Sailing’s top events navigate turbulent financial waters

By spreading into other countries as part of a marketing offensive, they have ended up with a currency defence mechanism

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The Independent Online

When Rémi Duchemin woke up one morning last month on a South Pacific island he had chosen for a two-day hideaway stopover during a busy intercontinental itinerary, he still did what he always does. He checked his e-mail and he checked the foreign exchange cross rates. What he saw was staggered and he checked again. The Swiss franc had rocketed in value courtesy of a move kept secret even from the boss of the International Monetary Fund, Christine Lagarde.

Duchemin is ceo of OC Sport, which is based in the favourite watering hole of the IOC and the world’s sports governing bodies, Lausanne. Among other things OC Sport organises the Extreme Sailing Series, which has just opened its 2015 account in Singapore.

On the same day, 15 January, James Pleasance was giving a presentation to all the representatives of the venues that host his World Match Racing Tour (WMRT). The move by the Swiss Central Bank to break any link with the Euro had all but wiped out his sponsor, Alpari, an online foreign exchange hedge betting agency.

Duchemin was partly protected because he operates out of four different countries, including Britain, where the company originated on the Isle of Wight, is still there, and has Mark Turner as founder and a principle director. Pleasance already had the funding in place for the 2014-15 programme, which has its Monsoon Cup finale this week in Johor, Malaysia and starts its 2015-16 tour with the Congressional Cup in Long Beach in May.

Most sports teams take part in competitions in their own countries and operate in one currency. Both these sailing events roam the globe, attract teams from all over the world, and are run by relatively small companies. Neither runs a money book, neither could afford to employ a currency expert on the staff and, in any case, everyone, experts and small traders alike, was caught by the Swiss surprise. Both, almost by accident, found that they had defence mechanisms.

OC Sports has offices in Switzerland, Britain, France and Singapore. As much as possible, those offices deal in their local currencies and do not have to trade across currency borders. Competitors pay things like entry fees in Euros. And by banking with UBS, Lloyds, BNP Paribas and HSBC OC Sport can call on currency advice from all four, then taking a view on how to form a judgment. So, by spreading into other countries as part of a marketing offensive, they have ended up with a currency defence mechanism.

WMRT largely works in US dollars out of Bermuda and Malaysian ringgit, as its major shareholder Patrick Lim is a Malaysian businessman and the country hosts what is usually the deciding regatta. IMG is another shareholder. As WMRT, in effect, operates a franchise, then each of the host venues trades in a self-contained way, largely unaffected by the currency volatility that has been the nature of the market for at least the last six months.

But both are more wary. OC has sold a majority stake to the Telegramme media group in west France. WMRT is looking for a restructured “partnership” rather than only a replacement title sponsor and says the immediate impact has been reduced because it always had a plan in place if Alpari failed to renew. This year would have been the fourth of a five-year deal. “We will now rebrand the tour,” says Pleasance, “and we already have 300 partners of varying size, including governments and tourism organisations. None of them has been affected by the demise of Alpari.”

And Lim continues to urge the sport’s governing body, the Southampton-based International Sailing Federation, which has just done a finance deal with Russia’s Gazprom while at the same seeing sailing dropped from the Paralympic Games in 2020, to take a stronger grip on the organisation of the international calendar. The wait, so far, has lasted the best part of 40 years. Lim, in testing financial times, will need to be faster on his feet.