Team New Zealand: Heroes and villains

By EUGENE BINGHAM and JAMES GARDINER

Of all the the lines uttered by Russell Coutts in the champagne-sprayed moments after Team New Zealand's victory over Prada, one is constantly thrown back in his face.

Standing at Auckland's viaduct, he proclaimed that he wanted to establish a dynasty capable of retaining the America's Cup for 25 years.

How the critics howled when he announced eight weeks later that he had switched to Ernesto Bertarelli's Swiss syndicate.

Clearly the hurt is still being felt by the national hero labelled a traitor.

After he and Brad Butterworth last weekend won the Alinghi syndicate the right to challenge their former teammates for the America's Cup, they complained that the reasons behind their departure had been misunderstood. There was, said Coutts, an untold story. But he wasn't about to tell it - yet.

Certainly, from what the Weekend Herald has been able to establish, when Coutts held the cup aloft and talked of a dynasty, he was genuinely committed to Team New Zealand.

But the vision he had was different to the old team, so different that he could not get his way.

So is Coutts, 40, really a victim of the whole nasty break-up of Team New Zealand?

You won't find much sympathy for that view at the black shed, where those who remain remember Coutts' pleas for people to stick around despite the rich deals on offer. Too many of them recall a team meeting a few weeks before Coutts and Butterworth dropped the bombshell that they were leaving.

At the Royal New Zealand Yacht Squadron's Westhaven headquarters, Coutts told his teammates to hang tough and resist rival offers while he organised a new structure and the funding for it.

Soon afterwards, at least six members of the team found out that Coutts himself was about to lead the the most dramatic and unexpected desertion of all and that, two weeks before the May 19, 2000, announcement that he and Butterworth were leaving, Coutts had tried to sign others, including Tom Schnackenberg.

The elation over the successful cup defence on March 2 proved short-lived. As soon as the parties and victory parades were over the mudslinging began.

Team New Zealand bosses said private detectives had been hired to work against them during the challenger series and the cup finals. How did Team NZ know? Well, its own private eyes found out.

American oil billionaire Bill Koch, who skippered the successful defence of the cup on America3 in 1992, wrote an article questioning the secrecy of the Team NZ finances and the legitimacy of the ostensibly charitable trust ownership of the syndicate.

The trustees and the four executives led by the late Sir Peter Blake to run the syndicate and organise the regattas angrily dismissed Koch's allegations as the scurrilous work of a rival seeking to undermine the world's best yachting team.

If that was Koch's intention, it soon became apparent the effort was unnecessary. The real war was already being waged within. The rift inside Team NZ had been reported by the Herald the day of the first cup race, February 15, 2000. Blake likened the disagreement to a "family squabble", but later said it was "absolutely untrue" that there was a rift.

Blake's agenda, to defend the cup, took priority, but "rift" was a huge understatement.

Team New Zealand, according to then member Sean Reeves, imploded. "It absolutely self destructed," he says. "It was driven by greed - everything in the cup always is."

Reeves, 41, a lawyer who says he loves Coutts and has known him all his life, was the team's rules adviser. He saw at close range what he calls the coup led by Coutts and his allies in the sailing team, Butterworth, 43, Simon Daubney, 43, and Warwick Fleury, 41.

"Coutts is a very passionate guy. He wanted to do the best for his sailing team, produce the fastest boats and have all the tools and goodies he needed to win on the water. He got seriously pissed off when he'd go to Blake and say 'I need another $800,000 for my sail programme, we need another new mast' or something like that and they'd go 'oh shit, well there's no money for that'."

What also angered Coutts was that he became aware that Blake and the other three executives were paying themselves considerably more than him or any of the other members of the team. He told Reeves he believed they were between them getting about $11 million - equivalent to a fifth of the team's total budget of about $50 million.

Another of the bones of contention was a company called Team Magic owned by Coutts, Butterworth, Daubney and Fleury. In 1999 they were warned by Blake and trust chairman Richard Green that it was not acceptable for them at that stage to use Team New Zealand as a springboard to sign financial backers for Team Magic.

Coutts was intent on both raising more money for the 2000 defence and building a new company in anticipation of taking control of the next defence.

Team Magic signed sponsors, some of them direct competitors of Team New Zealand sponsors. A current Team New Zealand member and other sources remember how much that would rile Blake who demanded they stop.

Coutts then began snubbing Team New Zealand sponsors' events.

Reeves remembers the stand-up, knock-down verbal rows that went on between the factions.

"I heard Coutts being summoned into Blake's office [one day] and Coutts slamming his fist down on the top of Blake's desk and screaming at the top of his voice 'I hate Richard Green'. Everywhere you looked it was just a battleground."

Other team sources and Green himself have confirmed that animosity. There were personality clashes, fuelled by jealousy, secrecy, rumours and misinformation.

"Russell and Brad didn't want to recognise Peter's role as head of the syndicate," Green said this week.

Coutts began demanding that Blake open the books and became obsessed with the financial structure. What he was allowed to see made him very unhappy and not knowing what was being withheld infuriated him.

Immediately after the cup victory chaos reigned. Blake had had enough and confided in some that he would like to take his family and jump on the first plane home to England.

Reeves himself was now busy working for a rival syndicate. In March and April he signed up 12 Team New Zealand members to Seattle's OneWorld.

Other syndicates were also busy waving hugely lucrative contracts, some with $1 million-plus sign-on bonuses, in front of sailors, designers and support crew.

Dean Barker, 29, was offered $1.5 million a year by OneWorld and an even larger sign-on bonus, according to Reeves.

"Team New Zealand's damn lucky to have anybody from the last defence still there," says Reeves.

In all there were 30 defections: 13 to OneWorld, 10 to Alinghi, six to Oracle and one to Victory.

The problem the team had was it was no longer a team. The transition committee, consisting of the old guard and the new, were barely talking.

When they did it was to battle over what assets and liabilities the syndicate had and what they were worth.

There were no new contracts for team members when they received their final pay at the end of March because there was no money.

The old trustees said they had an obligation to get as much money out as possible to carry out the charitable purposes set out in their trust deed. They wanted up to $20 million for the black boats, the syndicate base, intellectual property and goodwill, but the team members who were staying said that would cripple the next defence from the outset.

Coutts wanted to at least double the budget for 2003 and believed a single backer was the way to achieve it.

But contractual arrangements with the existing sponsors, the so-called "family of five" New Zealand companies were always going to make it difficult to replace them.

They had first option to back the defence and four had the right to demand repayment of their share of a $5.25 million loan should they not continue as sponsors. The loan was to cover a funding shortfall during the successful 1995 challenge in San Diego.

Coutts was unhappy. He wanted the loan written off and thought if the family of five were not prepared to put up more cash this time they should be prepared to let another major sponsor on board.

Lawyer Richard Green, chairman of the trust during the Blake administration, says Coutts and Butterworth had been privy to the agreements and contracts with the sponsors "at least a year" beforehand and should not have been surprised.

"They were fully aware of the arrangements," Green says. "Peter emphasised to them that the key to the next defence was to ensure that the sponsors were there and supportive."

Green also says that after the 1995 campaign it was the sponsors who insisted Blake stay as syndicate head, showing how firm the bond was between him and them. Blake would "walk over broken glass" for the sponsors.

In late 1999, Coutts and Butterworth approached people they wanted to install as new members of the trust, including Ralph Norris, chief executive of ASB who now heads Air New Zealand.

Norris, who became trust chairman, says there were difficult issues and "intense" discussions about the handover when the parties got together on March 15.

"Those discussions probably would have taken five weeks," says Norris. "But everything that Russell wanted was set up.

"We reached agreement with the sponsors and the former trust as to the way the transfer would take place. While Russell and Brad weren't overly enamoured with it, I believed that we had a good deal and that Russell and Brad were committed to it."

When Coutts and Butterworth went overseas in the third week of April "we had it, I thought, bolted down".

The yachtsmen, who along with Schnackenberg were to head Team NZ, had gone to the United States and Europe intent on a mix of business and pleasure.

As far as Norris knew they planned to play some golf and visit a sports marketing firm on the team's behalf. They were also due to hold talks with a businessman interested in leasing one of the 1995-generation black boats to help him kickstart a challenge.

That businessman was Ernesto Bertarelli, who had turned his family's pharmaceutical company into a $10 billion biotechnology empire.

Bertarelli, who as a boy dreamed of sailing in the America's Cup, had come to Auckland in 1999-2000 to watch the regattas. He was exploring the idea of mounting a challenge and even visited the Team NZ compound.

Coutts, in a May 2000 interview, recalled being introduced to Bertarelli by Schnackenberg. "We were one-nil up against Prada in the cup and Tom was showing him around our compound. I shook his hand but later he said I was really aggressive towards him. Like, who's this foreign guy walking around the compound?"

Bertarelli returned to Switzerland uncertain about what to do about his cup aspirations. He bumped into New Zealand's Geneva-based former cup benefactor, Sir Michael Fay, and began asking questions. The pair had lunch and Fay encouraged the 37-year-old to mount a challenge - but that was as far as his support went.

Bertarelli knew Team New Zealand was not well off and inquired about leasing or buying one of their boats.

While Bertarelli was playing squash one day, Coutts rang. Bertarelli was awe-struck. "It was like a basketball fan getting a call from Michael Jordan," he later told the New York Times. Coutts wanted to come to Switzerland to discuss a possible lease.

Quite how a discussion about the leasing of boats turned into talks about the purchasing of people is unclear.

Bertarelli has said Coutts expressed frustration at the way Team NZ was being set up, and implied that it was Coutts who made the running. Coutts has said it was Bertarelli who made the offer.

The discussions at one point revolved around whether Bertarelli would back Team NZ, although it is likely it was always Bertarelli's preference to make a clean start.

Coutts' interest in Bertarelli as a sponsor to Team NZ fitted his vision of finding a single wealthy benefactor to fund the 2003 and future campaigns rather than the family of five.

He believed that the formula would not be able to provide enough cash to mount a proper defence - a point disputed by one senior family of five figure this week.

"Team New Zealand is a national effort rather than a commercial syndicate," said the source.

"The board that Russell and Brad selected is still there and Team New Zealand has been able to raise the money to mount a valid defence. So for anyone to suggest that the team did not have a viable model ... it's just not credible."

Norris is happy with the arrangements and the structure that the defence has been built on.

In the end, the new trustees were handed the team's assets - the base, NZL57 and NZL60 - without having to pay anything, although they took on the 1995 debt from the sponsors' loan. The old trustees, led by Green, kept the proceeds of the sale and leasing of the 1995-generation boats to make charity payments under their trust deed obligations.

It is understood that the Norris-led trust had also obtained a loan personally guaranteed by some of New Zealand's richest men to give the team enough money to get through the first six months without having to lock into a deal with the family of five sponsors.

A source says that advance money was sought because Coutts did not want to have to negotiate a new deal with the sponsors from a weak position of needing money to sign sailors.

Norris says of what unfolded: "In the final analysis, the three directors [approached by Coutts] went ahead with the arrangements that were put in place and which we thought Russell and Brad had agreed to."

The sense of betrayal felt by those who worked to give Coutts what he wanted or followed his urgings to stay loyal is reciprocated by him and Butterworth.

Coutts felt let down that the people he had surrounded himself with in the new regime could not set him up in the financially flush sailing team he envisaged.

Bertarelli's $120 million certainly gave him that.

Butterworth claimed in an interview with hand-picked foreign journalists this week that he and Coutts were, in the end, "locked out of Team New Zealand", which Norris says is simply not the case.

Butterworth: "There's been a lot of lies told and it continues to go on here, which has actually been detrimental to the whole event."

Coutts is believed to have plans to set the record straight and tell the untold story after he has - he hopes - won the cup.

If nothing else, it should be clear by now that any attempt to rewrite history risks yet another backlash.

nzherald.co.nz/americascup

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