This is the second installment of our very interesting interview with Knut Frostad, CEO of the Volvo Ocean Race. In this part we talk, among others, about the complexity of imposing budget limits, the possible future route, the potential teams and the scoring system. You can read the first installment here:
VSail.info: It’s obvious that your main focus is to make the entry to the race easier for new teams. Have you considered establishing budget limits so that the richer teams don’t have an unbridgeable advantage? Couldn’t you just impose a budget limit of 15, 20 or 25 million euros, just to give some examples?
Knut Frostad: Yes, we have considered that as well. We actually did a big project on that prior to the last race where we worked together with PricewaterhouseCoopers and looked into what is called forensic auditing. It basically is the situation where you have a budget cap and you go in and control how much every team is spending. The reason we haven’t decided to do that yet is that it’s extremely complex to measure, although it’s a very good thing if, of course, you can do it. It’s extremely difficult to control at 100% what a team is actually spending.
From that experience we found out that sailing teams are organized in a number of ways. Some teams are organized by themselves where sailors own a company and then run their sailing projects through that company. Other teams are organized by the sponsor and the sponsor actually owns the team while other teams are organized by a third-party event company such as Offshore Challenges or Atlant from Sweden. So, if you want to limit the budgets, you have to control how much money is coming in and getting out of these companies. That means that all these companies have to allow an external auditor to have access to their books and check everything they are spending. This is EXTREMELY complex. The advice we got from the auditing companies was that while some expenditures were quite straightforward to control, for example the boat and parts for the boat, salaries are very, very difficult to control.
Some sports do have such controls, it’s done in parts of rugby and in parts of ice hockey in the US but then it is controlled by a federation that gives players a license. If the players are caught earning more money than what they have reported, they lose their license. I think that we are still very far from ISAF being able to do that.
Knut Frostad, CEO of the Volvo Ocean Race. Photo copyright Paul Todd / Volvo Ocean Race
VSail.info: Let’s talk about the potential entries in this edition. What is the landscape right now? You have recently announced the first official entry, the first all-female crew after many years, but what about the other serious potential teams? Can you shed some light there?
Knut Frostad: I can’t say too much right now. We are currently working with quite a few potential entries, both from the last race as well as new teams. I have to be careful about giving you a number or names because I’m very cautious. It’s not an easy market and we are working very hard with a lot of projects but at the moment I’m optimistic. The early signs are very positive even if it’s a difficult market.
VSail.info: You have stated that your intention is to have at least eight boats on the starting line. Obviously, everybody wishes there were even more but, given it’s a difficult market, what will happen if at the end there are less than that number?
Knut Frostad: If there are six or seven boats there will be a race. We have organized this project so that we can finance eight boats to be built. Our clear objective is to reach that number and we have everything set up to reach it, which is a big step from where we have been in the past.
VSail.info: What is the deadline for a team to enter, meaning the practical deadline so that they can at least be competitive?
Knut Frostad: I think that if you enter as late as June 2014 you will have a new boat ready for you, fully-equipped and ready to start. That will give you enough time until late autumn, when the race starts, to prepare well. As long as you get your boat ready and delivered, even in July 2014, you are in good shape. This is one of the beauties of this project, you extend the time a team has available. If you look at the past races, if you went past December the year before the start you knew that your only option was to buy an old boat. You didn’t have any other option.
This gives me the opportunity to bring up another point regarding the boats that I didn’t mention earlier. In the previous races, the teams would build the boats and then we would mount all the TV equipment onboard. Because we are now involved in designing and building the boats we can do the opposite. We can actually design and build the boats around television and media. This is a very big difference for us. For example, we have now created different elements in the cockpit which enable more live television. We couldn’t do this in the past because there was no area in the cockpit that was protected to do proper live television, unless you had very benign weather conditions. There are many different elements around the boat that were introduced thanks to the feedback from media crew members and TV production teams.
We asked them the simple question, “What would you do differently, if you could design the boat?” They gave us their feedback for audio, video, camera positions, cables, lenses, protection from the water, etc. It was a unique and very important opportunity for us.
VSail.info: Does that mean we will be seeing more live footage from the boats?
Knut Frostad: Yes, I think we will see more live television. The limitation for us has always been the technology in terms of how fast you can get the transmission from the boat with enough quality. In the last race, we started doing more and more live TV towards the end, in particularly in the finishes of the legs but also in the middle of the legs. What we saw was that quite a few times we managed to have really good quality footage. We had really good success and it worked very well in many TV stations, in particular in France but also other markets. This proved to be very popular and we think it’s an important asset for an offshore race because just the perception that you can dial in and watch a good-definition image, have a dialog with the crew with audio and video whose quality is good for television, is a very good selling point.
VSail.info: Another issue where your organization received criticism was the Abu Dhabi stopover, in the sense that it broke the continuity of the race as the yachts had to reach a secret port, be shipped via cargo to the Emirates and then back before resuming sailing. Will you repeat a stopover in the Gulf this time?
Knut Frostad: It’s too early to say because we are working on the route right now.
VSail.info: Let me rephrase the question. If a city, country, king, emir, sheikh or whatever they might be, offer an appealing amount of money will you go back in the Gulf?
Knut Frostad: No, the main reason for us isn’t just to maximize the money because if it were just that we would go to all kind of strange places. There are a lot more things that matter than just the investment, although the investment does matter to us. If a country is behind a team and they put a good stopover then it does matter but again, it’s not the only thing. It does matter to us that a country would support the race with a team and it does matter that they are putting the effort to have a very good stopover. These factors are very positive and do matter to us. To what extent they matter will depend on many other factors.
We need to have a route that is attractive sports-wise, that isn’t attractive for just one country but all the sponsors, that works on the media side and that has a certain length. As you see, there are many factors to take into consideration when we take a decision. It’s not just an issue of the city that puts the most money will make us go there but I have to make it absolutely clear and I’m not ashamed to state that it does matter a lot to us if there is a team funded by country that wants to be in the race.
VSail.info: There is no doubt about that and at the end of the day you and your sponsors are there to make a profit. However, if your priority is that then you end up with a race that doesn’t even go around the world because even the yachts that weren’t damaged had to be shipped from the secret port to the Emirates and back. That’s always the point, that it breaks the continuity of the race.
Knut Frostad: In fact, one of the big considerations for us in the last race, when we had to make the decision about going to Abu Dhabi, was that we didn’t want to break the race. That’s why all the boats returned to the same place they were shipped from, so in fact the boats that didn’t suffer from damages did sail around the world. If you look at Telefonica, they did sail around the world, there isn’t a piece of the race course they didn’t sail. They didn’t sail from the location to Abu Dhabi and back but they sailed to the secret location and from secret location.
VSail.info: Will you consider changing the scoring system where each leg has an equal weight? Do you think it’s fair to give a long oceanic leg the same score as a short spring off the European coast?
Knut Frostad: This is an interesting discussion. We are always looking at our point system, discussing it with the teams…
VSail.info: …or even make the race on elapsed time. Now that you mentioned Telefonica, one of their points in their post-race press conference was that they had finished the race four days, in accumulated time, before Groupama.
Knut Frostad: I don’t think you can take a race on points and afterwards say that had been the race on time you would have won it. During the last Volvo Ocean Race nobody was thinking about time. If you sail a race on time, which I did myself in 1993-4, the last race we had on time, you sail a completely different race. If you sail a race on time you can kill it just in the first leg. You strategic mindset will be different because you don’t just have to be in front of the other boats, you have to be in front with as much time as possible. You can never take a race on points and then say afterwards”Ah, if we had sailed on time we would have won” or the other way round. When you start a race, everybody knows the rules and they prepare for that, they set their strategy for that and they race for that.
VSail.info: As the race CEO do you prefer a race on time or on points? As a sailor what would you rather have?
Knut Frostad: In both cases I prefer a race on points. If you look back at the races we had on time, and 1993-4 was a very good example, the race can very easily be over very early. Chris Dickson and Tokyo were winning the first leg with a very big margin and the only reason they didn’t win the overall race was that they broke their mast. If you break your mast, in race sailed on time, it’s all over for you, game over. Hadn’t they broken their mast all they had to do was simply stay close to the rest of the fleet. Even if they finished a leg third, fourth or fifth, as long as they stayed close to the others they would have won. I think there are some benefits in racing on time but the great upside of racing on points is that we believe it creates a closer race. We believe it opens the competition to the end and makes it more attractive all the way to the end. This is very important and this last race was probably the closest one in the history of this event.
VSail.info: Now that you mention the breakages, there is one issue that was asked by quite a few people during the summer was the setup you now have with different boatyards doing different parts of the new boat, who’s in charge in case of a breakage? Is it Volvo Ocean Race, is it Green Marine or the boatyard that built the broken piece?
Knut Frostad: It depends on the cause of the breakage. If the breakage happened because there was a problem with the manufacturing then it’s a warranty issue. If, let’s say, your daggerboard breaks because you hit something in the water or because you push too hard then it’s the team’s problem. This is always going to be a challenge in a one-design and it’s the same challenge you have in the MOD70′s, the RC44′s or the AC45′s.
VSail.info: Certainly, but in those cases you just have one boatyard doing the entire construction. Don’t you think you have a complex scheme with four-five boatyards doing different parts of the boat?
Knut Frostad: First of all, the MOD70′s are working exactly the same way. The MOD70′s have multiple yards that manufacture different pieces of the trimaran and then assemble them in another boatyard. So, it’s not a new thing. It’s also important to stress that the only way to build enough boats on time, is to have more than one yard involved. There is no boatyard today that could build, alone, enough of these boats on time for the next Volvo Ocean Race. This is the reality we are facing. At the same time, it’s Green Marine that manages boat construction and delivers them. The teams have only to relate to just one yard and that is Green Marine. They buy the boat from Green Marine, not from Volvo Ocean Race, and they only deal with them.
It’s the same with any other boat you buy. If you buy a TP52 from Cookson in New Zealand it’s very possible that somebody else and not Cookson made the rudders. It’s also the same when you buy a Benneteau or a Swan. You don’t necessarily know who’s the supplier of all the parts. The most important thing for you is that you buy the boat from one source. One source delivers you the boat and for the teams this is a huge positive step. If you look at how the teams worked in the past, they had to deal with many different suppliers. They would buy the hull from one place, the daggerboards from another one, the winches somewhere else, the electronics from another and so forth while now they get the entire boat from one single place.
VSail.info: Up to what point are these boats one-design? Even the sails will be the same or will the teams have more liberty there?
Knut Frostad: We haven’t announced our decision on the sails yet but we will do it soon. Apart from that issue that hasn’t been announced, the rest of the boat has already been announced and it’s 100% one design.
VSail.info: Finally, what is the calendar for the first one of these new boats?
Knut Frostad: We plan to launch the first boat around the end of June 2013 and then there will be around seven to eight weeks between the launch of each subsequent boat.