Clever Money

On face value, when we considered and debated the venues that vied for the next America’s Cup, naturally we all looked at infrastructure, prevailing wind conditions, sea states, local hotel accommodation, politics, restaurants, international travel access, media facilities, base infrastructure and whether the family would be happy to spend a month on the beach whilst we all watched boats. We barely looked at the money in any detail. It’s not our fault. Us sailors are simple fellows united by a common interest and let’s face it, high finance is for those at school that we paid little interest in.

But for Barcelona to come out as top trump in an elite pile of tax efficient bidders, you have to look at the favourable tax laws that allow for quite simply huge write-offs against corporation tax for those companies with a big enough balance sheet to make meaningful contributions to support having the event in the Catalonian capital.

Now that’s not to say that the same doesn’t exist in Malaga, the designated reserve venue, or that Cork wouldn’t have had the financial engineering (remember Facebook is domiciled globally for tax reasons in Dublin). Jeddah is a different story, a coming-place with an in-built structure for supporting sports aligned to the Dubai 2030 vision of Mohammed bin Salman. But the key to the Barcelona success is the corralling and harnessing of corporate Spain (and that includes a whole host of multi-nationals that operate in the country) under the umbrella of the Barcelona 2040 vision and within the Barcelona & Partners non-profit organisation. It’s clever. Really clever money.

KOS Picture Source /

Do a quick search and you’ll find reams on this. Headline click-bait that purports, but is true, that firms can save up to 90% corporate tax on the sponsor amount gives Spanish companies a huge lever to play with and as the organisers approach corporations operating in the City they come with a big carrot. But critical to this bid was getting an agreement cast in stone, legally watertight and aligning the various entities into a cohesive unit. Spanish politics can turn on a sixpence so the key was the signature of the Catalan Government body, unlocking immediate downpayment within 30 days, and then the hard work begins.

What we will see now is a whole host of big name sponsors lining up to not only align themselves with the America’s Cup but to also reap the benefits of what 10 cents in the euro buys them. It’s genius and it’s so obvious. Barcelona will get the tourism, the profile, the superyachts (all along that coast the Qatari’s own the superyacht harbours), the political goodwill and an invigoration of their young population to a dynamic sport. Meanwhile, with the Cup so far down the technology route in terms of profile, they get an A1 opportunity to showcase Barcelona as a tech capital of the world. And corporate Catalonia will love it. As I say, it’s a clever deal all round.

When you look at the New Zealand bid in the cold light of day, it really couldn’t compete, sad as that may sound. And for those hoping for a last minute reprieve, sorry it isn’t happening. Period. Change the narrative. It’s very dated thinking. The most positive thing that the New Zealand government and local councils can look at, if they truly want to bring the Cup back to the Hauraki Gulf, is to see what the Spanish and Irish bids tabled, how they financially engineered it, and take some clues for how to fund sports from the tax regime. Grant Dalton is on record as saying that they needed to ‘burn the village to save it’ and although that sounds harsh, he’s right.

All throughout the process, the focus got lost on the billionaires and millionaires when the answer was far more obvious. Create a favourable tax regime and the dollars flow. The government looks clever. The corporates are clever. And everyone wins. This is the model of sports sponsorship – like it or hate it – in the free world. The old chicken feed and in-kind package doesn’t cut it at the top table of elite sport any longer and I wonder whether it every really did.

©America’s Cup

But what about Jeddah? Well that’s a different prospect where the chump change, in relative terms, is sourced from the State so long as it conforms to the 2030 vision and fits into the pillars they’ve decided – motor sport, e-sport, horse-racing, soccer, watersports etc… The America’s Cup fitted neatly in and it was very, very close to happening. Closer than many in our sport would like to countenance or believe. The activation was going to be huge. Boots on the ground and diggers were 48 hours from going in until Dalton made the Barcelona call. They will have an AC40 event there – so too at Cork and Malaga – and the youthful population of the Kingdom will be entertained and turned on to sailing both in the AC40s and the SailGP circuit. Sailing would be myopic and left behind if it didn’t.

Barcelona though will be spectacular. It’s one of the truly great cities of the world with one of the ugliest cathedrals on the planet (Lord, strike me down) but the most beautiful people who will throw a warm embrace around the America’s Cup and buy it in its entirety. The teams and especially the actual sailors are already well-versed in this Catalonian jewel and it’ll be a celebration of youth, diversity, the elite and the hopeful coming together for something incredibly special in a very short order. 2024 is just around the corner. Strap yourself in for a heck of a ride.

©ACE / Studio Borlenghi

And what of the boats themselves? Well the designers will be looking at the lower wind ranges of 6-15 knots in September and October so can we anticipate boats of the Stradivarius variety coming into play? Not so according to one team boss I spoke to. The devil is going to be in the detail and the efficient harnessing of power.

The new closed loop onboard systems will certainly be more efficient with the generated energy – no more squeals and squeaks from the traveller – but the reduction in crew numbers will still make the AC75s monsters to sail. The real advantage that Team New Zealand has is in the fine tuning of the massive forces available up top and you can be absolutely sure that the mechatronics teams will be in high demand. Formula 1 is right in play here and whether the resources can truly be ring-fenced within Mercedes and Red Bull (Ferrari perhaps?) to make a difference will decide the winners in the Challengers from the also rans.

©Alinghi Red Bull Racing

And then you have the show-stealers…this America’s Cup will be a celebration of youth and female talent and when we look back in summary, yes we’ll celebrate another probable Kiwi win, perhaps a USA victory or a fabulous steal from a European team, but the legacy will be a whole new pathway for our sport.

With a degree of accuracy we will be able, just like in motor-sports, to far more easily see the stars of tomorrow and my goodness they are going to be good. Personally I’m doubling-down on my interest in seeing tomorrow’s stars thrust into the AC40 spotlight. Hitherto it’s been a case of trailing the dinghy parks of the Olympic dreamers. Now it’s the AC40 circuit (and SailGP let’s not forget) that light the runway forward for tomorrow’s sensations. It’s electric. I can’t wait for the first launch.

The 1983 America’s Cup changed the world. The 1987 Cup took it global. Since then it’s been on the wane, slowly I’ll admit, but now it’s turbo-charged. Change is uncomfortable. Change is unpleasant. Change is unwelcome. But embrace the change because it’s brilliant and it’s necessary.

The 2024 America’s Cup will be the watershed for sailing. Mark my words.

13 thoughts on “Clever Money

  1. In a world of rising and debilitating inequality, generous tax breaks for billionaire yachties may not play well in every jurisdiction. The AC under delivered for SF, where we rightfully don’t subsidize sports arenas, and so the billionaire left the bay area where he made his fortune.


      1. Insofar as those corporate tax breaks benefit the team owners, however indirectly, doesn’t it have the same effect? In any event, I think you get my point. I’m of the view that sporting events should be viable on their own. Very few Olympics have justified the local financial support given them. Studies in the USA show that tax breaks for arenas have been a losing proposition to taxpayers. That said, the Barcelona Olympics was a winner for the city and it’s residents. Let’s hope same results apply for the Cup.

        Liked by 1 person

  2. Mouthwatering prospect for AC2024 to be hosted in one of Europe’s greatest and most characterful cities. Fantastic for sailing fans. But as you have rightly written about frequently over the past year, Magnus, the financing and politics behind these venue deliberations is a far more opaque matter. Bluntly that’s an entirely different sport! Possibly one to revel in a little less. Spain has the second worse unemployment rate in Europe currently; I’m sure many unemployed Spanish youngsters would prefer their government to invest in job creation rather than tax breaks for their big corporates to support a UHNW regatta.


  3. You know, Alinghi still *can’t* host at home even if they win and they want to get back in everyone’s good graces… what if *they* win and choose Auckland as their venue?


      1. Every other challenger went around handwringing saying they hoped it would be Auckland for a year, but none of them were willing to offer a penny to make their hopes a reality. Dreams don’t work unless you do, guys!


  4. Hi Magnus, while the media here in New Zealand do their darndest to drag all the nay-sayers in front of the camera to declare Team New Zealand traitors, I have just been handed a great ‘excuse’ to plan tat extended ‘working’-holiday in Spain (not sure yet if I can make it tax-deductible though….). Bring it on!


    1. That’s the spirit…Team New Zealand are ANYTHING but traitors. All-out winning machine more like and absolutely the benchmark for America’s Cup sailing. Almost impossible to beat whether it’s Timbuktu, the Hauraki Gulf of 100 yards off the beach in Barcelona….


      1. Yes, they are not traitors, and really all we can do now is doff our caps and enjoy the circus. Dalton probably has achieved a mighty something we will never understand given the powerful interests that have been circling. Barca will be a great venue and paradoxically easier for we-the-kiwis to win away from home.


  5. And keep in mind that the races here were sailed later in the afternoon just as the sea-breeze began to fade, to fit in with the northern hemisphere. It will be good to have races sailed at the correct time of the day.


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