From Larry to Ernesto

GGYC release a letter from Larry Ellison to Ernesto Bertarelli trying to find a solution to the stalemate

Friday October 24th 2008, Author: Jane Eagleson, Location: United Kingdom
The Golden Gate Yacht Club (GGYC) today released a letter sent last week from Larry Ellison to Ernesto Bertarelli proposing a framework to modernize the America’s Cup by mutual consent, reduce costs, and get the maximum number of teams back on the water for the 33rd edition as soon as possible, under fair rules similar to those that governed the highly successful event in 2007.

The letter, dated October 17th, states: “I support modernizing the Cup to the extent possible under the current Deed of Gift … [and] I think some of your re-structuring ideas have merit. But those will take time to develop and implement, and in the meantime we need to focus on solutions to get the America’s Cup back on the water as soon as possible. We also should not attempt to change 157 years of history and tradition overnight, without carefully considering all the ramifications of such changes and consulting with the important stakeholders.”

The letter reiterates GGYC’s September 23rd offer to end the legal battle over the next America’s Cup if Bertarelli’s Société Nautique de Genève (SNG) agrees to stage the 33rd America’s Cup as a conventional, multiple challenger regatta under fair rules similar to those that governed the event in 2007. Assuming Bertarelli drops such unfair conditions as insisting that the judges and other race officials be employed by an organization that he controls, Ellison states that he would support Bertarelli’s proposal to limit each team to one boat, along with “any other sensible cost cutting measures.”

The letter further says that GGYC would agree to allow the Defender to race in the Challenger Selection Series with certain limitations, would be open to a 2010 date, and would consider using the ACC V5 class one more time, with each team limited to building only one new boat. Ellison wrote: “Obviously, this would be the least expensive and fastest way of getting the maximum number of teams back in the competition.”

Ellison proposes meetings of all the Cup stakeholders to resolve boat design and other issues, and to agree by mutual consent on an appropriate date. He urges Bertarelli to “get the teams together around one table as soon as possible” and make decisions “in an open, transparent and democratic process.”

Ellison also praises the Louis Vuitton Pacific Series as an “excellent and cost effective way to get the Cup teams back on the water,” and he proposes that the LVPS format “be extended to include other similar regattas in other parts of the world, hosted by other Cup teams such as Emirates Team New Zealand is doing in Auckland.” This could lead to a full 2009-2011 calendar of world-class regattas that would benefit the entire sailing community by providing a consistent commercial return for the teams.

All Stakeholders Must Be Involved in AC33 Discussions

GGYC spokesman Tom Ehman said Ellison’s letter was sent last week, and there had been no reply. He said the letter was being released in response to this week’s announcement by Alinghi of their intention to try and push forward with AC33 with rules heavily skewed in favor of the defender.

“We remain ready and willing to reach a settlement outside of court based on rules similar to those used in the highly successful AC32,” Ehman said. “But, as Larry proposed in his letter, all key stakeholders must be involved in meaningful discussions about what AC33 is going to look like. We’re confident the Challengers as a group would be flexible on many details and could quickly reach mutual consent with the Defender. That’s the fastest and best way to end the litigation and get the America’s Cup back on course.

“It is surprising that SNG - as a trustee of the America’s Cup - would allow Alinghi and AC Management to set another entry deadline for mid-December, given that the New York courts will not rule on the pending litigation until next year. It’s time Alinghi stops trying to dictate the rules and sits down with all viable Challengers in a sincere effort to reach mutual consent on the date, format, class of yacht and other key rules.”

LARRY ELLISON LETTER:


October 17, 2008

Dear Ernesto,

It is unfortunate we did not meet as planned while I was in Trieste last week. I still hope we can meet again soon, and stand ready to do so at a mutually agreeable time and place.

As you know from our discussions in Auckland during the 2003 Cup, I support modernizing the Cup to the extent possible under the current Deed of Gift. I think we made good progress with AC32, and we can do more. And, as you know from our meeting in San Francisco two weeks ago, I think some of your re-structuring ideas have merit. But those will take time to develop and implement, and in the meantime we need to focus on solutions to get the America's Cup back on the water as soon as possible. We also should not attempt to change 157 years of history and tradition overnight, without carefully considering all the ramifications of such changes and consulting with the important stakeholders.

To follow up on our meeting in San Francisco, I want to confirm that GGYC's offer of September 23rd still stands – to end the legal battle over the next America's Cup if Société Nautique de Genève (SNG) agrees immediately to stage the 33rd edition as a conventional, multiple challenger regatta under rules similar to those that governed the event in 2007.

To be clear the filing of our appellate brief on September 29th was simply to meet the court's deadline, but we remain eager to settle this out of court.

Since our meeting we have seen reports in the press from your side proposing (assuming a conventional 33rd America's Cup regatta) that teams be limited to one boat to help cut costs. We strongly support this as well as any other sensible cost cutting measures, provided, again, that we return to fair rules such as those used in the 32nd Cup or similar.

You will say that, with only one boat per team, the Defender must be able to sail in the Challenger Selection Series. Fundamentally, we do not agree with this as there is a risk that the impact and suspense of the America's Cup Match will be diluted. To have the Defender race in the Challenger Selection Series is a radical departure from the Cup's long history and tradition and we need to be careful about making such changes.
However, to help move things along we will agree to this, as we did last December, provided (a) the points earned during the CSS against the eventual Challenger are applied to the America's Cup Match, or (b) the races involving the Defender do not score (or lose) points for any Challenger vis-à-vis the other Challengers in the CSS. Unless one of these two options was accepted, your team could influence the results of the Challenger Selection Series while being at no risk of losing. The risk would be entirely on the Challengers - an unacceptable and unfair situation.

As to the type of boat, other members of your team have been quoted in the media this past week saying you now want a smaller boat than the new AC90 - perhaps even smaller than the ACC Version 5 boats we raced in AC32.

To be fair to all parties, the boat decision must remain a mutual consent decision. It would be unfair if Alinghi were to develop another design rule (even if this process involved a few, but not all, of the other teams) because your team would gain an important head start in the design process and would be able to shape the design rule towards your team's strengths. As you know, this was one of our big objections last year. To avoid making this same mistake again, I propose that we revert to the process used so successfully for the development of the ACC rule back in 1988, which I understand involved meetings of all the Cup stakeholders to discuss and decide the Class Rule in an open, transparent and democratic process.

Alternatively, given the current situation with the financial markets, consideration should be given to using the ACC V5 class one more time, with each team limited to building only one new boat. Obviously this would be the least expensive and fastest way to get the maximum number of teams back in the competition.

As to the date of the next conventional Cup, this also should be agreed among all the teams, Challengers and Defender, by mutual consent. We would propose 2010 to get things back on track even sooner than the 2011 date we have seen floated in recent media reports by your side – unless 2010 is too soon now to allow teams, especially new or smaller teams, to get up to speed. Regardless, this can be decided by getting the teams together around one table as soon as possible.

The Louis Vuitton Pacific Series seems like an excellent and cost effective way to get the Cup teams back on the water. This format could be extended to include other similar regattas in other parts of the world, hosted by other Cup teams such as Emirates Team New Zealand is doing in Auckland. This supplied-boat format is good especially in these tough economic times, and if teams were able to bring their own mainsails and gennakers with their own branding it makes for an especially affordable way to compete while retaining much of the commercial benefits for the teams. The Cup needs a regular series of events in order to provide a consistent commercial return for the teams, and this format or similar could be the solution.

Again, I stand ready to meet with you as soon as possible, and ask you to carefully consider the proposals outlined above.

Sincerely,

Larry Ellison

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