Team New Zealand: The big-money reasons America’s Cup had to go offshore - Paul Lewis

With a little over six months before the America’s Cup in Barcelona, Emirates Team New Zealand’s decision to hold the 37th staging of the cup overseas now seems well and truly justified. Even more, this version of the cup seems – so far – remarkably conflict-free for an event renowned for backbiting, controversy and legal action.

It seems aeons ago (but was only 2021 and 2022) that trouble flared when it became clear Team NZ were looking overseas, sparking indignation locally and the formation of Kiwi Home Defence (KHD) – the ginger group headed by local businessman Mark Dunphy pressing the team to defend at home. It was a strange time, full of PR bluster and behind-the-scenes manoeuvring; Dunphy insisted the defence could be bankrolled here (though the money and the sponsors never materialised), with team boss Grant Dalton even more vehemently maintaining it couldn’t.

Matters came to a head when Dunphy said publicly that the $80 million needed to stage the event here would only be forthcoming if Dalton wasn’t in control of the purse strings – a statement he later withdrew. Dalton won a showdown at the OK Corral, aka the Royal NZ Yacht Squadron, by demonstrating KHD were $50m short – and that taking on the likes of Ineos Team UK and Alinghi with a $50m deficit would be the same as just handing over the cup.

Nearly two years on, all that must seem a bad dream to ETNZ. Their preparations for the cup seem to be going swimmingly for two linked reasons: sponsorship deals and a new Challenger of Record (CoR).

With the loss of New Zealand government support and money extremely hard to find after Covid, the lockdowns and the downturn, ETNZ decided on an overseas venue, reorganising their sponsorship packages. It’s been, by any measure, a resounding success.

Team NZ were originally asking venues in the running for $120m to host the event but it is understood Barcelona paid more. In addition, big sponsors have come on board, such as Estrella Damm, the Barcelona beer, which previously bankrolled ETNZ at the 2007 America’s Cup and sponsored the Valencia and 2010 events.

Sponsorship amounts are closely guarded but it’s understood many international sponsors have been paying far more than could have been expected from New Zealand companies. Spanish companies can also enjoy generous tax discounts for events of “exceptional public interest”.

It has been a far cry from fundraising in New Zealand ahead of the decision to go overseas. Dalton made the telling point that, because of Covid, Kiwi companies wanted a clawback provision in their sponsorship. If the event was cancelled for any reason, they had to pay the money back, effectively meaning the team couldn’t spend it.

The latest sponsor on board – joining existing companies like naming sponsor Emirates, Omega and Toyota – is technology expert Capgemini, official data provider for the cup. But perhaps the biggest coup has been the return of Louis Vuitton, once again the dominant force behind the Louis Vuitton Cup, the regatta that determines the eventual challenger to the cup holder. It previously sponsored the Louis Vuitton Cup from 1983 to 2021; you might say it shares DNA with the event.

That is a big reason why matters seem to have flowed smoothly thus far. In the 36th America’s Cup in Auckland, Prada were the challengers’ regatta sponsor (the Prada Cup) as well as the sponsor for Italy’s team Luna Rossa. It worked so badly, for various reasons, that Team NZ later changed the rules, essentially forbidding event sponsors to be team sponsors, effectively showing Prada the door. It was a potentially costly gamble but Louis Vuitton’s reappearance was a big win, not only financially but in terms of relationships.

Prada had come to the rescue when Oracle Team USA reneged on a deal to stage the opening round of the challengers’ regatta in Auckland. The Government immediately retracted funding promised for the event and Oracle then switched the cup to Bermuda (where the Kiwis won, leading to the 36th cup in Auckland).

ETNZ was reeling when Prada chief executive Patrizio Bertelli loaned them money, a yacht and a chase boat in return for CoR status if ETNZ won in Bermuda. Prada then simultaneously became CoR, the Prada Cup event organiser and overall event sponsor.

However, the Kiwis accused the Italians of trying to destabilise Team NZ by causing trouble (the Italians took out 17 arbitration cases against ETNZ); the Italians said the Kiwis had treated them “like enemies”.

Whatever the truth, Prada is back as sponsor of Luna Rossa (but not any part of the event) and Dalton has said the previously good relationship has been restored. The fact ETNZ are also happy with Ineos as CoR this time is also why things are going remarkably well thus far.

However, the question that will be on the lips of many is whether (assuming ETNZ retain the cup) the next defence will be in Auckland or whether the Barcelona experience has provided a model for continued overseas events.

That’s a future too distant to see clearly, although the size and readiness of the overseas sponsorships have contrasted vividly with what happened in New Zealand almost two years ago.