Team NZ face America's Cup ban

Team New Zealand will be kicked out of the next America's Cup if they don't drop their legal action against holders Alinghi.

In a new and serious development between the two feuding camps, the Sunday Star-Times has been told Alinghi recently sent Team New Zealand a legal letter with that ultimatum and if the Grant Dalton-led syndicate doesn't comply by December 15 the Swiss team owned by Ernesto Bertarelli plans to write a protocol for the next cup in 2010 specifically designed to exclude the Kiwis.

This explosive development has come as a "bolt out of the blue" for Dalton. He said both parties had been negotiating an out-of-court settlement in recent weeks.

"And we thought we were pretty close to a settlement but then this letter arrived," he said.

"They are trying to bully and intimidate us which is not going to get anyone anywhere really."

Team New Zealand mounted a two-pronged legal case against Alinghi earlier this year. Dalton claimed Alinghi broke a promise to hold the regatta in 2009 and sought $60 million in damages.

It also contended Alinghi's protocols, or rules, for the cup were unfair and breached trust laws.

Alinghi returned serve and said that, when Team New Zealand entered the regatta, they agreed in writing they would settle any differences by mediation rather than in court.

Alinghi skipper Brad Butterworth supplied the Star-Times with the paperwork he claimed backed their case.

Alinghi have also been fighting a separate court battle with the Larry Ellison-owned Oracle syndicate, which is the main reason why the regatta has become becalmed.

Bertarelli, who won the most recent appeal in the ongoing saga, holds the whip hand in this battle and last week announced he would plough ahead with the next regatta in 2010.

Dalton said he "applauded" the decision and is desperate to be part of the regatta. But that's now far from certain, unless Team NZ drop their case.

"I don't know why they are doing this," he said. "I thought we were close to settling our differences so I don't really know where we now stand."

However, Team New Zealand may have unwittingly played a part in the antagonism between both sides by launching its Louis Vuitton Pacific Series to be held in Auckland in the new year. Alinghi sees the series as a rival to the cup.

Long-time America's Cup sponsor Louis Vuitton backed the series after quitting the America's Cup following a rift with Bertarelli during the last cup.

In a further indication of how petty the spat has become, Alinghi are also disappointed Team New Zealand haven't asked permission to use America's Cup class yachts in the series.

Cup regulations stipulate they technically should have, but the yachts can be altered to skirt the rule. Dalton confirmed they would be.

Where it all ends is anyone's guess.

Dalton said he was reluctant to back down but added: "December 15 is a long way away. I thought we were making good progress towards a settlement.

"We were keen, and are still keen, to have them in Auckland for the Louis Vuitton series, which is going to be really successful.

"But threatening us doesn't help that cause at all, so we are not going to respond to bullying tactics.

"There could be a settlement between us and them. There could be a settlement between them and Oracle. I still think there is plenty of room for negotiation from all parties involved."

- © Fairfax NZ News