Rich Guys can't sell their Mega yachts

In todays's New York Times

http://www.nytimes.com/2011/01/22/business/22yachts.html?_r=1&hp
You Think Houses Are a Slow Sell? Try a Yacht
By GERALDINE FABRIKANT
Published: January 21, 2011
What is tougher than having one sleek mega-yacht for sale in a glutted market? The answer, for the moment at least, is having two mega-yachts on the market.

Jim Raycroft
The 161-foot Mine Games was put on the market for $28 million several months ago because its owner had a larger boat on order.

In boom times, yacht enthusiasts would order a new dream boat and keep their old one for the two or three years the builder needed to complete the new boat. Then, they would quickly sell the older yacht to impatient new millionaires and billionaires eager for their requisite status symbols.

But that equation changed with the financial crisis two years ago and took the superyacht market down with it


Well doesn't that just make you want to cry. A perfectly good multimillion dollar yacht going to waste.

 

You can sell anything, if the price is right

 

An... " I want the biggest toy in town" " supersize it" " Great Gadsby" .... madness swept thru the yachting industry during the bubble years. The market is glutted with super and mega yachts forcing down market value.
Yachts so big they cant fit into port...yachts so big that overextened fat cats cant pay the dockage. On my port side is a 100 footer slowly falling apart under port police supervision, 7 crew on the big white motoryacht at the end of the dock havent been paid in four mounths and are living without with electricity and water cut off, anchored offshore the port entrance, salt covered by winter gales is a 160 footer with helicopter on deck who cant pay the port dockage. An electrical engineering company specialized in big yacht systems was recently doing sevrice work for me and mentioned that his company had to take out a bank loan to cover over 100 thousand dollars worth of 90 day outstanding superyacht invoices .Yacht Contractors have shrunk from 25 employees to a handful. No respray paint jobs are taking place in the shipyard......4 years ago I had to stand on a waiting list for paint work. The big yacht industy took a hit and may never recover. Who will break up and recycle these beasts ?

 

The mega rich don't want other peoples discards. Without the long waits to build a boat it is possible that people won't be looking at refitting the tires old ones either and yes, the will need to be recycled. But what about the composite boats which are getting bigger and bigger.
It was said before the recession that many mega yacht owners felt their last vessel was to big and couldn't access the right spots any more. I can't help but feel these boys just got into one big pssng competition.

 

Rich folks went mad with gigantism. Like the Pharaohs building pyramids. The yachts became so in your face ostentatious that they are not safe to travel with. Billionaire toys and their guests don't fair well when confronted with the reality of the worlds coasts....an angry sea of poverty. The mega monsters are limited to anchoring off the Bay of St Tropez, looking at their mates megayacht thru binoculars , as they waite for a berth to free up on the coast so they may park and sell the beast. . .

 

Now these aren't the "Megas" or whatever they are now calling the huge ones, but build a product better than the competition and there is still a lineup of buyers. Here's five under construction.
http://www.deltamarine.com/nc_projects.html

They've also got so much repair business that they've called me and asked me to come back (I used to work winters with them). I'm not going to say names, but there are a lot of pretenders in the big boat industry and I imagine it is some of them that are most hurting. Things could change but these guys are booming.

 

"A trap of two mega yachts". Very similar to the in Finland well-known trap of owning two houses at the same time.

 

This is an interesting situation. Having worked in the megayacht industry, my wife and I saw this trend a couple years back. The problem is that the real rich want new megayachts. They don't want second hand boats. They especially don't want anything dated. On the other hand, you have the pretend rich. Those people were slaughtered in the recession. They aren't buying boats at all now. They were the market for dated megayachts.

There is one more interesting fact: No matter how much you drop the price of a megayacht, it won't sell. In fact you couldn't even give one away free. Why? The person who can only afford a cheap or free megayacht can't afford to move or dock the boat, never mind crew salaries.

Ft Lauderdale is littered with these boats.

 

This is an interesting situation. Having worked in the megayacht industry, my wife and I saw this trend a couple years back. The problem is that the real rich want new megayachts. They don't want second hand boats. They especially don't want anything dated. On the other hand, you have the pretend rich. Those people were slaughtered in the recession. They aren't buying boats at all now. They were the market for dated megayachts.

There is one more interesting fact: No matter how much you drop the price of a megayacht, it won't sell. In fact you couldn't even give one away free. Why? The person who can only afford a cheap or free megayacht can't afford to move or dock the boat, never mind crew salaries.

Ft Lauderdale is littered with these boats.

 

I suppose my attempt at creative sarcasm wasn't good enough. I just can't feel sorry for these people. Most make more in interest everyday than you or I make in our lifetime, and yet they can't afford to have two yachts? Pathetic.

Well call in the scrappers and break the damn thing up and recycle it!

 

You could have a really nice floating cathouse.

 

Well, I can't read the article so I don't know to what boats it is referring. (the Times asks me to log-in to view and there is a reason to want my info) Are we saying boats in the $20M - $30M range? There was a Delta that was sold and went around to Ft. Lauderdale (?) boat show two years ago. There was a guy there that wanted this now used boat so a deal was made for a $4M profit and a new boat ordered. I'm sure the top yards of Europe are the same (in demand). But, follow Stallupi's boats, for example (Moonraker, Gold Finger, Octopussi, Eight Is Not Enough) This guy hops around from yard to yard and throwing huge horsepower into these boats to go fast. One of them was made by Dennison in an attempt to do some things the Holland yard couldn't, or wouldn't do. I believe Dennison was a start-up specifically for that yacht (son of the owner of Fedship?). The Fedships I have been on were glitzy but not much relative to what a yacht should be. Now I see Staluppi has strted yet another new yacht company named Millinium and has teamed up with the third best large yacht builder in Washington State (Christensen) to build their boats.
This is new money. It is acting like new money and the REAL money runs from whimsy and instability. Plus, how can a yard that has never done something expect to be as good as a yard that has done it hundreds of times? All the bling and honeycomb-cored Italian marble a yacht can carry can't make up for experience.

 

Rich folks, when their pockets are overflowing , will always squander great wedges of cash on frivolous follies. The problem is the squander cycle. When its up and the Great Gadsby's are in full cry, boatbuilders and contractors are in hog heaven....when its down, bankrupt.

Be wise as a contractor. The guys I know who got hurt in this recent downturn were small subcontractors working for prime contractors. They expanded from 3 engineers, with a well respected program, into a dozen engineers to handle these mega projects. When the money up high went south, they were left standing with infrastructure and employee's they couldnt afford.
When I walk thru the local marine industrial park it looks like a deserted wild west frontier town. A few years ago it was normal to see workshop lights on at midnight on a saturday. There was even a special company suppling nightime illumination for paint companies working under the big tents.
It will be a good question as to what happens to all those overstylized , overpowered, 30 meter plastic motoryachts that were built in the new millenium with charter revenue as part of the ownership equation.
The charter market is flooded with boats competeing for charter in an economically shortened season. 1500 dollars per night just to keep them tied to the dock during high season. The bankrupt yacht on my port side fell into this trap....poor charter season, unable to pay the bank. That scenario is being repeated hundreds of times.
If youre in the market for a used yacht....drive a hard bargain.