Now, yachting and legal sources are awash with talk of an impending legal challenge to the offshore defence, possibly in the form of an interim injunction ahead of the committed venue announcement on September 17.
Cork, Valencia and Jeddah have all been mentioned as likely candidates.
"Dunphy hasn't even met Grant Dalton," said one source.
"They've had one telephone conversation which lasted about an hour but which went nowhere. Now there's a lot of talk there's a legal challenge coming.
"You'd think that if he [Dunphy] had money [for a local defence], they'd just go to the team and talk – but they haven't done that. It's all being done as if he is some sort of kindly, patriotic Santa Claus when the reality is they want to take over the team and strip out the management."
"Sure, if they had millions to put into the team's account and said 'there you are, let's talk later, please send me a T-shirt', that'd be different."
Several sources have confirmed Dunphy's group are trying to raise the necessary cash through a complicated scheme involving an Auckland City charitable trust, government money, private money and tax write-offs.
The Herald has seen a long letter sent by Dalton to Dunphy after their phone call, containing suggestions the council has concerns about the structure of such a financial arrangement. Separately, yachting sources say the proposed framework would see Dunphy in charge of the finances, the team and the squadron.
Team NZ would not comment but one source said they'd received a warning from a financial backer that Dunphy's group had sought their involvement.
A letter sent to the supporter contained this sentence: "It is fair to say there is some desire from the group to see some changes to ensure that Team NZ remains an iconic Kiwi business and brand into the next generation. In that regard these discussions are a bit sensitive."
That and the control over finances have apparently convinced Team NZ the "local defence" is a takeover bid and, if the finance doesn't stack up or Dunphy fails to get the squadron on board, a legal challenge is likely to be made.
Dalton's letter to Dunphy, approved by the squadron, makes it clear the RNZYS and Team NZ are in sync over the offshore defence. An injunction could, however, throw a legal spanner in the works if, as many think, it will be based on an attempt to prove that the squadron exceeded its fiduciary duty by assigning the venue decision to Team NZ.
One yachting source said that even if a takeover was successful, "all that might be achieved is that Team NZ would fall apart; it'd collapse."
Dunphy's moves have been made with no hint from him of any ambitions to take over Team NZ.
Last month he told the Herald: "I am doing this because I believe the America's Cup really is New Zealand's cup in more ways than one. Everyone in New Zealand has contributed to it, through government, and it's a unique showpiece for our nation.
"As Kiwis, we should not let defending the Cup go overseas, if at all possible. Grant Dalton and Team NZ have done a fantastic job and won our admiration with a wonderful team of sailors and the design team. But it seems silly that, collectively, we New Zealanders can't find a way to both stay here and defend it here and achieve what Team NZ want – a three-peat."
He clearly told Dalton the same thing when they spoke, as Dalton's letter says: "It is noted that you said on the call we had that you did not seek to have any governance over or control of Team New Zealand or the Event, or to change the way that we operate. However, the funding diagram that you have provided (attached) and our initial read of the IRD ruling application suggests something quite different ...".
The letter also said some of the potential contestants in AC37 were already becoming agitated by the lack of a venue announcement so far: "Any delays could jeopardise the participation of other competitors and the viability of AC37 cycle as planned and agreed with the Challenger of Record ... We don't agree with your view as expressed to me in our only conversation that 'the perfect number [of challengers] is two or one'."
