Racing for silverware and chasing dollars
It is easy to view the America’s Cup as simply a playground for wealthy people’s racing yachts, but in New Zealand the economic value of what lies behind the event is significant in less obvious ways, writes Todd Niall.
FOR most, the America’s Cup is a series of often-dramatic boat races in which New Zealand has a fair crack at beating the best in the world.
Sir Stephen Tindall though, sees an ecosystem of high-tech businesseswith the sport’s longest-standing competitor, Team New Zealand at the centre.
‘‘If you took away the fact that this is a sailing team, you’d have to say this is an incredibly highperforming, high-tech business,’’ said Tindall, who in his other life as an investor, backsmore than 150 local firms.
‘‘It includes a lot of artificial intelligence, machine learning, mechatronics and a high amount of research around aerodynamics and fluid dynamics.’’
Tindall backed Team New Zealand financially for its 1995 win in San Diego, and again in each campaign from 2003, becoming board chair for the successful 2017 Bermuda campaign.
The America’s Cup, uniquely in New Zealand, has two very different personas. One is simply the sporting magic which since the first New Zealand Challenge in Fremantle in 1986, has gripped fans from Kaitaia to Bluff.
The other is its direct connection to important contributors to the economy: international tourism, the marine industry, and the way it attracts wealthy investors for locals to woo.
While Covid-19 has wiped out much of the economic benefit forecast in 2017, consultants estimated Team NZ’s 2021 campaign would spend $80 million-$120m locally.
The three challengers are half the minimum foreseen in 2017, but even halving the lowest level of forecast spend suggests $30m spent locally by those teams.
Tindall’s personal investment vehicle, K1W1, has money in 150 local, mostly high-tech or environmentally focused startups, including Rocket Lab – one of the world’s most prolific space rocket builders.
‘‘There are similarities in terms of materials. We both use carbon fibre. We use it for boats, they use it for rockets, and there’s telemetry and electronics,’’ said Tindall.
‘‘There has been quite a bit of crossover in personnel between both organisations – they’ve got some of ours, we’ve got some of theirs. They needed guys to be able to build the fuselages of those rockets, and we had the experts.’’
Team NZ pioneered foils for the giant AC72 catamaran in San Francisco, and Tindall said that leap has spread into other New Zealand marine players. He’s invested in Freight Fish, that started off with diesel-engined craft that wouldmove two 40-foot containers on a foiling vessel. Then they pivoted to an electric ferry, and now believe they can produce a foiling ferry that will cross Cook Strait, ‘‘probably seven times a day, with maybe 15 vehicles and 30 people.’’
The sophistication in Team NZ’s 30-odd-strong design department has also made waves internationally, according to Tindall. ‘‘We broke a global record for the amount of data going back and forth in our artificial intelligence operations with the simulations.’’
Tindall says America’s Cup technology has flowed out into the world for decades, starting with the ‘‘plastic’’ hulled yachts of Fremantle, carbon fibre technology, foiling, and now sail design.
‘‘We have got sails with two skins, like an aeroplane wing, that create more power. You are going to see that drive sails around the world. In the marine industry alone, the expertise that’s come out of Team New Zealand will help that industry dramatically.’’
All of that, and the team’s 150 staff, are paid from budgets significantly filled with cash from long-standing overseas sponsors like the Dubai-based airline Emirates, or Japanese car marker Toyota.
Team NZ’s role as a technology leader for the marine industry has helped multinational mast and carbon fibre specialist Southern Spars fill orders for its West Auckland factory. Three teams have had their $600,000 masts built in Avondale by the plant which built Team NZ’s cup-winning Bermuda catamaran.
Southern Spars co-founder Mark Hauser said the America’s Cup had boosted staff morale, and their financial position. They had enjoyed steady business supplying additional gear as teams continued to upgrade their boats and he expects this good trend to continue over the next three months.
In terms of local business,
THauser said the boat servicing part of their business is doing well as people who would usually go away for Christmas are now staying local and spending more on boat maintenance, especially with the America’s Cup bringing more people out onto the water. he challengers’ regatta this month and February, and the Cup Match itself in March, have taken on a new economic role. The rosy economic impact of anywhere between $555m and almost $1 billion is now an historic wish.
Only three, not six to eight challengers, stepped up to tackle the radical new AC75 foiling monohull promoted by Team NZ, and the Covid-19 pandemic closed the borders to all in the America’s
Cup other than essential crew and staff.
International Cup tourism spending had been put at nearly $61m, and sponsorship including big foreign brands at a further $28m.
But in the pared-back Covid-19 world, the America’s Cup will play a different economic role.
‘‘I think it could be even more important than it was,’’ said Stuart Nash, who is both minister for tourism, and for economic development – the portfolio that pumped $40m in to support event costs.
‘‘In previous cups, when the borders were open, we had a lot of people come down and watch it. ‘‘They will watch it on TVwith family and friends, and talk about it in circles of people who wouldn’t normally come down here – [now] you’ll get a very engaged group of individuals in their home countries watching this.’’ The absence of foreign visitors will hurt the volumes of cash being banked by businesses, but the local value is now being seen in a new light.
‘‘People want to be entertained, and theywant to enjoy big experiences,’’ said Nick Hill, the chief executive of Auckland Council’s recentlymerged economic and culture agency, Auckland Unlimited.
‘‘When we came out of lockdown, we had 42,000 people at Eden Park for Super Rugby, and the Town Hall sold out for (pianist) Michael Houstoun,’’ said Hill.
The America’s Cup world series regatta in late December showed the pulling power of the event on Auckland’s waterfront. Around 65,000 people passed through the Cup ‘‘village’’ over four days, peakingwith 21,000 on the Saturday.
‘‘It will be special, it will be intense, and I think you will find Aucklanders and the rest of the country engage,’’ said Hill.
‘‘The energy, and intrigue and technology is unbelievable. The personalities ... you’ve got billionaires behind each of these challengers pulling out all the stops to win, and you can go and watch it in the middle of the harbour.’’
Wynyard Quarter’s The Conservatory bar and eatery was
‘ It was a blend of every supporter; from the Kiwis ... Italians, we’ve got the English in ... We want everyone in here because it creates a lot better atmosphere.’ TRICKY HARTLEY, WYNYARD QUARTER BAR OWNER EATERY
busy during the December racing. Owner Tricky Hartley said combined with Christmas it was hard to quantify how much the races drew in customers but new TVs and extra furniture meant they are well prepared for next week’s Prada Cup. ‘‘The fantastic thing about it, it was a blend of every supporter from the Kiwis, we had some Italians in, we’ve got the English in… We want everyone in here because it creates a lot better atmosphere.’’
He expects the Prada Cup to be a better indication of how things will go, business wise, in the March finals but expected the America’s Cup would ‘‘help us to get through the rest of the year’’.
He said it was great to see New Zealanders coming up from the South Island and other parts of the North Island for the Christmas races, and is hoping they would come again for the Prada Cup.
The broadcast pictures of racing with an Auckland city backdrop are viewed as valuable promotion to a global audience, even if no-one can jump on a plane to visit.
‘‘For the brand and recognition globally for the city, that will be even more important because of the lack of international sporting contests,’’ Hill said.
But the hoped-for investment in future travel decision-making will not help Auckland hotels, which traditionally make their hay while the summer sun shines. Five new hotels opened in late 2020 ahead of what would have been a year of mega events in Auckland from the America’s Cup through to APEC in November.
‘‘If it was a normal time, November to the end of March is peak season,’’ said Dean Humphries, the national director for hotels, at property consultants Colliers.
Yet in late December, rooms available in top hotels on the opening weekend of the Prada Cup included an executive apartment on the waterfront for $220 a night, or in the swanky Sofitel for $273.
‘‘Everyone is a little gun-shy to plan ahead. What we are seeing is a short lead-in time to book. It’s
weeks-out, not months ahead,’’ he said.
Humphries said some operators have been helped out with contracts to provide Managed Isolation and Quarantine (MIQ) rooms for incoming travellers.
MIQ now accounts for between 30 and 40 per cent of Auckland’s 10,000 hotel rooms.
‘‘Most or all contracts rolled over to March-April. It will be an interesting exercise to look back in March and see how everything has panned out,’’ said
Humphries.
‘‘Auckland has still got capacity but operators are confident they will get uptake, when the cup gets closer – quietly confident,’’ he said.
The biggest direct economic boost due to come from the America’s Cup has been significantly lost, however, with Covid-19 and the border closures turning away more than 100 superyachts, and hundreds of smaller cruising yachts.
‘‘We had a goal of 160 superyachts and had met that (with bookings) but during June to November we saw 110 boats turn around in the Pacific and
head back to Europe or the USA,’’ said Peter Busfield, the executive director of the Marine Industry Association.
Visits by superyachts and luxury overseas boats were originally estimated to be worth about $180m, nearly half of the extra spend expected in Auckland for the Cup defence.
The other loss has been the refit and maintenance work on hundreds of 10-20 metre cruising yachts that would pass through.
Busfield said about 15 superyachts had arrived under Covid-19 criteria that allow arrivals if more than $50,000 worth of engineering work is booked.
‘‘That has actually saved that sector of the industry, because many specialise in servicing the superyacht market,’’ said Busfield.
As many as 200 visiting boats which arrived the previous year have had their permits to stay in New Zealand waters extended.
‘‘Many that would have left have had work done, so that has also balanced the scales,’’ he said.
The fall-off in boat visits has also hurt marina bookings for Auckland Council’s property operator Panuku Development, which had expanded berth
numbers around the Viaduct Marina.
Panuku expected to take a $3.2m hit from 22 berth cancellations, and from both cutting rates for locals boaties and offering the return of nonrefundable bonds.Berth rates have been wound back to normal summer levels, and there are 71 confirmed bookings for 77 available berths. Two thirds of them are local boaties.
Back at Team NZ’s Viaduct Harbour base, Sir Stephen Tindall can look out at NZL60, the boat whichwon the first cup defence in Auckland in 2000.
Tindall owns the boat, in return for early backing of the team, and had it restored to join the team’s other cup-winning boats at the waterfront. NZL60’s technology is old-school now, but is part of how the America’s Cup has boosted local industry.
‘‘You create an ecosystem, and Team New Zealand is at the leading edge of what it does’’ he said.
‘‘People will go out and spinoff new businesses, or they will go and work for other employers, and bring their expertise to that table.’’
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