Monday, March 24, 2008

You’re so Vain”…..and you know who you are. (redux)

You’re both so vain, you’ll probably think this story is about you, and unfortunately you are right. The old adage holds true that two wrongs don’t make a right.So here we are with an apocalyptical nightmare America’s Cup scenario that appears to be deadlocked in an insurmountable ego driven bypass.On one hand, there is Alinghi President Ernesto Bertarelli, whose team defended the America’s Cup last summer for the Society Nautique de Geneva (SNG) and who is trying to force his vision forward by usurping, for the most part, the mutual consent provision of a new protocol for the 33rd running of the world’s most prestigious yacht race.
On the other hand is Larry Ellison, the founder and chairman of Oracle. His racing team BMW Oracle had perhaps the fastest AC Class Version 5 boat in Valencia, Spain, but was virtually swept away in five of 6 races against Luna Rosa from Italy. Ellison’s team represented the Golden Gate Yacht Club and was the Challenger of Record, until they were eliminated.After Alinghi defended the ‘Cup in seven exciting races in probably the best America’s Cup ever, they brought in a challenger of record (COR)from Spain to sign off on Bertarelli’s vision for the next America’s Cup.
Unfortunately, the new club had not fulfilled its minimum obligations to qualify as pro bono COR.According to the strict terms of the Deed of Gift, which governs the rules, by which the America’s Cup can be challenged for the COR has had to have conducted an annual regatta and had to have been an established yacht club from a proprietary standpoint. This differs from merely being able to challenge for the ‘Cup. The COR is held to a higher standard.BMW Oracle objected to the new protocol for the next race and submitted a challenge for the America’s Cup to the SNG.
When the challenge was rejected, the GGYC filed suit in the New York Supreme Court, to invalidate the Spanish challenge. The court is bound by the Deed to arbitrate all disputes relating to the America’s Cup Trophy, which is held as a charitable trust by the State of New York.On November 27th, the Honorable Judge Herman Cahn ruled in favor of the Golden Gate Yacht Club (GGYC) and declared them to be the true challenger of record. Alinghi and SNG are now challenging(not as yet appealing) the ruling and those arguments will be heard in court on January 14th, before Judge Cahn orders his decision.
Prior to that, BMW Oracle submitted nine amendments to the protocol and has support of most of the other seven challengers at this point. By in large, Bertarelli’s original vision for the protocol of the 33rd America’s Cup remains intact.There is agreement on the new 90 ft. AC boat, the defenders are allowed to sail in the regatta; the dates, venue are unchanged and other than egos, the remaining point of contention would appear to be the 2 boat issue.
In spite of Alinghi’s contention, this has little to do with sour grapes on Ellison’s part and more to do that many on his team are very well versed and rehearsed on rules that regulate the America’s Cup.In order to keep costs under control, Bertarelli wants to limit construction of the new ‘Cup class and the inherent expense escalator of 2 boat testing. BMW Oracle has countered with crew limitations and a moratorium on when the yachts can sail against each other. But, Bertarelli has so far refused to compromise and here we are.
Controlling costs is a noble pursuit, but the America’s Cup is the grand dame of all the balls and should differ from the atypical American professional sports leagues, where ownership has had to embrace a socialistic manifesto to keep the lesser franchises afloat. If it is imperative to have the lesser funded teams from countries like Britain, South Africa and China onboard, then institute a hard line “salary” cap to keep the billionaires in check.During the 32nd America’s Cup the speed gap between the top and bottom had narrowed to the point, that a majority of the teams were very competitive.
The problem with the ‘Version 5” was that the high tech design teams were spending millions for milliseconds and now the rule makers have, hence forth regulated a very competitive America’s Cup Class boat into extinction.In this impasse the devil is not in the details, it largely involves the party’s inability to negotiate and compromise. No, Washington DC has not challenged for the ‘Cup of late, but it seems like the air and attitude of our nation’s capital has rubbed off on the Auld Mug. Parlay, anyone?

Wednesday, March 19, 2008

History of the America's Cup (Brief)

A Brief History of the America’s Cup.

The original contest for the One Hundred Guinea Cup took place off England's Isle of Wight in 1851. The contest was won by the yacht America, against 18 British challengers. Aboard, was Commodore John Cox Stevens, who later presented the trophy to the New York Yacht Club in 1857.America dominated the event to such an extent, that Queen Victoria was said to ask, "Who's in second?” In which she was told, "You’re Majesty, there is no second!"The first race for the “America's Cup” was in 1870 off of Staten Island, in New York as the schooner Magic won a fleet race against the British challenger Cambria. In an act of conveyance, the original members of the America syndicate, placed the ‘Cup in a charitable trust as a perpetual challenger’s trophy.

The deed of gift, which is the bylaw that governs the race, was amended by the last surviving member George Schuyler in 1887. The defense of the “Auld Mug” for the most part, takes place every few years. It attracted such luminaries as legendary yacht designer Nathanial Herreshoff, Captain Charles Barr and tea baron Sir Thomas Lipton.

The NYYC moved the regatta to the exclusive resort community of Newport, Rhode Island in 1930. The America’s Cup was graced in the 1930’s by the magnificent J-boat class. Led by railroad and banking blueblood Harold Vanderbilt, he matched up victoriously against the aeronautical wizard T.O.M. Sopwith, from over the pond in England.

After World War ll, the races were revived in 1958 with the 12-Meter Class boat. These 60 ft. yachts provided challenging matches in Newport's moderate and shifty wind conditions. Throughout the next three decades, the NYYC conducted defense trials served up most of the drama, with CNN cable mogul Ted Turner, France’s Baron Marcel Bich (the Bic pen) and avid fan Walter Cronkite providing most of the star power.That was until 1983, when the controversial winged keel yacht Australia 2, won the America’s Cup in the best of seven races over Dennis Conner's Liberty. The men from the land “downunder" unbolted the trophy and took it back to the picturesque fishing port of Fremantle, Western Australia, to defend it against all comers.In one of the greatest sports comebacks of all time Conner, challenging under the burgee of the San Diego Yacht Club went down to Australia in 1987 and brought the 'Cup back to America, crushing the Australian yacht Kookaburra in the process 4 to 0.

Enter New Zealand, who through the efforts of banker Michael Fay was able to challenge for the "Cup in 1988 by forcing the SDYC to run the races under a strict interpretation of the original race rules. Again, Dennis Conner countered with a brilliant defense, this time in a fixed wing-sail catamaran.The America's Cup recycles its event about every 4 years or so. It has changed hands several times between America, New Zealand and now, Switzerland. The Swiss yacht Alinghi, representing the Geneva Yacht Squadron won the ‘Cup in 2003. The team defended it this past year in Valencia, Spain, against many challengers from all over the globe, including teams from South Africa and China.

Since Fay's surprise challenge, the Deed has generally been usurped of its authoritative grip on the rules by mutual agreement provisions called the America's Cup Protocol. The protocol's enabling resolutions allow the Challenger of Record to establish the rules and regatta format to determine who will challenge the defending boat for the America's Cup.The matches feature the yachts sailing against each other on a windward/leeward course, approximately twenty miles in length. A series of elimination round robins, between all the challengers race for the Louis Vuitton Cup. Each round is worth more points than the last, and the highest scoring two yachts face off against each other to determine who race the defender for the America’s Cup. The Italian fashion design store Louis Vuitton has sponsored the challenger trials since 1970.

Copyright Mark Reid 2007

Crossing my "t"s and dotting my "i"s.

The latest verdict is out from Judge Cahn, so I like many of you will do diligence on all of the details before commenting. See you Friday!

From Alinghi

In response to New York Supreme Court Justice Herman Cahn’s order today designating Golden Gate Yacht Club (GGYC) as America’s Cup Challenger of Record replacing Club Náutico Español de Vela (CNEV), lead counsel for the defending yacht club, Société Nautique de Genève (SNG), Lucien Masmejan, issued the following statement:
"Following today’s court order, Larry Ellison has eliminated the competition and gained access to the America's Cup Match, a feat BMW Oracle Racing has never been able to achieve on the water. While we are disappointed with the outcome of this court order and believe that the matter of GGYC's certificate of challenge wasn’t properly addressed, we have decided not to appeal the decision and we look forward to getting the fight back on the water and meeting BMW Oracle Racing on the start line of a Deed of Gift Match in July 2009," Masmejan said.
Should Alinghi win the Deed of Gift Match, the Defender is committed to getting the America’s Cup back on track for a world class multi-challenge event in 2011 in Valencia, Spain. "The challengers can be assured that the 34th America’s Cup will be run with the same vision and commitment for a premiere multi-challenge sailing event that they supported in Valencia in 2007," Masmejan concluded.

From BMW Oracle

Court Order Confirms GGYC Challenge

Justice Herman Cahn of the New York State Supreme Court today issued an order confirming the validity of Golden Gate Yacht Club’s challenge for the 33rd America’s Cup and rejected a late-stage bid by the defender to re-argue the court’s earlier ruling in GGYC’s favor.
"We are very pleased with this decision. The Court has ruled that our challenge complied fully with the Cup’s Deed of Gift, and we are now keen to keep moving forward towards the next regatta," Tom Ehman, the club’s spokesman said.
In its order today the Court reconfirmed its November 27 decision that GGYC was the valid challenger for the Cup.
The defender, Societe Nautique de Geneve (SNG), had filed a motion to re-argue that decision based on a new claim that the American club’s challenge was invalid under the Deed, but this was rejected by the court.
A Deed of Gift match is being held as the defender made it clear it did not wish to take up GGYC’s offers made before and after the court’s ruling in November of a conventional regatta with rules agreed by mutual consent and involving all teams.

Saturday, March 8, 2008

It is always the darkest before the dawn.

Again as we all wait for Judge Cahn to rule, tensions are not easing up on any front. Hopefully, when the New York Supreme Court does rule it will be decisive,not devisive. A forceful ruling from the court should bring all the parties back to the table for an amicable solution, but in the meantime; it is always the darkest before the dawn.

Below is a sampling of the latest infighting.....


From Team Alinghi

Statement from Lucien Masmejan, Alinghi legal counsel, following Emirates Team New Zealand legal action lodged today in New York:
"We are disappointed to learn of this legal action by Emirates Team New Zealand, given their previous public acceptance and commitment to the competition.
These actions are totally without merit, wildly miss the target and will be defended rigorously. We share the sailing community’s frustration in the delays affecting the America’s Cup but Alinghi, as trustee, is duty bound to defend its position in the current legal action and to preserve the integrity of the America’s Cup.
We have repeatedly made it clear that Alinghi welcomes a swift court resolution and wants to get the action back on the water as soon as possible."


From Emirates Team New Zealand

ETNZ seeks compensation for America’s Cup delay
07/03/08
Emirates Team New Zealand is seeking financial compensation for the delay in holding the next America’s Cup.Managing director Grant Dalton said today: “We have a duty to protect the investment in the team over many years by a wide range of loyal supporters. “We also have an obligation to honour the trust shown by the hundreds of thousands of New Zealanders who have supported the team through the years.“We have to ensure that when the next America’s Cup is held, Emirates Team New Zealand is still in very good shape and ready for the battle on the water.”Dalton said today the 33rd America’s Cup was to have been held at Valencia in 2009. “It’s now probable we might not see a normal regatta until 2011.”“The delay in staging the next America’s Cup is harming every challenging syndicate as they have to stretch budgets for a two-year campaign over three or perhaps four years.”He said the team had been working towards a challenge in 2009 when AC Management announced in November that the 33rd America’s Cup was to be delayed to a date to be decided. “By then we had already done an enormous amount of work on the design of the new 90ft AC class boat. Design work is continuing, although with less urgency.”He said the sailing team planned to stay sharp this year and had put together a comprehensive programme for 2008, with team members competing in a number of European regattas.“ETNZ is fortunate in having the full support of sponsors, the New Zealand Government and team members. However the delay does come at a price and it seems prudent for the team to seek financial compensation.“We are seeking compensation through American Courts from Alinghi, AC Management which is controlled by Ernesto Bertarelli and the defending yacht club, Société Nautique de Genève.“We are doing this reluctantly but have no option,” Dalton said. “We would rather be racing.”The first action, filed in the Supreme Court of the State of New York, claims damages for breach of contract arising from an agreement made as a pre-condition of ETNZ’s entry to the 33rd America’s Cup.The agreement involved an understanding entered into by Ernesto Bertarelli that the America’s Cup would go ahead in 2009.“That assurance was a pre-condition of our entry on July 25,” Dalton said. “Then on November 22 last year, before the Supreme Court of New York had even issued judgment on Golden Gate Yacht Club’s challenge to the validity of the Spanish challenge, AC Management, announced that the Cup would be delayed. “Bertarelli had the chance to accept a reasonable proposal from Oracle, which was also signed by the majority of the challengers, and which would have allowed the America’s Cup to be held in 2009. He would not do so.” The action also claims that SNG, as trustee of the Cup, through the actions of the other defendants has committed breaches of its fiduciary duties that trustees owe to maintain the standing and integrity of the Cup.The second action has been filed in the Federal Court under United States anti-trust legislation, which is conceptually similar to New Zealand competition law.ETNZ contends that Alinghi and the other defendants, abusing the power conferred to the defender under the Deed of Gift, has acted to stifle competition for the Cup and for the right that goes with it of conducting future events by accepting the Spanish CNEV (a paper yacht club of no substance) as the challenger of record, thereby enabling it to impose rules for the next event that were completely one-sided and which were designed to give Alinghi an unfair competitive advantage. ETNZ also contends that Alinghi’s subsequent conduct in refusing to agree to a reasonable settlement of the BMW Oracle case, the unilateral and indefinite delaying of the Event from 2009 was all designed to and had the effect of increasing other teams’ costs, including those of ETNZ. “It seems prudent to seek compensation to cover additional campaign costs and damage to our brand name and reputation and to the event in which we compete, the standing of which affects our ability to raise funds,” Dalton said.He said the actions were being funded by sources other than sponsors and the New Zealand Government.

Tuesday, March 4, 2008

America's Cup

While we wait and wait and wait. Here we are in March and the yachting community is still waiting for Judge Cahn to bind his court order from November. It is difficult to believe that he his really buying into all of Alinghi's subterfuge about whether or not BMW-USA is a multihull or not.
I guess its true; lawyers love lawyers, or better yet, they love to listen to lawyers. If judges didn't love to listen to lawyers, they would probably have no one to listen to, but us; "the affected".
It seems unbelievable that we are in the 3rd month of a new year, with no decision. Of course, when it does come in, it will undoubtedly be appealed....6 more months.
Hear this. Honorable Judge Cahn. Its time!