS Team UK base, under development, looking across Wynyard Wharf towards Emirates Team NZ base on Auckland City © Richard Gladwell / Sail-World.com

Thoughts of shifting the dates of the 36th America's Cup have been dismissed by Emirates Team New Zealand CEO, Grant Dalton.

"There is no intention to move the dates", Dalton told Sail-World on Monday.

Dalton's response came after being asked to comment on an interview broadcast on Radio New Zealand by the CEO of Auckland Tourism, Events and Economic Development, Nick Hill in the context of a broader discussion on a plan for Auckland's recovery from the COVID19 measures. The principal issue is the border closure, ordered by the Coalition Government.

Pre-COVID19 there would have been few barriers to entry into New Zealand for those involved with the Cup, and 2021 was going to be a big year for major events in New Zealand. The calendar includes the America's Cup, the Womens Rugby and Cricket world championships, and the Asia-Pacific Economic Cooperation Forum (APEC). There seems to be some flexibility with dates for the other events, but not the America's Cup.

Maybe that's a little difficult to comprehend given the postponement of the world's biggest sporting event, the Tokyo Olympics.

After the Challenger and Defender were unable to agree on wind limits, the dates and racing schedule for the America's Cup Regattas were set out as part of the Match Conditions by the Arbitration Panel for the event. Those conditions can only be altered by that body - and effectively with the consent of all competitors. At this stage of the America's Cup and world events, it is unlikely that a team will agree to a race schedule change that is disadvantageous to their program, without first putting its case to the Arb Panel.

Unlike other major sporting events, the America's Cup has no controlling body able to dictate terms to the teams. The Auld Mug is simply a challenge trophy for which two yachts clubs agree to compete under the terms of the 19th century Deed of Gift which governs the trophy.

It is clear from comments made by various politicians that the America's Cup is a vexed issue, particularly with first challenger teams wishing to enter New Zealand in the next four to six weeks. A busy schedule of events is planned for visiting superyachts, so their visit to New Zealand extends over several months.

Hill admitted that "international visitations [those outside the immediate challenger team] are a bit of a dream at the moment".

"[The] status of the America's Cup is still very important," Hill continued.

"No decision has been made to move away from the current program and dates. But we are undertaking scenarios with the Government and with America's Cup Events Ltd to work out how you might reposition the event, potentially condense it or push it back slightly. A lot of that depends on the teams being able to come into New Zealand, and impacts on budget and safety issues with the Alert levels."

"Running scenarios with the America's Cup, we understand the value drivers of that event," Hill continued. "International visitations that are part of the economics won't be there.

"But other things like superyachts which were coming to Auckland are worth $120million to the Auckland economy. How can you still attract those and those kinds of benefits to Auckland?"

A government statement last Thursday echoed previous comments that there was "still too much uncertainty to know when New Zealand's closed borders could be reopened".

Previous statements have indicated they would be closed for "some time" clarified as 12-18 months. In early May a BBC reported comment by the Prime Minister that "we will not have open borders for the rest of the world for a long time to come."

As well as the America's Cup teams, other groups affected by the closed border action include officials, media, and owners, guests and crew of superyachts, team sponsors, key players in the international marine industry, and America's Cup fans.

The three "super teams" who make up the Challengers, are now set to arrive in Auckland, in July, August and September.

Each team has a budget in excess of NZ$200million, a substantial portion of which will be spent in Auckland by the teams, and throughout New Zealand by high net-worth supporters of the teams - if they are allowed to enter into New Zealand and spend it.

Kiwi borders closed to all but returning New Zealand residents. According to a Radio NZ report, over ten thousand requests for special exemption are believed to have been lodged with the NZ government. Approximately 1700 have been approved mainly on humanitarian grounds. Other approvals include some for gas pipeline repair specialists. On May 27 media update conference the Director-General of Health, Dr Ashley Bloomfield said there had only been "one hundred to two hundred" exemptions granted, and that Bloomfield had only signed off on a handful of those (which were medically based). Bloomfield said he had given an exemption to those he signed from having to undergo 14-day quarantine. The rest of the 100-200 applications had been signed off by Minister Twyford.

Last Thursday the Minister of Finance and Sport Grant Robertson said that consideration was being given to conditions under which America's Cup crews, who did not hold NZ passports or permanent residency could be admitted.

It is accepted by the teams that they will have to spend at least 14 days in a government-supervised quarantine, at their cost.

That follows a similar process allowed under exemption by the Australian Government to allow a New Zealand based professional sports to relocate to Australia for six months to compete in a professional league.

To date, approximately 10,000 people have been quarantined, in New Zealand with 2,000 currently being "accommodated" in hotels at the government expense.

Over 120 superyachts had expressed interest in coming to New Zealand, with only 75 berths available - which have all been allocated and deposits taken. Only a handful are understood have cancelled at this stage.

Approximately 40 superyachts are already in New Zealand - the rest of the flotilla are in various locations around the Pacific, and easily seen on AIS.

If suitable arrangements are not put into place to allow superyachts with prebooked maintenance and refit work with NZ boatyards to enter NZ from July this year, marine industry sources expect that many of the superyachts will cancel their plans to have work done in NZ and go elsewhere - as they have to transit out of the South Pacific route by December 2020 to avoid the cyclone season.

Recently exemptions for 11 superyachts to enter Australia for refits are believed to have been issued, with more likely.

That relatively small number alone means the loss of $30 million of maintenance work to New Zealand, much of which would have been undertaken in a new superyacht servicing facility under construction a few hundred metres away from the America's Cup bases.

Back in October, Marine Industry Association Executive Director Peter Busfield calculated the average spend per superyacht while in NZ at $2.67million.

If it continues its present course, with borders closed for "some time" or "12-18 months" it would seem that the New Zealand Government is prepared to take the economic hit, placing a higher priority on health outcomes than expanding a high-value industry with a long list of forward orders.

To cope with an expanded workload from the America's Cup and superyacht refits, the marine industry is expected to the retention of existing skilled staff, and to take on additional apprentices or retrain those with complementary skills displaced from other industries.

Apprentices are likely to be the big winners from the increased superyacht activity in Auckland and New Zealand. Before the COVID19 outbreak, most marine companies in New Zealand had good work projections, and many had also diversified into composite engineering.

Most also have their build facilities out of central Auckland and are mainly located in South, SE and West Auckland.

But before they can lay their golden egg, the people associated with superyachts and America's Cup teams, must first be allowed into New Zealand.

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