Grant Dalton's persistent warnings the rules for the next America's Cup will kill commercial teams have proven to be founded after Team Australia, the challenger of record for the next event, pulled the pin.
The event is now under threat if another team pulls out, potentially setting up another messy Deed of Gift challenge.
In the first public sign of dissatisfaction over the direction of the event, the Australian syndicate backed by Hamilton Island Yacht Club yesterday withdrew their entry for the 2017 event. The move follows a competitors' meeting in Los Angeles last weekend, during which teams vented their concerns behind closed doors.
Among the issues discussed were the costs, delay in nominating a venue and disapproval over San Francisco being eliminated as a potential host of the next event.
Team Australia's decision leaves the 35th America's Cup in jeopardy if the event authority, headed by former Oracle Team USA boss Russell Coutts, don't begin to address the competitors' gripes.
"The challenge was initiated with a view to negotiating a format for the 35th America's Cup that was affordable and put the emphasis back on sailing skills," said Bob Oatley, who lodged the challenge on behalf of the Hamilton Island Yacht Club. "Ultimately our estimate of the costs of competing were well beyond our initial expectation."
Oatley's comments support Dalton's reservations over the protocol and the requirement teams must stump up the US$2 million ($2.3 million) entry fee before the venue is known.
The Team New Zealand boss argued from the outset the delay in nominating a venue would make it impossible for teams to secure sponsorship, and it's understood this was a major issue for Team Australia, but his concerns were dismissed by defenders Oracle who claimed Dalton was making excuses.
Perhaps conscious of the delicacy of the situation, Dalton was ducking calls from media yesterday, with his only comment coming in the form of a statement that reiterated Team NZ remain on track for the 35th America's Cup and are in strong shape with their sponsorship drive.
Coutts also did his talking in a press release, expressing his disappointment the Australian team will no longer be involved.
"Our focus going forward is with the teams that have already submitted challenges and the teams that have told us of their intent to do so," Coutts said.
The withdrawal of Team Australia could hand the challengers more collective power and force Oracle to back down on some issues they have previously refused to bend on.
The next challenger of record is determined by order of entry and it's understood Swedish syndicate Artemis are next in line. Artemis were appointed challenger of record for the last event in similar circumstances when the original challenger Mascalzone Latino withdrew citing a lack of funds.
Artemis were accused of working for the defender rather than being an advocate for the challengers, but are now led by British sailor Iain Percy, who is known for his considered approach.
If Artemis don't accept the existing protocol, new terms for the next America's Cup will have to be negotiated and these will likely include several challenger-led amendments.
A provision in the protocol which says a challenge will not be accepted until there are at least four challengers means Oracle are not in a strong position. With Team Australia's withdrawal and a French challenge unlikely to get off the ground, it leaves only four teams - Team NZ, Artemis, Luna Rossa and Ben Ainslie's British syndicate - capable of putting together a campaign. Should they lose another challenger, there will be no event.