Last chance saloon

Leslie Ryan explains what 'suspension of operations' means for GBR Challenge

Following GBR Challenge's announcement yesterday that they are to 'suspend operations' due to them still having failed to find a commercial partner to help fund their challenge for the 32nd America's Cup in Valencia, we spoke to the team's Head of Sponsorship and Marketing, Leslie Ryan about the problems they have been facing and where they stand at present.

Originally decision time over whether or not GBR Challenge would be taking part in the 2007 America's Cup was to have been made in September. But this date was postponed. At the time there was considerable speculation about whether HSBC bank would be the sponsor they were looking for but in October the bank officially denied their involvement.

On a more positive note Carphone Warehouse boss Charles Dunstone, whose wealth this year was estimated by The Times' Rich List at £427 million (Peter Harrison is worth a mere £206 million according to this same list), was announced as one of the official supporters of the team.

Dunstone's involvement was to lend gravitas to the sponsorship hunt initially, backing this up with a major financial commitment but on the absolute proviso that this would only be forthcoming if a commercial sponsor was found for the team.



Leslie Ryan (above) explains: "I think the reason for that was clearly, as Peter felt last time, ‘if I start investing early on, I may well end up in a situation where I am funding pretty much the whole thing, because if I don’t find a commercial partner I am not going to want to pull out of this’. Charles felt he wanted to be 100% sure that it was going to go ahead all the way and at the right level - he is very determined at all times that we should stick to the budget levels that we aspire to and not compromise on that."

A new suggestion, made by Dunstone, was to donate the title rights of the team to a charity, with sponsors underpinning the finances of the campaign and with a percentage of that money going to the chosen charity.

"The response we have had to the idea has been really positive," continues Ryan. "But the timing of it...we should have introduced it earlier and we should have made everyone aware of Charles’ involvement earlier. But we didn’t."

Setting up GBR Challenge in this way offers significant tax advantages to private individual investors in the Challenge but not for companies.

To run GBR Challenge in the way Dunstone envisages would require a trust to be set up with independent trustees (ie not Dunstone or Peter Harrison). Ryan says they already have identified two potential trustees experienced in this kind of work. "They, together with the team, the investors and the sponsors, agree a number of criteria for selecting the right charity. And charities are then invited to tender for that position."

To date they have had discussions with UNICEF and Oxfam who had already approach AC Management about being involved in the next America's Cup. And the deal looks to be an attractive one for whichever charity ends up the beneficary. "The financial model is one whereby as soon as that is agreed a percentage of the budget automatically goes to the charity. So their very least direct financial gain is £1.25 million, [working on an initial minimum budget of £25 million]. That is the base starting point. And money would continue to go to them - the percentage goes up the more money we gain and our target budget is £40 million."

Then there is the potential for additional funding to come through the supporter's club, the business club, the merchandising, the auctioning of hospitality and 18th man places. In addition to that the charity would get the main branding position on the boat estimated to be worth £30 million in terms of media value. "They can then exploit that further in line with what they do with their own marketing activities. They are fairly confident they can raise money on the back of that," says Ryan.

In the meantime, the announcement of GBR Challenge suspending their operations has come this week. The reason for the announcement is that since the end of the last America's Cup in Auckland Peter Harrison has continued to bankroll the team entirely on his own. Having been through sailing trials with their two boats GBR70 and 78 this summer development work has culminated in three tank test sessions this autumn. The next step the team were about to embark on was the modification of their boats to Version 5 of the America's Cup Class Rule and this would have required a considerable hike in costs.

"The money was starting to get fairly significant," says Ryan. "And it was a call for Peter as to whether he was willing to take a risk when we still didn’t have significant commercial partners signing up to it. And we all talked about it and it really wasn’t fair for Peter to carry that mantle on his own."

'Suspension of operations', to clarify this point, does not mean that the doors are closed for GBR Challenge and that its assets are up for sale - not just yet, at any rate. On Monday all the team, including GBR Challenge's management were put on notice, some on a one month period, others including Ryan on three months according to their roles.

"It will take about a month to put things on hold because there are lots of assets and activities that are part completed," says Ryan. "Peter was keen to put things into a state where we could immediately step back in and push it forwards again immediately."

In this period - Ryan says up until Christmas - it is up to her and her sponsorship team to find a commercial sponsor for GBR Challenge or it will indeed be curtains for the British campaign. "We want to keep the door open and have those discussions," she says. "This [yesterday's announcement] might well help to accelerate some of those discussions. As we know large corporations work through what can be quite a slow process and time is against us now so we are trying to put pressure on those discussions so we can accelerate them." It might also be read as a team on its last legs.

So what does she need? "We are looking for £5-10 million. That would put it back on the road and, together with Peter and Charles, would bring us up to around the £30 million budget mark. What we have are a number of smaller partners at £1-2 million mark who are already committed but won’t commit to it until we are at the £30 million mark. We are fairly confident we can move those partners forward once we have one partner who has come in with, at the very minimum, £5 million."

In our mind £5 million, bearing in mind that this can be spread over the three years from 2005 until 2007, seems pretty good value for an America's Cup campaign.

Why has raising sponsorship proved so difficult? This is the $1million question. "It has constantly amazed me because I genuinely think we have a really good product to sell now," says Ryan. "We have a great event that is evolving and you have all the pre-regattas, the Acts, etc. There will be more TV coverage. I think that there is not necessarily scepticism, but a lack of awareness by even the global brands we are talking to who are based in the UK.

"Sailing on my opinion is on the increase in terms of corporate involvement, but willingness to take a risk and to be the first one to back something like this seems to be elusive. That is the hardest thing - getting the first major corporate behind it. I think then others would follow fairly easily.

"I think that one of the things we had hoped as a team is that AC Management would have done more by now, as a central event coordinator, to promote what is going to happen about the event. It would have been good to see a media campaign around the event itself to help all the teams who are trying to get sponsors now.

"There’s been coverage of the Acts but there hasn't been much coverage from my point of view in the UK other than what we have done, which has been difficult. It would have been nice to get some coverage along the lines of ‘look at this event and how it is going to be one of the top events in Europe in the next few years’.

"We also haven’t had projected TV figures that we can talk about. There has been some talk about what TV we are going to get, but if we could have had a couple of documentaries in the build-up early on right now it would have started to wet people’s appetite."

With Charles Dunstone as well as Peter Harrison backing the campaign, GBR Challenge having the vital experience of one America's Cup under their belt and having most of the crucial pieces in place to mount a successful campaign for 2007, it would be a terrible blow to the progress of our sport in the UK if the doors were finally locked on GBR Challenge.

Anyone with £5 million can contact Leslie Ryan here.