Laser Kumbaya: One Week After

It is now a week ago that the kumbaya meeting between World Sailing, the international Laser class ILCA, UK builder LaserPerformance and other Laser builders took place on May 22nd in London. And lips are mostly tight.

May 30 Update: while not revealing what happened at the May 22nd meeting, the European branch of the Laser class, EurILCA, has published an extensive statement, which we analyze in the post: Europeans Outline Way Forward for Laser Class.

What do we know?

First, the parties are mostly quiet since the kumbaya meeting. There was no renewed public calls by LaserPerformance for example for the heads of ILCA to resign. Yet, the calls by LaserPerformance for ILCA, considered « incompetent, » to move back to Europe and to « appoint a professional executive team » are still online, and are dated as late as May 19th. So are the many other grievances they have against ILCA.

Second, it seems that the Laser class, World Sailing and LaserPerformance are collaborating to reduce the risks of acute shortages of boats this season. This was acknowledged in the ILCA « circular » at the World Sailing mid-year meeting.

« ILCA is working with World Sailing towards a plan to release up to 400 class- legal boats over the next 3 months. ILCA has arranged a contingency supply of class legal boats for the Youth Worlds in Gdynia, Poland so no disruption is expected. » states the ILCA document.

These boats are most likely all originating from LaserPerformance.

Did LaserPerformance have 400 boats in stock, without World Sailing plaques, produced prior to its decertification announced on March 27th? Or could LaserPerformance already have been awarded extra plaques, on the quiet?

To avoid boat shortages this year, more  hulls will sooner or later be needed, which suggests that LaserPerformance may soon (or already?) be officially back in business as an approved builder.

Remember, LaserPerformance is currently offering non-class “Club Edition” Lasers on the market, at a reduced price. The only difference between these practice boats and the class-legal boats is the absence of a World Sailing plaque and the use of non-class sails.

Third, and it’s linked to the status of LaserPerformance as a builder, if the company is back in the business of producing Lasers, the likelihood of a name change for the Laser is much lower.

Laser Hulls at LaserPerformance Facility
(photo: LaserPerformance)
Indeed, LaserPerformance, and its related company Velum, own the Laser trademarks. It’s unlikely there would be a collaboration on boats if ILCA maintains its plan to change the name of the Laser to the « ILCA Dinghy » - a name change that has been contemplated for at least a year by the the Laser class and that was prematurely announced as completed on April 25.

Keep in mind, a name change requires in principle a two third majority voting of the membership, and a major change to both the Laser class rules (one month voting period) and the Laser constitution (6 months voting period). The deadline set by World Sailing for an Olympic contract to be signed is August 1st 2019, so time is short.

Regarding the constitution vote, the idea seems to be to hold the vote on an amendment at the same time as a vote on an amendment to the class rules, to attempt obtaining two third of the membership vote within a month.

There are around 14,000 class members world-wide. With such a dual vote being implemented, and the two third majority requirement, there are clear risks of failure in the ILCA name-change strategy.

And in case of a failure to secure the required two third majority, there seems there would be no other Plan B than reaching a deal with LaserPerformance...

If the Laser is kept as the name of the boat, the Laser class will need to reach a new trademark deal with LaserPerformance / Velum for using the Laser name beyond September 1. This would actually need to happen prior to August 1st, the deadline set by World Sailing for the Olympic contract.

What kind of fees / royalties will the Laser class and builders have to pay the trademark owners is unknown and will need to be negotiated by the parties. It seems unlikely that the usage of the Laser name will be a freebie, if there are new builders involved.

Fourth, the resignation of the Chair of LaserPerformance, Bill Crane, seems confirmed, but it’s unclear what were the reasons for this resignation, who is the replacement, and what are the implications. Bill Crane was usually considered a moderate voice at the level of LaserPerformance.

See for example this most interesting article where he is interviewed, and even discusses the tabou question of upgrading the Laser hull.

Note that the website of the international Laser class has not been updated as Bill Crane’s name is still mentioned, so it’s unclear if LaserPerformance currently has a representation on the Laser class governing bodies (ILCA World Council, ILCA Advisory Council).

Fifty Shades of FRAND?

Fifth, the fair, reasonable and non-discriminatory (FRAND) requirements by World Sailing may not be that much of an issue for LaserPerformance after all. On May 15, the company stated: « LaserPerformance is cooperating with regards to FRAND policies; we are open to supporting a FRAND policy that is issued and accepted by all builders & trademark holders of Olympic classes. »

Of course, the devil may be in the detail, but it seems that LaserPerformance is prepared to do as much (or to be more precise as little) in terms of FRAND as what other classes such as the 49er, 49erFX, Nacra 17 and RS:X, are prepared to do.

Remember, in its circular to the World Sailing meetings, the Laser class stated that it would take 4 to 6 months to have new operational builders, and that it had already received multiple expressions of interest from 24 builders from many parts of the world (Europe, North America, South America, Asia).

While the Laser class did not provide any indications of its criteria to approve new builders, or the conditions for being licensed, and how many such builders there would be, it seems they would like to have at least one or two new builders and also to have at least some market competition among builders.

Remember, there are strong feelings, sometimes very strong feelings, vis-à-vis LaserPerformance, particularly in North America. The status quo with LaserPerformance as a single supplier is generally seen as unacceptable, except maybe in Europe.

Currently, dealers in Europe, North America, South America and other regions (except Japan, Korea, Australia, New Zealand) are not allowed to distribute boats built by the two only remaining approved builders from Australia and Japan.

As we previously analyzed, the risk of having multiple new builders, and free competition among them, is that the current builders, all located in high labour cost countries (UK, Australia, Japan), may become highly vulnerable and unable to compete with new builders in low labour cost countries (in Asia, Latin America for example).

Accordingly, it’s unlikely that the Laser class would take the steps for low cost producers to be accredited, which would result in cheaper boats internationally. While this would clearly be in the interest of sailors in general, and youth sailors in particular, to have new Lasers at a much more affordable price, it’s pretty unlikely to happen.

There are Lasers produced in China, but not by ILCA approved builders.
Picture: screenshot from Alibaba website
World Sailing seems also less in a hurry than the Laser class regarding timeframes for new builders. In its equipment strategy, it states:

« From a technical point of view, once the FRAND terms are available, it will require a new interested party approximately one year for the least complex manufacturing classes and potentially up to 2 years for the complex manufacturing classes to be able to manufacture the equipment. This means that between 2023 and 2024 all Olympic Classes could have multiple competing manufacturers. » (Source: World Sailing Olympic Equipment Strategy - November 2018).

The FRAND issue does not seems to be a black and white one. It’s not monopoly versus free market. It looks more like … fifty shades of grey … and we don’t know which shade will be the threshold that World Sailing will ultimately adopt to accept or reject the Laser for 2024.

Sixth, while there is much discussion about Laser builders, it seems that the issues related to parts, in particular the sails, are not being scrutinized as much by World Sailing and that no change in the current duopoly may be forthcoming in that regard.

We analyzed in this blog that the prices of the class-legal sails are overly inflated as they sometimes are 5 or 6 times more expensive than non-class sails. (US$600 to US$650 for a class Radial sail versus US$120 for a non-class one), with the sail button fee representing just a tiny part of the price difference.

Sails represents a huge part of the sailors’ equipment expenses, with top sailors using 10 or more sails per year. The annual cost of replacing sails can be much more than the cost of a hull, and top sailors typically change their hull at least once a year. And of course, hulls keep a substantial residual value, while used sails don’t.

Silence Louder than Words?

To conclude, we don’t know much, and the parties are tight-lipped, but sometimes silence is louder than words.

A plausible scenario seems to be for the Laser name to be retained, for limited progress to be done towards market competition regarding hulls, and to mostly have a status quo regarding sails and more generally parts.

It will then be a matter for this package to be wrapped up in a timely manner and be accepted by World Sailing, so that an Olympic contract can be signed, supposedly by August 1st.

Lots will depend on how World Sailing will deal with the Laser, on how stringent the organization will be regarding FRAND, trademark and related matters.

Yet, even if this minimalist approach, which seems to not require any membership vote, is adopted, time is relatively short to sort this out.

The recent actions by the Laser class, not only to banish LaserPerformance as an approved builder but also to change the boat name and therefore make the Laser trademarks essentially worthless, are seen by some as useful leverage. But it may also ultimately prove to be a deal breaker.

Even if the above described scenario of a return to a mostly business as usual situation seems plausible, anything can happen.

Stay tuned.

Note: List of 24 interested builders - as released by Laser class at the World Sailing mid-year meeting 

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