In fairytale style Grant Dalton's team finished second in the third America's Cup pre-regatta in Valencia yesterday which, combined with their third placing in the opening regatta in Marseille and the win in the second pre-regatta in Valencia, was enough to give them the 2004 America's Cup Class championship.

"I can only be happy with that", said a beaming Dalton, who was drenched in champagne by his team during the prizegiving. "I think we have done a lot better than we expected."

Although it is still some way out from the 2007 America's Cup proper, Team New Zealand will take plenty of confidence and satisfaction from their performance in Valencia.

It will also go some way towards silencing their critics, who believed yachting's greatest prize could never return to Auckland because Team New Zealand couldn't foot it with the big-budget campaigns of Alinghi and Oracle.

"The danger for us, having been almost too successful too quickly, is we do a good All Black trick - lose the World Cup then have a couple of good years and then fall off the cliff again," Dalton said.

Team New Zealand's race boats, NZL81 and NZL82, have showed they can be competitive, which is not entirely unexpected as it was always assumed they were okay.

They just needed a lot more time on water. However, it is still unknown whether the revolutionary hull appendage, the hula, actually works.

"We are so different from everyone else, the hula may work, it may not. I haven't got a clue," Dalton said.

Team New Zealand will regroup in Auckland in early December.