America's Cup: Auckland in bid for 38th America's Cup Hosting
by Richard Gladwell, Sail-World NZ 5 Mar 13:11 NZDT
Emirates Team NZ racing in the 36th America's Cup - Day 6 - March 16, 2021, Course C © Richard Gladwell / Sail-World.com / nz
Nick Hill, Tataki Auckland Unlimited Chief Executive, the Events arm of Auckland Council, has confirmed that they are part of a group bidding to hold the America's Cup in Auckland.
The statement issued on Wednesday is the first official confirmation that the hosting discussions are underway for a bid by Auckland Nad New Zealand.
"The post-event economic impact report for the 37th America’s Cup event held in Barcelona last year is extremely positive, illustrating strong return on investment," Hill said in a media statement.
"The benefits of hosting this mega-event go well beyond the obvious economic, trade, tourism, employment and social benefits for the region. As we know the whole country benefits from the opportunities to enhance and grow New Zealand’s reputation in cutting-edge marine innovation and technology, advanced manufacturing and sustainability.
"Technology that has been designed in America’s Cup racing has now been mainstreamed and used to develop hydro-foiling electric ferries, advances in car design, animation and graphics, and in numerous commercial settings; technological advances that extend well beyond expert sailing and boat building.
"On that basis, Tataki Auckland Unlimited can confirm we are talking with Emirates Team New Zealand."
Since Emirates Team New Zealand successfully defended in Barcelona, it has always been clear that any hosting bid would comprise a tripartite arrangement between local authority money, national or federal government money, and private benefactor funding.
In an interview, on the Discovery channel owned 3News, broadcaster for the 2024 America's Cup, ETNZ CEO Grant Dalton said the team was prepared to cut a deal to bring the Cup back to New Zealand.
"I always said the idea of going was to win it so that we could come back, and now we've done exactly what we said we would do, and now we're trying to come back."
The NZ Minister of Sport gave a confusing response on the TVNZ news, saying on one hand that there had not been any appoach from the team for funding, and then saying that a feasibility study was underway.
Auckland's Mayor Wayne Brown was much more positive emphasising that Auckland already had the facilities in place and that Auckland desperately needed major events. He was previously on the record commenting that these could be funded by a bed tax, which has yet to be passed by the Govt of NZ. The new tax is expected to raise $27million a year, and is self generating.
The Government coffers are the major beneficiary from any major event, picking up GST (VAT) tax of 15% on all revenue (net of expenses), plus income and company tax, while it is over to the event to fund these revenue generation exercises. The political downside for any NZ Govt is that any Event fee paid is automatically labelled as a "gift" to the America's Cup by mainstream media, who come up with any number of alternate uses for the money "given" to the America's Cup.
The incentives and tax-concessions given to movie makers to film in New Zealand, only attract mainstream media comment when they are not given, or are deemed insufficient.
Auckland is still doing it tough
The prolonged Auckland lockdowns ultimately cost the Labour-led Government the 1923 election. The current Coalition Government's dilemma is that the city has not recovered from the Lockdowns and spurning an America's Cup hosting opportunity, carries a high degre of electoral risk for a coalition which is behind in the polls.
Company liquidations are still running at record levels, with an economy that has been in recession for two years.
The other point overlooked by maintream media is that New Zealand has a $3billion a year marine industry, which is largely built on the back of almost 40 years of America's Cup participation - generating significant tax and export revenue. It is also the arrowhead of the composite engineering industry in New Zealand.
For the 2021 Cup, the Government of NZ contributed $NZ40 million, which did not cover the cost of the host broadcast. Emirates Team New Zealand, through their Events arm, America's Cup Events Ltd, raised the balance, with event sponsorship being picked up by the Italian Challenger of Record naming rights sponsor, Prada. For their unsuccessful 2024 America's Cup, the NZ Govt/Auckland Council amount was dropped to $30million in cash, and inflated to just uner $100million with so-called "added-value and non-cash" services.
The economic benefits of the 36th America's Cup in Auckland were severely impacted by the Government of NZ's decision to employ lockdowns in response to the COVID-19 pandemic. The Auckland region was in lockdown for 107 days, and New Zealand's borders only opened with free entry for all visitors in October 2022.
While the economic benefit figures released by Barcelona and the Catalonian governments are impressive, many in the City felt it was over-touristed.
Auckland has the reverse problem: tourism has still not recovered from the lockdowns, and all visitors were required to undergo a two-week stay in managed quarantine. A lottery system was in place to allocate rooms, adding $3,000 per tourist/returning person to their costs.
The broadcast model also shifted from a territorial one, with some free-to-air coverage via YouTube, to one universally available through YouTube without the usual restrictions demanded by territorial broadcasters who had paid a Rights fee.
New direction
A lot of the old thinking will have to go for a regatta in Auckland to work financially. To become economically viable, the Cup will have to become more international in its spread and type of events.
The problem facing organisers and teams as a result of the breakdown with the Challenger of Record, Royal Yacht Squadron and its racing is that time is marching on. The objective, stated in Barcelona in October 2024, for racing to start (albeit in AC40s) has passed, and there is no indication that there will be any racing in 2025 at all.
The key dates named two weeks after the conclusion of the 37th America's Cup are expected to be achieved—the Venue for AC38 will be announced within eight months of the end of the Cup—June 20, 2025—and the Protocol will be announced ahead of that date.
However, under the November 8, 2024 statement, teams are not allowed to sail America's Cup-related boats except for AC40 One Designs. That moratorium, while not legally binding, runs out on October 20, 2025. However, its dictates are expected to be reinforced in the Protocol for the 38th America's Cup. That document is expected to include restrictions on sailing days and cost reduction measures.
A key issue affecting the viability of the 38th America's Cup will be the ownership, use, and access to AC40 One Designs. These are the keys to the Cup's global expansion along the lines of F1—greatly expanding sponsor and investor exposure and venues.
While 12 teams competed in the America's Cup, Youth and Womens AC events, six of those did not own AC40s - and it remains to be seen if an expanded AC40 program is sustainable without teams owning boats.
From a New Zealand perspective, with a creative approach, it should be possible to improve on the Barcelona 2024 numbers, particularly with TV viewership and accompanying opportunities for NZ Inc. in a full-cycle America's Cup.
To date only Auckland and Rio de Janeiro have confirmed their interest in bidding for the hosting rights. However Valencia, Italy and Greece have also been mentioned as possible venues in the international media.