RNZYS commodore Aaron Young told members that while its preference was for the next America's Cup to be held in New Zealand "it needs to be viable to allow this to happen".
"Currently, we do not have a viable New Zealand venue proposition, and as a result [Team New Zealand] are in discussions with other potential locations," Young wrote.
Team New Zealand needed to secure the funding from Auckland Council and the Government or consider offshore venues, he said, or look offshore.
"The consequences of not doing so are potentially dire – no cup defence at all, and giving the America's Cup back, having been unable to stage a defence and meet obligations under the Deed of Gift. This means a loss of the America's Cup, a loss of our Team New Zealand, and the potential loss of any future America's Cup challenges from the RNZYS, and most likely New Zealand."
Dunphy, who says he has "firm funding" of $40 million to put towards a New Zealand defence said the squadron needed to "stop parroting" that there was no viable way to hold the defence here.
"The simple fact is that there is a viable funded option to hold the America's Cup defence in Auckland, but the Squadron's agent, Team New Zealand, point blank refuses to consider taking up that option and holding the Cup defence here," Dunphy said.
There appeared to have been no attempt by Team New Zealand to engage with the Government, Auckland Council or those willing to fund a home defence, suggested the team had no intention of defending the Cup in New Zealand, Dunphy said.
"We believe they haven't had any discussions with Auckland Council, the New Zealand Government, or other New Zealand funders since missing their first venue announcement date on 17 September, or since missing their second venue announcement on 17 November."
Farmer, meanwhile, said it was clear that the money that had gone into the pursuit of winning back the America's Cup created a clear moral obligation for the Cup to be defended in New Zealand.
In a statement Farmer hoped would be sent to members by the RNZYS - a request the squadron Farmer said was rejected, the QC said he had been a director of Team New Zealand for a decade, unpaid, to try to win the world's oldest sporting competition.
"I was never under any doubt of the moral obligation which we were under to defend the Cup in New Zealand, an obligation which was the result of the enormous support of the New Zealand public," Farmer said.