Sausalito Challenge 2007ï»¿
CupInfo Interview with John Sweeney
John Sweeney and Tina Kleinjan of the Challenge Series have launched an America's Cup challenge effort. The eBay Motors auction of the exclusive team sponsorship began Friday, April 2. CupInfo talked with John about the team, the puzzle of finding sponsors, and his unique perception of the marketing environment of the Cup. Plus, he revealed some of his team's plans, already well underway, including hints of an innovative attack on the ACC design problem.
CI: We want to talk a little about what prompted you to think you can take on these guys when all the 2003 teams were sort of hesitating. Last October you had the idea. Tell us a little bit about how you really got there.
John Sweeney: Well, I sailed with Larry Ellison in the last America’s Cup, and I got to watch what happened on our team and sail on our team and out of that experience when I came back and Tina and I started to run the challenge series, we had it in our head that if the challenge series succeeded and we could prove to people that sponsorship on America’s Cup boats was a good avenue for companies in the United States, then we would take it to the next level and do an America’s Cup team.
To give you a little bit of background, I actually have sailed on four teams in the last two cups. I started out with Young America in ‘97 and did a summer with them, and then I got to sail for six months with AmericaOne, and then I signed with America True and actually raced on the boat, as a racing sailor. I got the opportunity in a short amount of time in my Cup experience to be on four teams.
So I’ve seen a lot of stuff, and it struck me that all the teams take a very similar approach. They go down the same track and they all sort of have a lot of assumptions they believe to be true, that on the surface seem to be justified, when in actuality a lot of teams just follow each other because they assume the other one has already figured it out, when we all realize that that’s not the case.
CI: Nobody wants to break the mold.
John Sweeney: Tina and I threw the idea around for about a year and in probably October of this last year we started to really talk about it and then we had a couple of meetings with some of the people in Sausalito. Somehow the news got leaked to the local publication which then said we were talking about doing a team, and that kind of gave us the in. It was kind of the time to decide, “Well, it’s in the press. Should we take it on or should we let it go by?” It was basically now or never and we both agreed that the time was right and let’s do it.
CI: That might have been a very good leak. It was a big step. If you had several sponsors interested, then what prompted the online auction and the exclusive sponsorship route?
John Sweeney: Well, what happened is I flew around in January to meet with teams as a sailor, to see what my value was as a mainsheet trimmer on different teams. And in meeting with the teams, we also discussed their financial positions and sort of came to realize that there were a number of teams that were close to getting sponsors, some of them were closer than others, but in general no one was going to get any sponsorship until probably July of this year.
In coming back to the states I realized that there are a lot of companies out there that are looking, there are a lot more companies that will be looking, but they just haven’t been prompted to do it. How can we get people really excited about the Cup now, even though it's basically four years away? And that’s when Tina and I sat down and she actually came up with the concept of putting it on eBay.
CI: Sort of to catalyze the attention and get the momentum going now rather than waiting, then?
John Sweeney: The ultimate truth is in the America’s Cup when you get a sponsor, normally you know someone in the company. That how Dennis does it, that’s how Cayard has always done it. They know someone at the top who also shares a passion for sailing. The Cup changed this last time, with BMW and Areva and these big companies being involved who are actually in it more for the marketing for the first time, more than for the personalities. Although BMW did want to be associated with Larry, they also wanted to be associated, since they’re in Formula 1, with another high-end technology sport. So we figured this time around will be the first time that people actually get sponsors based on the merits of the Cup, not on the merits of the sailors.
We felt that it was a good partnership to do it on eBay, which symbolizes how the internet has changed everything and it’s not that people on eBay, per se, are going to buy it, but we also calculated that it was the largest auction they’ve ever had, and we’ve also found out, [the largest] on the internet to ever sell, as far as dollar value. So it has a lot of historical significance besides just being involved in the America’s Cup.
CI: What was your conversation with eBay like? Did you have any special arrangements with them to make this happen?
John Sweeney: Yeah, we talked to them approximately three months ago and approached them with the idea. And in all honesty at first they were lukewarm on the idea, at least, mainly because sailing is something they hadn’t thought about. But my proposal to them was about how this could be a new business model for them in selling sponsorships for say Formula 1 or NASCAR, and that if this works for sailing, which is such a difficult sport, it would work a lot easier for a major league baseball team or Formula 1 to sell for an existing team which has a huge audience, where sailing is still just a fledgling type sport. And that’s what kind of piqued their interest.
From that point on, we began to work on a project to basically draw attention for them and work to get it up and running. There was a bunch of technical stuff that had to happen on their side, since they’ve never had an auction over $6 million, and some of the things were like they couldn’t even put in the decimal value of $20 million. The computer wouldn’t accept it. We ran all these tests and found out a lot of different things that even they didn’t know. So, it’s been fun. It’s not that they don’t have a great system, they just never had people auctioning stuff at that level.
We have a special agreement with them, which our lawyers have mutually agreed upon. We’re kind of the test bed for it. And it’s all good for both parties. They can’t lose. Neither can we.
CI: It’s an interesting concept to get the dance between sponsors and the people who need sponsors out in the open instead of what usually seems to happen as some sort of closed doors situation.
John Sweeney: And that’s the other part of the equation, knowing that there were say as many as 10 to 15 companies that were actively looking to sponsor a certain team and have been in negotiations, and us knowing that the time frame was within the next three months they may possibly sign. How could we possibly get our package in front of them in that short of a time span without knocking on their door? It would take forever to get them letters, you may never get to them. This was the only way could figure out to basically say “Hey, Team New Zealand sponsors, before you sign with these guys, take a look. You’re supposed to spend $30 million to be one of five. Why don’t you spend $30 million and be your own entire team? Right?” That’s how it progressed.
CI: The advantage to the sponsor being exclusive is that their name would be preeminent, and, although obviously the commercial naming issue is there for the boats, they get a lot of exposure. What would you say that the advantage is to the team for getting one exclusive sponsor, knowing that you have the funding at the outset?
John Sweeney: You can look down the list, and you guys know this too, but I made a detailed list of the teams. Aside from the Swiss, who have achieved their entire sponsorship, and Oracle, who has received only the money from Larry -- as far as I know they haven't re-signed their sponsors from last time -- the other teams that are out there don’t have any of their money that I know of, aside from Prada which has the funding basically from their founder. They don’t have the sponsors.
The team that just signed up, it’s easy to post the million dollar bond, because that doesn’t require that you actually have a million dollars. What’s important is that you’re fully funded. I don’t think that people realize that if this auction sells, say in the first day or the second day or by the end of the auction, within a week’s time we become only the second fully funded team and we’re off and running. There’s no more money to be gotten. We’re done. And that’s pretty important.
CI: It could be quite a coup. It’s a very creative, very bold thing to do. Obviously also doing it in public with an unknown outcome is kind of risky. You probably don’t want to talk about a Plan B, but have you considered one?
John Sweeney: Of course it’s very risky. My name’s on it. It would probably damage my chances of sailing with other teams if for some reason it didn’t work out, but we entered this knowing, calculating, that it had a high chance of success and I think that judging by the media attention and the number of companies coming to our site, that we calculated it correctly. So, there is the potential it doesn’t sell online, and there’s also the potential that a company comes to us a day later and says “We didn’t want to do this online, but let’s negotiate it.”
CI: Beyond the sponsorship, do you have any additional sources of financing that you are looking at?
John Sweeney: We have $10 million to start out with. It’s there only if we obtain if we obtain a sponsor of $30 million dollars or more. If we get 30, we get 10. It’s kind of like Team New Zealand. They have a little money, but if they do get money over a certain amount, the government will match it. So our two investors have said “We will pledge this money to you. If you can pull it off, then you get this.” That helps us immensely.
CI: It’s an appealing idea. We’ve seen the recent notes that have come out about the Volvo effort, Team Kan-Do, that also seems to be looking at an eBay auction. Is that a coincidence or is there some connection here?
John Sweeney: Oh, no, they copied it. I had spoken to their guy about two weeks ago and got the sense from the conversation that they were going to do the same thing at some point. I think in his calculation, he’s realizing that we’re going to get a lot of traffic to our auction. My own personal opinion on that -- he hasn’t given anybody any time to know who they are or what they’re doing or their package. I think they’re selling themselves short with it. If this is successful and we do well, then he can post his a month from now as the first Volvo team and have a much better shot at it. You never know.
CI: How far along are you with the crew selection process?
John Sweeney: We’re done with the crew selection process, the design team, and boat builders, and like I said we’ll be building our boat and it will be launched in July 2005.
CI: So you really have things lined up.
John Sweeney: That’s the whole point. We’re going down a completely different path. The design that people see on the water, the boat won’t look like anything you’ve ever seen on an America’s Cup course. That’s also because our group of people have uncovered some other areas that have just never been looked at, because why would you if you had gone down the same path as the other guys?
CI: I know you said in one of your e-mails that it would be a radical new boat, potentially. Any hints as to what sort of radical?
John Sweeney: No, we’re going to make our boat public as soon as it gets launched, and everybody in the world will get a chance to look at it. My guess is it will be far too late for anybody to go down that path. I don’t think the big teams will look at it anyway because they’ll have spent far too much money and time starting so long ago on their old projects that it wouldn’t make sense.
CI: We were curious about that because people look back at TNZ and say “Well, they went radical and they lost,” but on the other hand, every time it works, everybody’s going radical again.
John Sweeney: You’re speaking of radical down the same lines as what other teams do in the concept of an America’s Cup boat. Well, we’re not talking about designing an America’s Cup boat like it’s been designed before. We’re not trying to improve on the same kind of path and make something "radical" onto America’s Cup boat like it was done before. We’re doing something totally different that doesn’t even look like that. Does that make sense?
CI: Yes, it does. I'm awfully intrigued to see what that is.
John Sweeney: That’s what I’m saying. It’s easy to say everyone’s tried everything. Actually everyone hasn’t. Everyone's only tried innovative things on top of the generic design that everyone seems to come up with, but no one’s actually changed the basic design. And that’s what we’ve done.
So it gives us an opportunity to not have to compete on the same playing field, per se, as the other teams. It’s like sailing against something different, so they’ll have to figure out how to deal with it.
CI: Well, it should be exciting.
John Sweeney: It’s part of the process of doing stuff differently, otherwise we wouldn’t bother doing it. I’m not going to the same track and then try and go race against these guys if I had to sail, you know, a revised America’s Cup boat along the lines of what we did last time. Because as we all know, if you have to develop something that similar, looking for more gains with the box getting smaller and smaller, it would be hard to do well with our budget.
If we have a completely different design that’s different from anything else, we have a great opportunity to do well. So that’s the key.
CI: So it’s not chasing the small incrementals but finding something that really gets you ahead. Well, you’re going to train in San Francisco, initially, and do you have plans to for a particular date to go to Valencia, especially with four teams, at least, already moving in right now?
John Sweeney: I think, like I said in the press release, if this auction closes, we’ve negotiated with three different boat owners for a 2003 boat. We have to decide which boat we want. We’ll do that the week following and then we’ll go fly and pay the money. The boat will get shipped to Marseille first, and we’ll be there for the first three events and the boat will get shipped back and we would launch the new boat in July, sail here for probably a couple months, and do the other regattas.
CI: That gives you actually a lot of time in Valencia, then, even on that schedule.
John Sweeney: We’ve got the Challenge Series regattas here we’ve got to do this summer, as well, which takes a little bit of time with the old boats. And that’s all part of our package.
CI: Is there anything that AC Management, the organizer for the America’s Cup, has done that has made this sort of approach more viable this time around versus recent years?
John Sweeney: I think they’ve definitely cleaned it up. Having regattas beforehand is a great thing for all teams. It’s also very expensive. They’ve obviously tried to adjust the cost by helping to pay for some of that stuff. I think the overall format is a lot better. I still think personally the America’s Cup should be fleet racing, not match racing. We’ll see what happens in these events. There are a lot of fleet races. It will be interesting to see the public’s reaction when it goes back to match racing at the very end.
CI: The pictures of the fleet on San Francisco Bay really look great.
John Sweeney: I think if you look at it from the spectator point of view, you can’t argue that it isn’t more exciting with more boats. Pure sailors like match racing. I personally don’t like match racing. The Cup is in a transition time. It’s definitely going to be better being in Europe. All they’ve really done is cleaned it up and made it look prettier and added some regattas, which is great, though they had a chance to really change….I think even Russell Coutts wanted to do some more. But it’s fine, you know, it’s a big step. Europe itself will draw 10 or 20 times as many spectators, so that’s great.
CI: It’s a big change from the situation where some of the teams in 2003 that had, you know, 20 races, or at least relatively few races. Even if they were somewhat competitive, they went out shortly. So there is the opportunity here both for a team to rise to the top and at least feel that the long effort was not just for a very short racing time.
John Sweeney: All in all, it’s a heck of a lot better than what just happened.
CI: What’s your association with Sausalito Yacht Club? Did you basically grow up sailing there?
John Sweeney: No, I grew up sailing out of the San Francisco Yacht Club and the St. Francis. In all honesty, the politics in those clubs drives me crazy and when we went to do the Challenge Series there were a lot of people who didn’t believe in what we were doing from both the other yacht clubs. Sausalito Yacht Club came to us and said, "We’d like to host your events and we like your vision." We did the events for two years there, and whatever it was, six or seven regattas, and based on that, we felt we owed it to them, and they showed that they believed in us and they were forward thinking, so they should be rewarded.
CI: That makes sense. The Challenge Series, it’s been fun. Just to get those boats out and sailing against each other is a pretty exciting thing to see. Now you have plans next year on that front for the return of the world championships and the other cups that happened last summer, right?
John Sweeney: They’re going to start this year in June and we’ll do the three regattas this summer again, the three regattas next year, and probably we’ll pack our boats up and do a regatta over there before the America’s Cup for our sponsors.
CI: One of the big advantages it seems to me that you have in Sausalito and the Challenge Series is having an existing platform that doubles or triples the exposure for your sponsors.
John Sweeney: I think that the Challenge Series was very successful from the regatta side. The events came off great. The last two regattas all of the boats finished every race. It was really good from the sailing side. The sponsorship fell a bit short because it was tough timing with the economy. It led us to where we can run that on a very tight budget, and get up to seven boats racing on the line, old boats, and they all make it. It showed me we definitely have the potential of doing it. We’ve got the pier at Treasure Island, which is a great facility. We’ve got cranes and containers, every piece of equipment you need to run an America’s Cup program. We already own all that stuff. It’s just sitting there ready to go.
CI: We really thank you for taking the time talk to us, John. Your energy to innovate in order to make these visions come true is contagious. We are excited to see this auction go forward, and even more so anticipating the sight of your team out there on the water in Valencia. Best of luck from all of us at CupInfo!
Photographs on this page used with permission of the Challenge Series and Chuck Lantz.
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