Firm got top deal for slot at basin

By BERNARD ORSMAN

The worldwide credit card company American Express paid next to nothing for an exclusive yacht club in the Viaduct Basin and naming rights for the America's Cup village.

The Herald understands American Express paid just $200,000 towards the $2.8 million yacht club and nothing for village naming rights valued at $2.2 million.

The deal goes some way to explain a huge cost overrun of up to $8 million at the Cup village from missed sponsorship opportunities and several projects that include:

* Spending $700,000 on a 1980s-style nightclub at the Viaduct Basin after a plan for a local franchise of the Hard Rock Cafe fell through.

* Leases on the old City Markets and the Winstone Building with a combined net loss of more than $1 million.

* Investing $2 million in the yacht club that sits empty in the Viaduct Basin waiting for a buyer.

But it was the American Express sponsorship deal that caused the biggest ruction inside the company funded by $85 million of Aucklanders' money, and led to the resignation of the village boss.

In an exclusive interview with the Herald, Rob Sutherland, the former chief executive of America's Cup Village Ltd, said he resigned 13 months ago because the American Express deal put together by the village's chairman, Lindsay Fergusson, was "commercial suicide."

"The deal did not give the village company anything. In fact, it cost the company over $5 million and yet at one stage we had a definite commitment that they would pay for the naming rights and the yacht club would not be subject to the risk the company finally took on."

Mr Fergusson, a former oil company boss who was also chairman of the company that ran the financially disastrous 1994 Whitbread race stopover, said it was not true that American Express paid next to nothing.

Asked if American Express paid nothing for naming rights to the village, Mr Fergusson said: "Not true. It's all a question of how the deal was structured.

"There was a confidential deal between the village and American Express and if Rob is discussing it he is acting completely improperly, he is being unethical and he is breaching a commercial confidence."

Mr Fergusson resigned as ACVL chairman in December last year.

It is understood that American Express started to unpick the original deal early last year after an expensive worldwide marketing drive selling memberships to the yacht club for up to $1995 bombed.

Instead of being on target for 9000 members, the initial drive resulted in fewer than 500 people signing up. Afterwards, the fee dropped to $995 and membership grew to over 3000 - still short of the 6000 break-even figure for the club.

American Express, facing a costly exposure, insisted on a new deal on its terms or it would walk away.

Mr Sutherland and Strategic Media, the company which stood to gain about $600,000 in commission for putting the original deal together, were incensed and recommended suing American Express to complete the deal. Mr Sutherland, who wanted to separate the naming rights and bring in other sponsors to broaden the yacht club membership, resigned in protest.

Shortly afterwards, the new chief executive, Ian Collinson, and Mr Fergusson, said to be worried about the sponsorship repercussions and the bad publicity that would ensue, signed the new deal with the backing of the ACVL board.

A spokesman for American Express would not divulge how much the company paid in sponsorship to ACVL.

"We invested a significant amount on marketing the project both locally and internationally, and on the sponsorship itself.

"We met all our obligations contractually. There were good levels of membership achieved. At the end of the day we were very comfortable with the outcome."

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