America's Cup: Legal action becoming a more likely prospect in power struggle
Amid all the harsh words raining down on Emirates Team New Zealand and the threats from challengers to withdraw, direct and tacit, it is possible to see the hand of Alinghi boss, Swiss billionaire Ernesto Bertarelli, shuffling the America's Cup deck.
There is talk in sailing circles
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Auckland's unsuccessful five-month bid to secure the hosting rights for the 2027 America's Cup appears to have been doomed almost before negotiations started with the Government. Documents released to Newsroom show that Auckland Mayor Wayne Brown's insistence that the Government allow his council to bring in a hotel bed levy as a funding source, was an early and significant hurdle. The Government had already refused the bed levy request, and Auckland's failure to have any other way of co-funding the event was highlighted repeatedly in advice to Cabinet ministers from the Ministry of Business, Innovation and Employment (MBIE). The city's hopes to stage the 38th cup regatta were extinguished on April 1, when Auckland Council's culture and economic agency announced the Government had declined to co-fund it. Following the failure to strike a deal with Auckland and the Government for 2027, the cup defender sold the hosting rights to the Italian port city of Naples. 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Unusually, Dalton began talking about what a post-Barcelona future might look like, even before the team had secured the Auld Mug in late 2024. At first, Auckland didn't seem to be a part of it. 'Whether New Zealand could host the (next) Cup would be for politicians to decide and make a bid, rather than the team actively seeking a deal,' he told Stuff in a September interview. But on October 27 more than a week after victory, Dalton told this writer, in Barcelona, that confidential talks were underway to explore a joint public-private sector hosting bid in Auckland. 'We are completely genuine in terms of – if we can get this (event) home, we will,' he said. Two days later, inside Auckland Council's culture and economy agency, that work began under a code name. 'We will refer to it from now on as the 'Special Project' or SPWG, rather than the America's Cup,' wrote Tataki's head of major events Michelle Hooper to a chosen group of 10 agency staff on October 29. 'There is stiff competition from other cities to host this event, so we need to move swiftly and with focus to pull together a winning bid to present to Team New Zealand,' Hooper wrote. Tataki Auckland Unlimited (TAU) met in person with Dalton and his chief operating officer Kevin Shoebridge a month later. Notes prepared by TAU have all dollar references redacted, but noted 'there is potential private sector funding interest from a consortium of wealthy benefactors to the tune of (blacked out).' 'This sum could be doubled with the right structure, support and campaign, based on discussions with the representative of this group,' said TAU. Newsroom understands the hope was that private backers could provide as much as half of the media-reported hosting sum of $150 million. Barcelona's late and successful hosting bid for the 2024 cup was made possible only when wealthy individuals in just 15 days agreed to underwrite $44.8 million of revenue, kickstarting the formal bid. TAU provided 'high-level' information to MBIE in November and more detail in December, outlining the case for hosting, and some of the key elements in a bid. All the infrastructure was already in place in Auckland, said the local officials, following the investment made for the 2021 Cup, creating space for bases and public viewing. A total of $348.4m of ratepayer and taxpayer money went into permanent infrastructure on Auckland's waterfront, and event-running costs. A TAU briefing prepared for Cabinet ministers in December 2024 doesn't reveal the hosting fee sought by Team New Zealand, but Newsroom understands it was around $40m. An initial cost-benefit analysis commissioned by TAU put the net benefit at up to $1.19 for Auckland, for each dollar invested, and up to $1.15 at a national level. The briefing also outlines what would soon appear to become a significant hurdle for MBIE and the Government. 'The mayor is clear that Auckland's financial contribution is dependent on the introduction of a visitor levy,' said TAU. Brown appeared to be using the cup hosting as a lever to get government approval for a nightly bed levy – something the government had already ruled out. Under Brown, Auckland Council significantly reduced ratepayer funding for major events, in the expectation the government would agree. Auckland Mayor Wayne Brown is adamant the Government allow his council to bring in a hotel bed levy as a funding source. Photo montage:Before TAU's first detailed pitch went before Cabinet ministers, MBIE's Kylie Hawker-Green wrote back to the Auckland officials to ensure she would be accurately conveying the city's stance on its funding contribution. 'I will be stating that Auckland's cash contribution is contingent on the establishment of an accommodation levy of some form being established prior to the event delivery window,' she put to TAU. She intended to tell ministers that: 'If no accommodation levy is established, Auckland Council will not be in a position to contribute a direct cash contribution to AC38.' Two days later, Hawker-Green presented a 23-page briefing to the Major Events Ministers Group, made up of eight ministers, Sport and Recreation's Chris Bishop, Melissa Lee for Economic Development, Finance Minister Nicola Willis, Foreign Affairs Minister Winston Peters, Minister for Auckland Simeon Brown, Paul Goldsmith for Arts, Culture and Heritage, Trade Minister Todd McClay, and Tourism and Hospitality's Matt Doocey. Hawker-Green outlined Auckland's dependence on a future bed levy, under a section entitled. 'Funding sources are highly speculative'. To that same meeting, TAU argued benefits that would flow into the marine and technology sectors concluding the event would 'provide Auckland and New Zealand with an unparalleled opportunity to showcase its marine and technology prowess'. 'By hosting the event, Auckland cements its position as a world-class destination for innovation, sport sustainable technologies and cultural celebration.' A potential event programme submitted to MBIE by TAU in November 2024, outlined cup events in Auckland spanning a year, from a women's and a men's regatta in February 2026, through to the challenger series and the cup itself from October 2026 to almost March 2027. The December ministerial briefing paper included MBIE's 'preliminary views' such as this fleeting reference to the upsides of hosting. 'Crown investment in an event of this significance and scale presents a strong signal of New Zealand's ability and willingness to host mega events and would catalyse direct economic activity for Auckland.' A subsequent MBIE paper from February 12, 2025, included an ominous line about that multi-minister briefing. 'Pre-Christmas engagement on the opportunity drew mixed views from the MEMG (Major Events Ministers Group). MBIE's advice to ministers in a range of papers provided to Newsroom, highlights what it saw as risks, and downsides for the Government. Auckland Mayor Wayne Brown's insistence that the city be allowed to introduce a nightly bed levy was repeatedly cited as a hurdle. 'Local government investment remains unconfirmed,' was one sub-heading on a topic MBIE officials would underline repeatedly. The other cash problem was that the undisclosed amount being sought from the Government's coffers outstripped what was available in its Major Events budget, where some money was already ring-fenced for unnamed possible events. 'The Crown would need to establish a new appropriation to provide investment in the AC38,' wrote officials in a March 4 briefing. In short, the Government had no earmarked funds available, nor had Auckland Council. On February 28, TAU lodged a formal application for Major Events funding with MBIE. Along with the formal document, the Auckland agency forwarded an email it had received from a clearly frustrated Grant Dalton. 'To date, in the four months since Emirates Team New Zealand won the America's Cup, I/we have not had any direct contact or indication at all from central government level (PM, ministers or even MBIE) if they are even interested in the America's Cup being hosted in Auckland,' Dalton wrote. 'It is of paramount importance and necessity to have a firm indication from the Government on the extent of their desire to host AC38 before this can progress any further with meaningful direction.' 'In response' noted an MBIE ministerial update on March 4, 'the Minister for Sport and Recreation (by then, Mark Mitchell) contacted Mr Dalton directly to discuss the Crown's consideration of the investment opportunity.' Dalton had wanted faster progress, and had told TAU in late 2024 that if a business case for local hosting was submitted by the end of that year, he would halt negotiations with other potential venues, until the bid process concluded. Seemingly unaware of the skeptical tone in MBIE's briefings, TAU was pressing on. On March 25 it asked the ministry to agree to a timeline in which the Government's decision on funding would be made by April 18. But by the time that email from TAU's Michelle Hooper landed in MBIE's inbox, the hosting bid was dead. A week earlier, in the MBIE briefing to the Minister of Finance, and Economic Growth, Nicola Willis, the ministry said: 'Noting ETNZ's upcoming end of April 2025 deadline, the significant risk around Auckland not having identified a funding source, and the opportunity cost of an investment of this quantum in the present economic climate, we present two options for you to consider'. Willis chose the second: 'instruct officials to cease work on the proposition now, noting risks, and advise TAU accordingly.' On February 21, four days before Hooper's last nudge to MBIE, Willis' private secretary emailed the ministry: 'The minister has signed the paper (attached), agreeing to cease work and notify TAU.' The final six-page paper from the ministry to Willis – which presumably outlines the final view on the merits of funding a cup hosting – has been withheld from Newsroom, by MBIE. Over the following week, much of the material released by MBIE to Newsroom, is about the preparation of a communications plan around the decision being announced. On March 27, MBIE's chief executive Carolyn Tremain broke the news to TAU's chief executive Nick Hill in a phone call, who then told Dalton. The formal letter from the Government came the following day. 'We acknowledge that events like the America's Cup can deliver a range of significant benefits,' wrote Tremain. 'However, Auckland Council's contribution was based on the introduction of a new 'accommodation levy' or similar funding mechanism, which is not a priority for this Government,' she wrote. 'Additionally, the investment risk would require government to identify and ring-fence new money at the expense of other funding priorities such as health and education.' In a statement publicly ending the hosting hopes, TAU's Hill wrote: 'This situation again illustrates the need for a long-term sustainable funding model in New Zealand to support major events.' A month later, further underlining Auckland's shrunken funding for major events, Hill in a memo to local politicians, informed them that an advanced bid to host the Gay Games had been strapped, and a lean funding pipeline also put at risk Lions rugby tours in 2027 and 2029, and an ICC Tour cricket World Cup in 2028. Team New Zealand continues to negotiate with challengers, to agree a protocol – a set of event and design rules – for the Naples cup regatta in 2027.
