"You Can't Always Get What You Want"
The Rolling Stones must have been singing about the America's Cup. Opinions are flying about what the Royal New Zealand Yacht Squadron and the Circolo della Vela Sicilia should put into the protocol for the 36th defense. It's easy to say, "We should go back to monohulls," or "There should be strict nationality rules for the crew," or "Yacht clubs should be in charge, like the Deed of Gift says," or "We need to keep the great LiveLine graphics." But it's a lot harder to come up with a complete Protocol, since some apparent desiderata are mutually exclusive. And there is the small matter of how to fund the event.
What's the Objective?
Before diving into details, let's think about what we want to achieve.
- Do we want to build the America's Cup into a profitable sports entertainment business?
- Should we return to a "traditional" America's Cup? What does "traditional" mean? The traditions of the Herreshoff era, with tycoon-funded American yachts with a Scottish skipper and a crew of Scandinavian fishermen? Or the traditions of the 12m era, sailed in the smallest yachts ever, until the AC Class catamarans of 2017? Or the traditions of the 1930's with huge, elegant J Class yachts helmed by their owners?
From the Royal Yacht Squadron website
RYS Annual Regatta - 1851
- Monohulls or multihulls?
- The fastest boats (apparent wind always forward) or boats with downwind sails and sail changes?
- Stadium racing or racing in big waves and strong winds? (NYC ACWS or Freemantle Doctor?)
- Build a linear TV audience big enough to attract broadcast rights fees equivalent to, say, the Tour de France (about $50M)? Or use a "digital-first" strategy on a freemium model?
- Help owners build their teams into long lasting, financially valuable "sports franchise" assets? Or continue with varying mixes of patronage and sponsorship?
- Establish a permanent governing authority? Or give more authority back to yacht clubs? (What staff and funding does a yacht club need to run the America's Cup?)
- Provide visibility by defining the dates, venues and boats for multiple future editions? Or follow the Deed of Gift and have the defender and challenger issue a Protocol months after the conclusion of each Match?
- Encourage additional nations to enter? Or institute 80-100% nationality requirement for the crew?
- No racing among the teams before the Challenger Selection Series? No sailing with the Defender before the America's Cup Match?
- Frequency? Every two years? Every four years? Random, decided by the Challenger in the case of a DoG match; or by the Challenger and Defender under mutual consent?
- Branding. (OK, I have not seen any discussion of this - as a businessman it is a special interest of mine.) Stop diluting the brand by holding "America's Cup This or That." America's Cup World Series. Red Bull Youth America's Cup. America's Cup Qualifiers. America's Cup Challenger Playoffs. America's Cup Superyacht Regatta. Stop it! The America's Cup is the Match, between the Defender and the Challenger. Find other names for all those other events. Go back and look at the 1851 RYS. There was only one event called "The R.Y.S. £100 Cup." All those other events were great, but each had its own name.
What's the Revenue Model?
How much will it cost to run the event? Regatta management, security, an international media center, broadcast production, the LiveLine graphics which require helicopters and a team of engineers to operate the system - who pays for all this?
Sailing is unlikely to generate much revenue from big sources that some other sports have: TV broadcast rights and ticket sales. As with Formula 1 venues, Valencia and Bermuda paid significant venue fees. Sailing is highly dependent on sponsorship. Merchandise, licensing and commercial hospitality provide additional revenue sources. How much revenue can be generated? Will it cover the cost of producing the event? If not, who makes up the shortfall?
Will We See a New Framework Agreement?
The RNZYS did not sign the "Framework Agreement." At the time, Team New Zealand said "Emirates Team New Zealand believe the future America’s Cup format should be decided by the Defender and Challenger of Record as it has historically been."
But might RNZYS and CdVS agree to a protocol that requires additional challengers to commit themselves to conditions imposed by the defender and the challenger of record?