Grant Dalton clears misinformation to RNZYS members at AGM

Emirates Team New Zealand CEO Grant Dalton presented at the RNZYS AGM tonight and via Zoom to a large number that could not be there in person. It was a comprehensive update to members to clarify a lot of the misinformation that had been perpetuated by Jim Farmer and Mark Dunphy when looking for support of the SGM, which was subsequently pulled due to lack of support.

© @ETNZ | Carlo Borlenghi

Dalton updated the members with a thorough explanation of the financial requirements for AC37 broken up between the Event and the Team as well as clearing up what Mr Dunphy presents as “funds for a local defence now being available”, are in fact $50m short.

“Since March this year our numbers of an overall budget of $200m split between Team ($120m) and Event costs ($80m) have never changed.” Explained Dalton

“And of this total $200m budget the consistent ask of potential venues has been essentially $120m with slight variations for relative overseas costs like accommodation. To be clear categorically, it is not a process of ‘selecting the highest bidder’ as has also been mischievously circulated.”

“However, there is no wonder that RNZYS members and public have become confused because Mr Dunphy’s numbers and calculations have been somewhat fluid in their make-up. Initially Mr Dunphy made an assumption that the government would substantially increase their financial contribution to the event, but on realising that this would not occur he then disingenuously changed the costs to make them fit his narrative.

This week Mr Dunphy’s most recent angle has been that his $50m shortfall can be made up of revenue from the event, Grant Dalton explained the reality of being the Defender of the America’s Cup to the members:

“On winning the America’s Cup two things happen. You become the Defender, which carries a number of obligations on top of defending the next America’s Cup on the racecourse- including producing the Protocol and Class Rule along with the Challenger of Record, as well as staging the next event. There is no prize money for winning the America’s Cup- but you do become the Rights Holder of the event. Along with this though is an increased financial challenge and obligation by adding the cost of the event organisation to the already significant cost of mounting a defence on the water.
As has been the practice over numerous different America’s Cup campaigns, if the costs of the event have been underwritten with a venue fee, as rights holder the Defender can use any additional funds raised to help finance the costs associated with the defence by the team.”

This has been a model used numerous times in the modern era, Sir Peter Blake helped fund the team in 2000 with the event income, as was done in 2003 by Team New Zealand. Furthermore, one of Mr Dunphy’s own associates, Hamish Ross, would know very well from his time as legal counsel at Alinghi in 2007 in Valencia as they also produced a surplus on the event organisation.
Therefore, there is not any ‘additional revenue’ as Mr Dunphy is assuming. All funds raised are used either for the event or the team which are already included in the $200m budget.”

The point Mr Dunphy surprisingly, or intentionally, misses is that once the event is underwritten, surplus revenue is needed to help to make up the $80m that ETNZ has committed to raise for the team towards the total $200m.
Therefore, the significant $50m shortfall in his proposed budget remains.

© Emirates Team New Zealand

Dalton continued; “So yes, having the event in Auckland with a $50m shortfall in the budget, you can bet your bottom dollar ETNZ will inevitably lose and this will lead to its demise when up against the budgets and strength of teams like Alinghi, INEOS Britannia, Luna Rossa and American Magic. This is in fact a hard reality that Dunphy & Farmer have spun into a ‘threat’ via their aggressive PR campaign.

In a further display by Mr Dunphy and Mr Farmers selective understanding of the costs and influences of the AC37 event in saying flippantly as part of their PR campaign ‘we did it for AC36 in Auckland so why can’t we do it again,’ they again omit two very obvious points: COVID19- and the effect that has had on the global sponsorship market and the contribution COR36 made to the costs of AC36.

To provide relevant context, it should be noted that the AC37 event budget of $80m is already considerably less (almost half) than what was spent in total for AC36 when you also consider the contribution that COR36 made to the event. The AC36 Event Report clearly quotes COR36: ‘Prada and COR invested over $150 million NZD in the 36th America’s Cup, a significant percentage of which went into the on-water and on-land operations and the Race Village…’ This obviously was in addition to the $45m that ACE also put towards the event, $40m of which was the NZ Government Event Fee which was spent exclusively on the event costs. A vital make up of numbers that is seemingly conveniently neglected in Dunphy’s calculations.

“Our experience in AC36 proved that the model of a separately managed Challenger Selection Series is not fit for purpose and the AC37 Protocol specifies there is a single Event Authority for all AC37 events as there was in Valencia, San Francisco and Bermuda. Afterall, we also have the Challenger Selection Series, preliminary regattas, Women’s America’s Cup, Youth America’s Cup and the Match itself.”

Grant Dalton concluded: “Dunphy, Farmer and Ross have clearly invested a considerable amount of time, money and energy in their PR campaign and have been exploring every avenue available to disrupt the team, the RNZYS and the venue selection process by whatever means possible. For some time we have been well aware of some of the lengths they have gone to and their extreme objectives both here and off shore. It is for these reasons that ETNZ will never have any relationship with Mr Dunphy or his associates even if he were to magically find the missing $50m needed to meet the full and actual costs of hosting the event and successfully Defending AC37.