Postponements ashore are not always a bad thing! They give you the opportunity to catch up with the sailors and talk in length and that’s what we did in Muscat during the RC44 Oman Cup. We caught up with the creator of the RC44 class, Russell Coutts, and talked about his class, the America’s Cup and the Defender, Oracle Racing [The last part on his team isn't as long as I would have wished because the AP signal came down and the crews rushed to their boats]:
VSail.info: The seventh season of the RC44 Championship Tour has just started. Were you expecting such a longevity for the RC44 class when you created it back in 2006?
Russell Coutts: No, not really. A big part of it is probably Bertrand Favre [RC44 Class Manager] and his organization. He took over the organization in 2008 and did an extraordinary job. All the owners like him, they like dealing with him and he makes all the logistics work. It’s a good organization and he has really done that by himself. He has Hubert Detrey with him and Jo Grindley on the media side and despite being a small team they do a good job.
VSail.info: The 2013 season starts with 13 boats, a healthy number taking into consideration the difficult financial climate. Is this success solely due to the good organization?
Russell Coutts: I think that costs make it attractive. The costs are really well controlled and can beat a lot of other classes. You can go to different venues and it doesn’t cost you a fortune. The fact the boats are shipped in a container makes it a lot cheaper because it lowers the shipping but also when you get to the venue, the assembly and everything else is shared among the teams. There are economies of scale just combining all the resources. There other many small details such as the keel attachment system that allow to assemble the boat, ready to race, in a venue in two days, maximum, with a really small team. There is no fairing of the keel, no repainting, it’s quick and simple. Still, I’ll get back to the organization because I think it’s the main factor. The boat is fun to sail, particularly downwind, it’s very fun to sail and that is probably another contributing factor.
VSail.info: There are 13 boats here in Oman, which is a very healthy number, but with the exception of Ironbound’s David Murphy, all of the owners are Europeans. Do you think there is a natural limit to your geographical reach? You do visit venues in the Middle East but there isn’t any Middle Easterner or Asian owner. Do you think it’s impossible to get this kind of persons in sailing?
Russell Coutts: We did have a Japanese owner in the early days and Frank Pong from Hong Kong did a regatta too. I don’t think it’s impossible to attract Asians but most of the circuit is based in Europe and this is probably the reason why. There are quite a few owners talking about coming in. There is probably four or five talking about joining us and seriously looking at how they can enter. We will probably get a few new teams in the next few years which is great. Maybe some teams will drop out but there will be new ones coming.
VSail.info: So, it seems you see a future in the class and it is your intention to continue as long as possible.
Russell Coutts: Yes, as long as everyone is still having fun. Walk around here and talk to the owners, they are the main driver. It’s an interesting dynamic. They all have a really good time and they all seem to get along pretty well with each other, even though they want to win on the water and only one can do it at each time. They all seem to get along pretty well which is good. I think the format helps too because we go to completely different venues quite regularly and that alone mixes the fleet up. You also have the two different format, match racing and fleet racing, even if we were thinking of dropping match racing a few years ago. Now most of the owners helm their own boat in match racing and they enjoy it. Yet, I’ll get back to it again, I don’t think it’s necessarily about the boat, it’s more about the organization.
Russel Coutts and Brian Benjamin, owner of Aegir Racing during the RC44 Oman Cup. Photo copyright www.martinezstudio.es
VSail.info: Let’s now focus on another main area in the sport of sailing where you have a major role, the America’s Cup. The America’s Cup World Series will come to an end in a few months in Naples. How would you assess these two years of America’s Cup World Series? Was it a success? Was it a failure? If you take out Cascais and Plymouth, venues of the first two events, the Series didn’t visit much of the world, in fact it only went to California the US [Note: This is a factual error that slipped into my question. An America's Cup World Series event was held in Newport, Rhode Island in the summer of 2012. My apologies and my thanks to Tom Ehman, long-time reader of our website, for pointing out the error] and Italy.
Russell Coutts: I don’t think there is many people left doubting that the basic concept has got potential. Certainly the broadcasters think so. We are currently having discussions with some of the major broadcasters about doing something long term after this Cup. I can tell you, honestly and categorically, the interest was not there three years ago. It was not. If you went to some of the major broadcasters and told them “Can we discuss covering a sailing event?”, I can tell you now they were not interested. This was achieved only through the change to what you could call a more television-possible format. Before, we didn’t know the time of the races, we didn’t know whether they would last half an hour or two hours. Maybe they wouldn’t even start on time. There were lots of problems with the format. All that has changed quite dramatically and races now are shorter, more exciting, basically more television-friendly.
We have seen that in the results. Some of the critics were saying that TV ratings weren’t that good. I can tell you that ratings were damn good when you compare them to previous ratings! A 0.9 rating in the US for a World Series event, frankly, is fantastic and puts it into the top 5% of US sports.
VSail.info: Still, you haven’t been able to attract venues in big, traditional European sailing markets such as France or Spain, let alone emerging countries in the Middle East or Asia.
Russell Coutts: I don’t think that’s true. We had to be careful about the way we grew it, we had to achieve certain things in the way we grew it. You have to remember we only started this in the middle of 2011. Clearly there were a lot of things we could have done better but I would categorize all those things as refinements. It’s not about a change of concept, it’s about refining what we have done. We could produce the TV at a much lower cost and get at least the same quality, just because of the lessons we have learned. In terms of the logistics and the cost of shipping the equipment, the non-containerized items added up to something crazy, close to 60% of the overall cost, and that was a small proportion of the shipping.
We quite clearly need to format it in such a way that, for example, the turning-mark boats are containerized. The concept was right, we had the turning-mark boats that can move quickly, avoid delays for television and have spectators and guests onboard, in other words we could commercialize it. The basic concept was right but we learned a lot about the operational side that for sure, no matter who wins, will be improved. Look, I’m actually really optimistic about it. I will not name any names but if you go to the major US and European broadcasters you can have a sensible discussion about this property. I can tell you now that a lot of sailors that aren’t close to the commercial side would argue that television in Valencia was really successful. If you go and ask broadcasters they will tell you that it is not true. It just isn’t true. If they analyze their own numbers, such as of the Italian network that broadcast the 2007 Cup in Italy, they will see it isn’t true.
Getting back to your question about venues, we had a small team work on procuring venues but we weren’t ready to sell it on a large scale. We didn’t have all of the components together, we didn’t have the full commercial package. You really need to go to these venues and offer them more than a year. You need to offer them a package where they get certain commercial rights, certain TV rights and not just for one year but for multiple years. That way they can leverage it. Frankly, I think we are only at the beginning.
VSail.info: Is this also the main reason why the America’s Cup has failed to attract any major sponsors? Correct me if I’m wrong but you have announced a number suppliers with hardly any sponsors.
Russell Coutts: That’s not true. Wouldn’t you say that Louis Vuitton is a major sponsor? Don’t you think that Lexus is a major sponsor?
VSail.info: Isn’t Lexus only a supplier? They do provide the America’s Cup organization with nice luxury cars but, at least according to our sources, there isn’t much of a cash deal involved.
Russell Coutts: That’s absolutely not true and I don’t know where you heard that from. I can’t disclose the figures but I don’t think I’m breaching any agreement if I say that they are paying us sponsorship fee. That’s a significant sponsorship and there is also Charles Schwab, Kaiser Permanente and Puma. These are real brands! It’s unfair to say there isn’t any sponsorship.
Here is what it is true. There is no question that in the sponsorship market budgets are under threat, in all of these companies. The prices have come down, not only in our sport but in all sports. The numbers that were achievable prior to the crash are just not there any more. It’s pretty hard to see ANY company in Spain sponsoring such events. But there are out there companies that are still doing it. Oracle Racing is about to announce another sponsor coming up but if you look at companies like Oracle, Tag Heuer or Puma, they are big brands.
Russel Coutts wins the August 2012 ACWS event in San Francisco. Photo copyright Guilain Grenier / Oracle Team USA
VSail.info: Surely, you are absolutely right, but they sponsor the Defender, your team, and not the event, the America’s Cup Event Authority.
Russell Coutts: If you look at the entire property altogether, all the teams, you have Prada or Emirates Airlines. If you look at all the teams and the sponsors they have, for these economic times, I don’t think necessarily that it’s too bad. Of course, you always want more and I don’t think there is any sports property that doesn’t want more sponsorship money. When you think about sports in general, then revenues, when you compare them to major corporations, are not that high, even for big sports such as football. Revenues aren’t that high and controlling the costs is always a challenge and none more so than now when revenues in the sponsorship market are dropping. All of the budgets have been cut and you have to cut your costs.
VSail.info: This Louis Vuitton Cup will have just three challengers, the smallest number of participants in its 30-year history. Do you see that as a failure?
Russell Coutts: It’s definitely not ideal and for sure we would have liked more teams.
VSail.info: Is the AC72 to blame for that?
Russell Coutts: Probably. Building an AC72 costs about as much as it costs to build a VO70. Check these figures and you will actually see that I’m right. I don’t think any of us, certainly not me, recognized that the AC45 was probably good in a media sense, on television. In these tough economic times you could probably have a boat similar in scale to that and you would obviously get more teams and so forth. I’m telling you that the annual cost of an AC45 for a full season of six events is similar to that of a TP52, approximately 1.5 million euros. It’s not easy for a team to find even that money in today’s world. That’s 1.5 million euros and it just is not easy to find it.
We put a lot of cost controls. To name a few, we cut out the weather programs, we cut out the expensive team bases, we combined resources such as lifting facilities and cranes, we reduced the number of crew down to 11. We did all that but we didn’t go anywhere near far enough. I think that in hindsight, being critical of myself and our organization, we didn’t cut the costs enough. The budgets today are very, very similar, within 5%, to what they were in Valencia in 2007. The cost-cutting we did didn’t go anywhere near enough. The sponsorship dollars today are nowhere near what was available or possible in 2007. The world is different today and we needed to be much more aggressive about the model. I think the whole reason we ended up with the AC72 was that there was quite a few of us that were not confident the AC45′s would be appropriate. The America’s Cup has been raced in big boats for many, many years and a lot of us weren’t confident you could race it in smaller boats and still get the same visual impact.
VSail.info: So, when you were on the drawing board you thought the AC45 would be too small of a boat.
Russell Coutts: I thought it would look too small but anyone that was in San Francisco last year thought it was spectacular and it was a pretty good success. That was just an America’s Cup World Series so imagine if we were racing for the America’s Cup, for the trophy. The AC45 was probably enough, for this economy.
VSail.info: Does that mean that, if Oracle Racing successfully defends the America’s Cup, this is the last time we see the AC72′s racing?
Russell Coutts: I think you have to look at reducing costs, it’s obvious, no matter who wins. You can’t keep the same level of expenditure that we had in 2007 with less sponsorship money. You might like to keep them and I think we will be sitting at the end of the Cup saying “Hey, the AC72′s are actually really cool boats, fantastic, spectacular”. But we can’t afford them. It’s almost like going back to the J boat era or even before that, when they were racing even bigger boats. They were spectacular, amazing but it got to the point where even people like J.P. Morgan, Vanderbilt or Sir Thomas Lipton found them expensive. If you look at how it evolved, they went to the J boat and then to the 12 meter, a 65-foot boat. I think that no matter who wins it’s pretty obvious that you will have to bring the cost of a campaign down.
VSail.info: Do you see the America’s Cup going back to monhulls?
Russell Coutts: I don’t. Even if you had that idea, the moment you are going to talk to broadcasters they will tell you, “Let’s compare the figures from the monohulls to the figures from the multihulls.” Without broadcasters there will not be any sponsorship money, so I don’t think this will be a reality, no matter who wins this America’s Cup.
VSail.info: Couldn’t you envision a canting-keel, fast monohull? The VO70′s had interesting in-port races.
Russell Coutts: We looked at that option but you have problems with draft, you have problems with transporting it, the canting system can be really expensive and they aren’t fast enough. I think the speed of the boats makes a big difference to what conditions you can race in. You can race a high-performance multihull in light winds and on TV it still looks like a race. You can’t do that with a monohull and there isn’t much difference in the visual look of a high-performance monohull and an average monohull. They both look the same. I think that no matter who wins the America’s Cup they will come to the same conclusion.
You need a circuit. Commercially, you can’t have the America’s Cup taking place every four years and make that work. You actually need more events to have a regular circuit. Six events per year is not enough, you need to solve the logistics to have more than that. If you go to the broadcasters again and you ask for six slots they will tell you they have all the other sports. They need a regularity, they need more than six. Look at Formula 1. How many events do they have? Twenty? Still, they keep adding new ones. If you look at the economics of it, you need more regular events to improve the return for the commercial partners, improve the value for the broadcasters which in turn improves the value for everyone. I don’t think this property is different to other sports properties in that regard. We need a regular circuit to improve market awareness for the major event.
Oracle Team USA’s repaired AC72 undergoes load tests prior to her launch. San Francisco, 3 February 2013. Photo copyright Guilain Grenier / Oracle Team USA
VSail.info: Finally, let’s focus on your team, Oracle Team USA. Can you give us an update on the two AC72 boats?
Russell Coutts: The first boat has been repaired and is about to be launched. We made quite a few changes but some of those changes were planned any way. We could have probably got the boat on the water earlier but because it’s winter in San Francisco we chose to use that down time to make those changes. Boat 2 is well progressed as well and I’m actually pretty confident in our boats. I think we have a very good design and a good sailing team too.
VSail.info: In a recent post in the America’s Cup website, you stated you were “optimistic” and that you “wouldn’t trade positions with any of the other teams at this point.” From outside it seems Emirates Team New Zealand might have an advantage. They have sailed all 30 allowed days on their first AC72, they are about to launch the second boat while you had a serious setback with the crash of your first AC72.
Russell Coutts: There is no question being on the water is a good thing but this isn’t a competition to see who gets on the water first. It’s a competition to see who can design the best boat, who can build the best boat and then who can sail the best boat. There is three components to it. A lot of people say that your performance in the AC World Series doesn’t matter but I, frankly, think it does. If you win those events it shows pretty well where you are relative to the others in a sailing sense. Design-wise, honestly, I think that on paper our boats look really good or certainly in the computer are boats look pretty good. I think we have done well with our boat-building team that responded well to the capsize. We worked hard and in many ways it probably brought the team closer together, as strange as that sounds. If you come well out of such a challenging moment it can strengthen the team and I think it did. I’m reasonably optimistic.
VSail.info: Emirates Team New Zealand’s AC72 certainly looks spectacular when foiling. Do you think though they will have any advantage when racing comes?
Russell Coutts: Not necessarily. Someone told me once that the good thing about the America’s Cup is that the points aren’t counted until the end. You can score points now or in the middle but in reality points don’t start counting until you put the boats on the water and you start the first race. I’m happy with where we are and we haven’t seen all the information from everybody. We haven’t yet seen the second boat of Artemis and I wouldn’t write Artemis off right now. It looks to me they will come out strong with the changes they recently made in their organization. I, certainly, am not thinking we will be facing Team New Zealand.
VSail.info: You don’t take it for granted.
Russell Coutts: Absolutely not! We will do some racing with Artemis in February and I’m sure it’s going to be interesting!
[As mentioned at the beginning, as soon as the race committee lowered the AP flag the interview had to come to a premature end as Coutts had to rush to his boat]