16 Jul 2020

Team NZ questioned over $1.5m wage subsidies

From Checkpoint, 5:41 pm on 16 July 2020

Employees at Team New Zealand have been kept afloat by nearly $1.5 million in Government wage subsides through the Covid-19 crisis.

Businesses had to prove a 30 percent revenue drop to secure the first round of wage subsidies and 40 percent to qualify for the extension.

TNZ has secured both rounds, but questions are being raised over what revenue the syndicate actually lost as a result of the pandemic.

But it hasn't been keen to answer questions about its use of the Covid-19 wage subsidy.

Team New Zealand base at Auckland viaduct for America's Cup

The Team New Zealand base at Auckland's Viaduct Basin for the America's Cup. Photo: RNZ / Dan Cook

The $1.47m claimed is made up of just under $890,000 for 127 staff in the first round and over $588,000 for 126 employees through the wage subsidy extension.

Checkpoint wanted to know how the team had been impacted financially by Covid-19 pandemic, how the team funded salaries and why it applied for the wage subsidy extension.

TNZ did not responded to RNZ's repeated requests for comment.

But former sailor turned AUT professor Mark Orams said America's Cup syndicates sourced their revenue for staff salaries through sponsors and in some cases, high net worth individuals.

"Sometimes they bring their companies into lead sponsorship or naming sponsorship roles and then from beyond that there are multiple tiers of sponsors who provide sometimes cash sometimes good and services in kind and so there is tiered structure of sponsors which provides revenue for an America's Cup team and they use that revenue to pay for their costs and some of those costs are employing people, some of them are buying materials, some are research and development costs and things like that," Orams said.

University of Auckland Professor in Ethics Tim Dare has taken in interest in big businesses use of the wage subsidy.

"One question though would be how did Covid in fact interfere with their activities such that their income was lost so that would be a legitimate question to ask," Dare said.

Orams thought there could be a simple explanation.

He believed TNZ's sponsors, themselves feeling the financial burn of the pandemic, may have dialled back financial support.

Most sponsorship agreements had a force majeur clause, meaning unforeseen issues cutting back their revenue allowed them to pull out or re-negotiate.

"And that may well have reduced the revenue streams for Team New Zealand. Now, I don't know the details but I would assume and would have faith that the 40 percent reduction in revenue is real and they would have to have demonstrated (that)," Orams said.

Meanwhile, a joint Crown-Auckland Council probe into TNZ and its event arm's use of public funds is continuing, following allegations of impropriety by three whistleblowers.

The Ministry for Business Innovation and Employment has suspended payments to America's Cup Events, the company planning next year's 36th America's Cup, during its investigations.

The Ministry of Social Development says it has not received any complaints in relation to TNZ's use of the wage subsidy.