Bill Koch

What made you decide to submit this Amicus, were you approached or did you just decide it was the right thing to do?

I was approached and I thought about it and decided it was the right thing to do.

We’ve asked a number of people, including lawyers, what weight Amici carry and nobody seems to know. Do you have any idea?

I really don’t know. Judges make up their own minds for their own reasons and sometimes it’s very logical and sometimes it isn’t.

In various articles, you have been pretty scathing about the NYYC, SDYC, RNZYS bending the rules. In fact, you’ve effectively said it is part and parcel of the Cup. What is so different about this that makes you feel you should join in a court action?

I’ll put it this way. In the past, the challengers knew, or had a good idea, of how the Defender could manipulate the rules to get an advantage. However, the Deed of Gift gives some very, very simple rules – if you can’t agree - about what the race will be and who can qualify for it. So, if you wanted to compete, you looked at the protocol and you figured out how the Defender could bend the rules and then you were able to counter that, or be able to say I’d have to get so much boat speed that no matter how well I do I just don’t win. There was some clarity there. What’s the old saying? “Figures don’t lie, but liars shouldn’t figure.”

It’s always been amazing to me how creative some of these Defenders get, or defending yacht clubs get. What is outrageous to me is that Bertarelli basically formed his own yacht club to be a challenger and, therefore, he could pick who would be the Challenger against him, not through a normal competition, or not through a Deed of Gift challenge. He could set his own rules that way and I thought that was a bit over the top and felt he was being wholly outrageous in giving himself so much power. Basically, he was trying to duplicate what the New York Yacht Club did in the 1800s, so he could keep the Cup for the next 200 years and make a great deal of money off it.

Why would Bertarelli want to win by creating a situation where he was guaranteed to win?

It’s very simple; by putting the venue up for auction, he can make 3, or 4 hundred million dollars out of it, or maybe quite a bit more. So he wanted that, for sure; any businessman would look at that and say “That’s a no brainer.”

But last time most of the money made went to the other challengers.

To the other side?

I believe Alinghi took 40% and 60% was divided between the challengers.

That’s what is down on paper. There were a lot of other things that went on behind the scenes; they were very, very clever.  

One of the things you say in your brief is that CNEV was formed to ensure the event stayed in Valencia. Don’t you think it would have been in Valencia regardless of who was CoR?

No, I don’t think so, I think Bertarelli would have put the event in any part of the world, where he thought he had a better probability of winning than in Valencia.

Even a multi-challenger event?

Well, behind the scenes, Bertarelli said that the next America’s Cup might not be held in Valencia and it all depended on what kind of a deal can be worked out. So, it might not have been in Valencia next time around; whoever would pay the most would get it.

In your Amicus, you say that, without a proper yacht club, sailing enthusiasts cannot get behind their team, but the Spanish certainly got behind Desafio without them having a yacht club at all. So, why do you believe that public interest would diminish if CNEV allowed to stand?

That argument is based on the fact that, if you have a big yacht club with a lot of different members you can get the support of those members and the support of the local community better than if you’re just a paper yacht club, with essentially one member; who wants to support that?

When I did my America’s Cup campaign, I had to join the San Diego Yacht Club. The SDYC didn’t support me at all, because they were trying to support their ex-Commodore, Dennis Connor, and when I went out to raise money, people said “Why should I give money to you? If I want to support the SDYC, I’ll support Dennis, who has won it before.” Then they said “You’re a rich guy, pay for it yourself.” I did raise money from a lot of different sources, but they were small amounts. The large amount I had to raise from sponsors, who looked at it from an entirely different viewpoint and that was “How much of a TV audience will I get?” That’s all they care about.

You once told the New York Times that the cost of competing was ludicrous. In that respect you are on the same lines as Bertarelli, with his latest protocol that wants to cut the costs.

Right after ’92, I put together a committee to try to lower the cost. It came up with suggestions like you could only have a certain number of sails, only two boats etc. It is impossible to limit the cost of the America’s Cup unless you go to very small boats and you go to a very short period of time in which people can prepare for it. Last time around it was three years and a big portion of the cost was not only in paying crew and a whole team for 3 years, but also in the research and development into what makes a boat go fast and then the boats themselves. So, even though we tried it, we couldn’t reduce the cost.

Coming back to CNEV, isn’t the real truth that none of the yacht clubs have had much to do with the Protocol for years? Do you think the GGYC Commodore negotiated with SNG, last time; or did BOR negotiate with Alinghi?

I think the last time around it was Oracle negotiating with Alinghi. In the old days, it was the yacht club negotiating with the other yacht club. When I was involved, in 1992, the San Diego Yacht Club did all the negotiating of the Protocol. We looked at it and negotiated a separate deal with the San Diego Yacht Club. I didn’t want to spend a lot of money and have the San Diego Yacht Club tell me what to do, as the New York Yacht Club used to do with its Defenders. Now, the whole thing has got so costly that it’s really out of the realm of the yachts clubs.

I tried to make a challenge after ’95, I put in a premature challenge to the Kiwis, then thought about it and withdrew it. When I went around and tried to negotiate a deal with a yacht club that I could represent, I went to the New York Yacht Club and the San Francisco Yacht Club, St Francis. None of those guys wanted to delegate authority to me, they wanted to have their hands into it and I didn’t want that. If I was spending all the money I didn’t want a yacht club telling me how to run it, so I just told them “No thanks, if you guys want to run it, do it yourself.” The New York Yacht Club eventually did and they made a huge mess of it.

All these Amici, yours and other, keep referring to the “Deed of Gift” and “Challenger of Record” in the same breath, but the real truth is that the “Challenger of Record” was an invention of the New York Yacht Club and is not part of the Deed of Gift. Doesn’t the whole concept of a CoR that gets changed if a team gets defeated violate the clause that says “When a challenge that fulfils the DoG has been received no other challenge can be considered until the pending event has been decided”?

Well, the Deed of Gift basically says, unless you can agree the terms to a match, you will resort back to the terms of the Deed. So, that’s how the New York Yacht Club got around it; they negotiated the terms of the event with the Challenger, which allowed a multitude of defenders and challengers coming in, but if they couldn’t agree it went to the strict rules of the Deed of Gift.

Isn’t it stretching a point to equate negotiating the rules of the event to negotiating the rules of a match?

Well it’s all the same thing, if you mutually agreed to have more than one challenger, more than one defender competing with each other and then the final is one on one that falls within the Deed of Gift, because you’ve mutually agreed to it.

The other thing that seems to me to be against the Deed of Gift is having an America’s Cup class of boat. Schuyler’s concept seemed to be “You bring your best and see if you can beat my best.” And having a class seems to defeat that objective. What are your thoughts on that?

I agree with that and, when I was thinking of making a Deed of Gift challenge, I didn’t want the other side to know what my boat was going to be. It’s the same as what Larry Ellison has done, he’s challenged within the terms of the Deed of Gift, but if the Challenger and the Defender agree upon a class of boat that is reasonable under the Deed of Gift. That’s why, after all these years, the Challenger and the New York Yacht Club and all the other yacht clubs agreed on a boat.  

Something like 17 to 20 teams have entered AC33 under a Protocol they have thrashed out around a table. Are you saying that they have all signed up to compete in an event knowing that they have no chance of winning?

The empirical odds for any one challenger winning the America’s Cup are 5%. Any challenger signing up knows he’s in a rigged game, if he’s done his homework. People sign up for a lot of different reasons and it’s rather like a world championship, there’s only ever two or three world class competitors. I don’t really understand why people do it, unless they think they have a huge edge over the Defender and can around all the shenanigans a Defender can pull to make sure he wins.

The reason I did it was because I was in a unique technical position. I’d designed a 90 foot maxi boat that broke a lot of traditions of monohull design and was so much faster than everybody else and a lot of people wanted to steal my design and my design team. First, Dennis Connor wanted me to give it to him and I said no and then he tried to hire my people, so I know I had something that was very technically valuable. So, I decided I might as well take advantage of it now I’ve got it and I said “We understand some of the things that make a boat go fast, which other people don’t know right now. So, why shouldn’t I put that to use instead of giving it to somebody?” That’s why I did it, because we had so much technical performance that I felt we could win the Cup. Otherwise I wouldn’t have done it because to spend $50 million, when you only have a 5% chance of winning, doesn’t make logical sense.

People have done it though, over two centuries, but why they do it I don’t know; maybe a question of ego, or over self confidence, all kinds of reasons. Also, you’ve got to look at the fact that all the sailors have a vested interest in trying to get a rich guy to fund them. Then a few people think they can make money out of it.; actually, a lot of people have thought they could make money out of the Cup, but only a very few have.

What do you think BMW Oracle’s motive was in bringing this case, because the letter the challengers signed, saying this was the worst protocol in history, ends with the statement that they were signing it to avoid legal action? So why did BOR take legal action before CNEV had had time to consider?

I don’t know, because I wasn’t involved in any of Oracle’s considerations at all, but I would have done the same thing. I think the reason they did is that this guy Bertarelli, who I’ve had a few dealings with, has got what we call a tin ear. He won’t listen to anybody; he marches to his own drummer, which people accuse me of doing too!

What Oracle wanted to do, I would suggest, was not to let Bertarelli get any further with it, but put a stop to it right away. I could see them saying “If we get going, we get a decision fast and we’ll have an advantage because we’ll be designing and building our multi.” I would have done exactly the same thing.

Ernesto Bertarelli sacked Coutts and he did what Ehman tried to do and failed; ie. ran a profitable America’s Cup  How much of this whole saga is directed towards bringing Bertarelli down, rather than the CNEV issue?

I reckon that very little is about bringing Bertarelli down; it’s just that Bertarelli is an obstacle and you want to get an obstacle out of your way. By the way, I don’t think Bertarelli sacked Coutts, I know for a fact he didn’t. Coutts quit because Bertarelli reneged on his deal to Coutts. Bertarelli promised Coutts a percentage of the action if they won and, when Bertarelli saw how much money was involved, when he won he wanted to keep it all for himself, so he reneged on his deal to Russell Coutts.  

A number of people are saying that the Attorney General should be asked to declare SNG an unfit trustee. Have you been asked to approach the AG?

No. I’ve just read about that in the blogs, but I haven’t heard anything about it; I haven’t been involved in that.

What do you think will happen if the Court of Appeals rules in favour of CNEV?

It’s a fake yacht club, right?

What if the Court of Appeals rules that it isn’t?

Then Bertarelli will have his field day and he will treat the competitors worse than the New York Yacht Club did in the 19th century.

What do you think will happen if GGYC prevails?

I think they’ll have a one on one match; it will be very hostile, very contentious and a lot of fun to watch. It will be like going back to the 1880’s and the days when Dunraven and people came over to the United States and there was no consensus. It was a lot of fun to read about.
Bertarelli will try every trick he can under the books and the other people will try to combat it. You’ll have heard some of those old stories about what the New York Yacht Club did to some of the challengers?

I’ve just read your article “A Short Primer on Rule Bending.”

Yeah, well I think some of the dirty tricks that the New York Yacht Club did to some of the challengers for the America’s Cup are more fascinating that the racing itself.

Do you know why is the George Schuyler Trust is a Charitable Remainder Trust, when it doesn’t see to match any of the requirements?

I know a little bit about it. That was not contested for years and then Michael Fay challenged the San Diego Yacht Club and they responded with a catamaran and there was a lot of litigation and the New York Court held that the America’s Cup is a charitable event, or a charitable organisation, of which the beneficiaries are the competitors and the holding yacht club is the Trustee. That has been set in law, I think, in 1988. In other words, any money made off the America’s Cup must be split among the competitors, but the Defender can’t deduct his expenses. That is the rule under which it should be governed.
Now, the New Zealanders didn’t necessarily obey that rule. It depends on how the charitable trust department of the New York State Attorney wants to enforce it. If you don’t enforce the rules you’ve no-one to obey them.

That’s all my questions, is there anything you’d like to add?

No, I think that’s about it, although a lot of people think all these events are taking away from the Cup, but I’m contrary on that view. I think they add to it, because they add a lot more interesting flavours to it and a lot more intrigue and glamour behind it.

I would agree with that; thank you Bill Koch.