The Politics of War, America’s Cup Style

Just when you thought everyone involved with the America’s Cup in New Zealand was going to “give peace a chance,” it seems that it’s a battle on all fronts for Emirates Team New Zealand (ETNZ) and its CEO, Grant Dalton.

If they aren’t feuding with Challenger of Record (CoR) Luna Rossa over a key component of the foil cant system, or the Port of Auckland about opening up the cityfront racecourse areas, it’s about the government of New Zealand’s Ministry of Business, Innovation and Employment’s (MBIE) ongoing allegations of financial mismanagement by the team.

But at least the sailing operation seems to be out of the line of fire — and firing on all (hydraulic) cylinders — as ETNZ prepares to haul their new AC75 yacht out of the barn later this week.

Helmsman Peter Burling was unflappable in his leading role in Bermuda. Nothing this time around, with all the swirling inherent drama of late, will deter his determination to defend the America’s Cup for the Kiwi nation.

Foil Controversies

First things first though. Luna Rossa skipper Max Sirena is trashing the Kiwi-manufactured foil component, a critical part of the new AC Class boat that all the teams must use. This issue is separate from the recent allegation by a Brazilian yacht designer that the foiling-arm monohull concept was his.

“I can tell you the two components are not on the same level,” Sirena told the New Zealand Herald. “It’s like putting in a component coming up from a Formula One car together with one from a car you use every day, so it doesn’t really match. We are not happy, because it doesn’t work as we wish. It would be a shame if we’re going to lose a race because the system doesn’t work.”

Stadium Racing Courses

On the positive news front, the Ports of Auckland announced that they will facilitate the use of the inner harbor racecourses for all racing, allowing for stadium viewing from shore.

“We wanted the public to enjoy the America’s Cup races as much as possible, so we looked again at the impact of racing on the port’s operations,” said Tony Gibson, CEO of the Port Authority. “The situation has changed considerably since January, because cruise ships are no longer able to visit Auckland. We will work with shipping lines to ensure there is minimal impact on their operations. We are very pleased to be able to support the event in this way.”

“Tony and his team have stepped up to help ETNZ and America’s Cup Event Ltd. (ACE) deliver on our promise we made years ago, to make this America’s Cup the most accessible and inclusive event ever,” said Dalton.

The AC Arbitration Panel had rejected mediation between all the parties involved because there was no mutual agreement on how to proceed.

Funds Scandal

In the last, but not least, category is the fundraising scandal that continues to raise its ugly head. Both ETNZ and ACE have been caught in the crosshairs of multiple government oversight agencies by coming under the scrutiny of the Serious Fraud Office, which has been looking into the mismanagement of taxpayer funding of the America’s Cup.

The war began (it’s been ongoing for years) when the NZ Herald ran an investigatory feature story on a $3 million payment to a contractor for the design development of the AC75 class rule from ETNZ to the event budget of the ACE authority.

This is the same component that has come under scrutiny and criticism by Luna Rossa and the other competitors.

ACE was promised up to $40 million of taxpayer funds to help host the America’s Cup. MBIE alleges that the design fee was never contemplated in the Host Venue Agreement (HVA) under the terms to which the government had agreed.

Even though a recent audit conducted by MBIE and the accounting firm Beattie Varley found that there was “no financial impropriety of any nature,” the case is still heading to government-mediated arbitration next month.

All this led Dalton to issue a statement, along with several unreleased confidential letters, to bolster their defense in the court of public opinion.

“In the face of further defamatory and baseless allegations again being leveled at ETNZ/ACE and its directors, we feel that we must now set the record straight, having tried to respect a due process in this saga all year. We have wanted to avoid such a public condemnation of MBIE.”

The underlying controversy is with the “boogying” (memo describing Dalton’s actions) or the moving of public dollars around, whether unseemly or not, from hosting the event to putting on the event.

As many of us here have learned, when it comes to government funding of such endeavors, especially for sports teams, their owners, and their extravagant stadiums, it is a very slippery slope indeed! Stay tuned.