At the end of last week, Vincenzo Onorato, principal of Mascalzone Latino – the challenger of record for the America’s cup, announced that the team would withdraw from the next event citing lack of money. It’s big news, and has big implications for the confidence of sponsors looking to back the next edition of the Cup.
A statement issued yesterday confirmed that The Royal Swedish Yacht Club (Kungliga Svenska Segel Sällskapet, KSSS), represented by Artemis Racing, would become the Challenger of Record, but made no mention of the reasons for the change.
If the new deal America’s cup is going to achieve its stated aims, of creating a new sport that is commercially viable, then losing one of the architects of the product is not a good thing. If on the other hand, the America’s Cup is returning slowly to its past – where only the wealthiest individuals can compete, then it doesn’t matter – does it?
Onorato’s statement of surrender echoes the sentiments of Sir Keith mills when he shut down his TEAMORIGIN – the issue is not being short of funds to compete, but not having enough money to win. Because the America’s Cup is not your normal sporting event. There is no handicap system or one-design equipment rule. The America’s Cup, like other sports where technology is the driver rather than the athletes, can be bought.
The withdrawal of the Italian team is also not good news for the America’s Cup Event Authority (ACEA). The organisation set up to promote the cup and represent its commercial interests has already discounted entry fees heavily to try and attract teams, yet Mascalzone Latino and TEAMORIGIN have still found the price tag too steep. If this was the old America’s Cup, then that would be okay, but if wealthy sailing team owners can’t raise the funds to compete, then the new model seems broken before its started.
If the challenger of record can’t attract enough sponsorship money to be competitive, then somewhere, the benefits of being a sponsor of the next America’s Cup are not being communicated.
There is no doubt that economic conditions, especially in Europe, are harsh, but IEG predicts that sports sponsorship will increase by 6.1% in 2011. Perhaps, the new format America’s Cup is too much of a risk for sponsors who can choose to back promoters with proven track record of delivery. The America’s Cup is not just competing with big, mass market sports for fans, it is also competing for sponsorship dollars.
The loss of such a high profile team will not help others still looking for sponsorship either. Most of the announced teams are struggling to raise the budgets required and most predict that several more will drop out as the Cup moves from the little demonstration AC45 boats to the 72 foot versions. Those pitching the boardrooms for America’s Cup sponsorship will have a harder time convincing Chief Marketing Officers that this is the place to put their $20 million or $40 million or $100 million. No sponsor wants to be the brand that came last, or even worse – somewhere in the middle of the pack.
Perhaps there will be some who have a longer term vision – teams and sponsors who are happy to go around at the back this time round, hoping the rules don’t change again next time having invested in the new format.
Of course, having boats on the start-line also impacts the spectacle and the spectator engagement of the Cup. Mascalzone Latino has one of the biggest fanbases of any sailing team in the world. Not just facebook likes, but real, long term, passionate fans. These are people who would have evangelized about the cup and brought new fans to the sport. It might not be exactly the same as F1 losing Ferrari, but nevertheless, it will have an impact on the event.
With only 9 teams now publicly vying for the trophy and many of those just shells trying to desperately raise capital, the America’s Cup has only 4 or 5 brands attached to it. Louis Vuitton continue to provide support. The NZ team have Emirates, Nespresso, Toyota, Omega and the NZ government. ORACLE is there, but the money doesn’t come from the marketing budget, rather the founder’s bank account and the rest are running out of time to bankroll their campaigns.
Can the America’s Cup become a commercial viable entity? It would seem that a lot more work has to be done to convince the brands of the world to get behind the new deal cup.