Are we being screwed by marina operators?

[maxxi]

Some years ago I had correspondence with the Chairman of the Monopolies Commision (I think that was his title, I believe it was Sir Barry Cass). In this correspondence he tacitly acknowledged that MDL enjoyed a de-facto monopoly position and that there was probably restricted practice within the marina trade.

This was due, he stated, to loopholes in the law that exempt Port Operations from monopoly scrutiny and that MDL claim NOT to be providing services but rather, they are providing licences, also exempt from monopoly scrutiny. He was therefore unable (and unwilling) to act.

The correspondence ceased when it was suggested that, having identified a loophole in the law which was detrimental to the consumer, a competent government would take action to close that loophole.

So there you have it, the marina operators are exempt from monopoly legislation and are not providing services - merely licences. Cynical government recognise the adverse effect of this but surprise, surprise, won't act.

Roll on the revolution!.


<hr width=100% size=1>

 

[DavidM]

Re: Monopoly Are we being screwed by marina?

I don't know who you had correspondence with but either the law HAS changed or he was misinformed. Marina opertaors are subject to the same monopoly scrutiny as anyone else. In any event, where is the monopoly? MDL, Premier, Crest Nicholson, Dean & Redyhoff, Yacht Havens, Moody's, C&N, Berthon ..............

<hr width=100% size=1>

 

[[2574]]

Re: Monopoly Are we being screwed by marina?

David,

Yes I agree, that was misinformation.


<hr width=100% size=1>

 

[andy_wilson]

Not exactly true

Marinas are classed as port operators and are therefore exempt from the scrutiny of MMC.

This was as I found out a couple of years ago when I looked into it.

I agree about the competition element however. Even if MDL have three in a row on The Hamble and 8 sites within a short hop of The Solent, there are still enough alternatives to dispell the myth.

<hr width=100% size=1>

 

[[2574]]

Re: Not exactly true

This is not correct. The Monopolies & Mergers commission was replaced by the Competition Commission and the Competition Act 2000 and marina operators are not exempt under the CA2000.

<hr width=100% size=1>

 

[Oldhand]

Some South Coast marinas are located in worthless mudflats where flooding risk would preclude any other use. So the cost of land doesn't apply to those which are just as expensive as those located on "hard land".

<hr width=100% size=1>

 

[MainlySteam]

Re: Yes, and here\'s a worked example

Rob

Thanks for that. As I imagined it would be there.

Would certainly cause some interesting distortions in the market (both with respect to rents and the sale/purchase of marinas) and compromise the willingness to invest if it were not so. Maybe those with "interesting" development concepts could get into marina ownership themselves, however, it is my experience that they rarely, not unexpectedly, have the wherewithall to do so.

I am constantly amazed by the number of even small business owners who consider that their business is worth what they put into it, not to what the earnings to a purchaser would be.

I know, another country another place, but we have one mutually owned marina near to us - it is about the most expensive around, the maintenace levy on ones own title berth is well on the way to being as much as it costs to rent a berth elsewhere (and it is not in a great location as it has severe draft constraints for sailboats) and seems to have a hard job selling all its titles (probably the reasons for which include the inevitable squabbles when you get many owners all thinking they should be running the place).

John

<hr width=100% size=1>

 

[PeterGibbs]

Re: Yes, and here\'s a worked example

An interesting reply, but one that is not entirely satisfying in explaining the differential between UK and all other European marina prices. After all bank rates are but 2 points different between us and them but occupancy charges are 33% different and more!

I continue to maintain that if an engineering project is capable of paying back the capital outlay within 2-4 years it is exceptional under any circumstances, and therefore not a model that should be considered the norm for the marina industry.

MDL attempted to securitise their pontoons in the late 80's and early 90's employing property development techniques and the result is clear for all to see: it does not work. But the residue is the disproportionate number of sites they control in S England and the influence they have exerted on pricing throughout the industry. However you care to caluculate it their return on capital is....what's the word I am searching for....

PWG

<hr width=100% size=1>

 

[PeterGibbs]

Re: Yes, and here\'s a worked example

I would look at it the other way round. If your MP thinks that abuse of a market position is not worth taking seriously, you should seek an alternative representative.

Of course, if you disagree with the proposition itself, and believe that the market is working efficiently.......have a financial interest in a marina.....

PWG

<hr width=100% size=1>

 

[alant]

Re: Yes, and here\'s a worked example

Dolphin Marina has recently been purchased, at an unknown but relatively low cost, from the receivers - the original developer had a 75% holding, which is now 100% Poole harbour Authority. Will this reduce visitor berthing costs?

<hr width=100% size=1>

 

[MainlySteam]

Re: Yes, and here\'s a worked example

I am not sure what interest rates have to do with what marinas charge, they may have some influence on peoples willingness to invest in a marina, however. Normally charges come about from what people are prepared to pay. It would seem, admittedly in my case from the outside looking in, as the charges seem to be sustainable in the market, that UK boatowners are capable and willing to pay much more than those in some other European countries.

Also, are you suggesting that the return from a business, marinas in the case you give, should be related to the capital invested in it. If you are saying that how do you feel about the return that should be expected from a business that has very low capital needs - very little return? Perhaps you only want that rule to apply to businesses where you are the customer, not to those which you might own or be employed by.

John

<hr width=100% size=1>

 

[Gunfleet]

Re: Monopoly Are we being screwed by marina?

Monopoly law is a joke. Have you tried to buy a DAB radio? The basic ones all seem to be £99.99 no matter where you shop. SO what's that, a co-incidence?

<hr width=100% size=1>

 

[DavidM]

Re: Yes, and here\'s a worked example

Peter, I am sorry but what you say about pay back is not correct nor achievable. 2-4 years pay back on building a marina in the UK cannot be done. On why different UK to other European? I have no idea about how European marina businesses or local authority run marinas are funded, what costs they have. For sure they do not have Crown Rent to consider just as one example.


<hr width=100% size=1>

 

[tcm]

Re: Poor Britons?

I think you're right. And, whilst speaking of things we know, er um...

<hr width=100% size=1>

 

[[2574]]

Re: Yes, and here\'s a worked example

Peter

There is a simple explanation as to why french marinas are so much cheaper than the UK an that is that generally they are municipally owned and therefore do have have to meet the funding costs nor the capital return that non public sector marinas do. Also, as far as I can ascertain the capital cost of developments are less in France simply because there do not seem to be such tough planning and environmental constraints to deal with. This, I must add, is not a professional opinion, simply my users observation.

I was at Trebeurden marina earlier this year in my boat, it is a huge civil engineering project and I understand that the costs were met from the Amoco Cadiz oil spill compensation. So, there is a "free" marina the capital costs of which must have been £5m at least?

You mentioned engineering projects payback - you must not mean civil engineering I guess, because (I am in the property business) I am used to income yields of about 7% on property investments which intrinsically have a payback period of 14 years! Having said that I tend not to use payback as a measure in my business, DCF is much more valuable.

Rob

<hr width=100% size=1>

 

[[2574]]

Re: Yes, and here\'s a worked example

John,

Tell us a bit about the marina business in NZ. Does demand outstrip supply as in south UK? What opportunities are there for new marinas out there? What are the planning laws like?

Rob

<hr width=100% size=1>

 

[charles_reed]

The major difference

between UK and european marinas is that the latter are nearly all local government owned and in the UK they are nearly all commercial.

The reason for the difference is those "greedy" shareholders. In most cases yours and my pension funds.

<hr width=100% size=1>

 

[MainlySteam]

You asked for it - very long

Sure, no problem - keeping in mind, of course, for all of the following that a far smaller boating population here in a similar sized landmass. I cannot comment on the economics as have only had a little bit of contact with that here. I will ignore the little marinas in some of the minor ports.

Auckland is the biggest centre and best I can recall there are 6 marinas of considerable size in the greater Auckland area, excluding Viaduct Harbour (where Americas Cup was based). The largest is Westhaven, which is a big marina by most standards (although much smaller than the likes of Marina del Rey in Los Angeles, for example). From what I have seen, the marinas there are all pretty much full and a quite a number of Auckand owned boats are based in Tauranga. Viaduct Harbour, which is super yacht sized, has been almost empty since after the America's Cup - last time I was at Viaduct Harbour was about 4 weeks ago and best I recall there was not one sailboat in there. So if you have a super yacht I suspect that the market would be on your side at the moment.

Tauranga and Wellington are the next (I suspect there may be more berths in Wellington, but not sure on that). Tauranga has two large marinas, both of which are well done and Tauranga is a very nice location.. The older one of the 2 looked full to me when I was last there about a year ago and the other, which was only completed a few years ago, I think is probably close to being full.

Here in Wellington there are 4 marinas. Has been a while since I asked but the one nearest to us, which is on the Tasman Sea coast has berths available (for sale or for rent off berth owners). This marina is a mutual type arrangement and those who have purchased into it I do not think have done very well - there are always berths available for sale and seem to be at same price as have been for many years. In Wellington Harbour there are 3 marinas, of which two are modern floating dock types, the other is old and not very popular. It has free berths but the other two marinas are full - the one we are in is owned by the local city council the other is not. The Council owned one was built with expansion in mind (the other is right in Wellington City and has no easy expansion prospects) and they are just about to start building another set of docks to increase its capacity by 25% and there is a waiting list for those. There is not alot of difference in rentals for marinas around Wellington (and for owned berths similar if one takes the forgone interest on the capital and the annual maintenance costs) - we pay about the equivalent of GBP1,000 per annum for a 14 m berth, and that includes "free" power and water (eat your hearts out!, but I should add that average incomes are much lower for most people here than in UK).

Nelson and Picton at the top of the South Island both have a big marina each. Nelson, because of its absolutely supurb cruising location and nice city is very popular. Both marinas are essentially full and I know the Picton one has a waiting list (Most Christchurch owned bigger boats are berthed up in Picton, again becasue of the good cruising area and quite a number of Wellington boats are berthed there in order to dave the Cook Strait crossing to the Marlborough Sounds cruising area - Once outside Wellington Harbour it is hostile with no refuges until the Strait is crossed). Nelson is the only marina apart from our own that we regularly visit but I cannot say what the current visitors charges are as we always have the kind offer of a free berth (our boat was built in Nelson). I do know that back in 1997 when we lived on the boat for a while in Nelson that visitors were paying the equivalent of GBP3.50 (yes not a typo) per night (NZ$10/night) and that included power, water and showers. I guess it is more now, but nothing like you folks are quoting.

There are other odd smaller marinas spread around the country, but not to the likes of UK as we have very few harbours and refuges suitable for them. Further south from top of Soth Island there is essentially nothing more.

We have the same problems with environment protection legislation and the costs are huge with hearings, appeals, protests, etc, etc.

The ownership of marinas is a mixture of local body owned, privately owned and mutual society type ownership. Cost of rentals or ownership of berths in the middle NZ marinas is much of a muchness in broad terms, but in Auckland they are quite alot higher. I suspect that Auckland is a little like what I hear from you all in that there is a prestige to be seen to be in the "right" marina and there are more bigger and wealthier vessels which up the market for everyone. However, I believe, from what I have seen, that the marina out in Hauraki Gulf to the North of where the America's Cup course were is quite reasonable - and I am sure I am correct in saying that it is privately owned. It s a reasonably new marina but I have never been into it so cannot comment further.

Maybe one of the couple of Auckland forum members will see this and can comment further for up there.

So for those who have perservered through this, it boils down to the population pressures being much lower here, the NZ population has on average a much lower income than in the UK so prices reflect that (although that does mean that the average NZ'r may find it just as hard to pay for his berth as the average UK'r - only about 5% of the population here earn over the equivalent of around GBP20,000/annum) and there are far fewer wealthy pushing the high end demand up and which invariably pulls the lower up as well, but in terms of demand, waiting lists, ownership expectations, environmental, etc the constraints sound much the same.

As far as I know there is nowhwere in NZ where one pays harbour dues, or similar purely from the act of entering and anchoring or using a mooring in a harbour. There are not the same small locl harbours and pubs to sail to as you have (we have about 50 nm to go to the next eating or drinking hole once we leave the harbour, but in the Marlborough Sounds for example, the few resturants/lodges all have free moorings and water taxis for drinking and eating visiting boats.

John




<hr width=100% size=1>

 

[PeterGibbs]

Re: Monopoly Are we being screwed by marinas?

I think the consideration is no longer just the older defninition of "monoply practice" which is rather crude and covers only the most blatant cases of market manipulation. We have the EU to thank for the evolution of this concept to read now more like "abuse of a market position". Now this is what most contributors to this site seem to have in mind, and in this regard I think there's a very real case to answer.

Put it this way, if a business consistently, year after year, raises its prices above the rate of inflation, and with no apparent justification, and arguably in concert one supplier with another, what would you call that? Fair market forces? I think not.

In today's world this will not wash, and if we push hard enough, we will catch the attention of the authorities.

PWG

<hr width=100% size=1>

 

[MainlySteam]

Re: Monopoly Are we being screwed by marinas?

Seems to me that if it is all as profitable and extortionist as you claim then you seem to be ignoring a wonderful opportunity to get so rich you will never have to worry about the cost of marina fees, or anything else, again - you will be so wealthy. What I suggest is that you put together a business case based on your claims. If they stand up to scrutiny you will have no difficulty whatsoever getting the backers for either a new development (if that is possible from a planning point of view) or else purchase of an existing.

I would be very confident that you either do not prepare a case on the basis of some flimsy excuse, or else you will but will find that those with the money will not believe you. I am not sure if they would want to get into the UK, but I have a client who is just itching to invest their spare cash in a new business venture, but I have to say they are very smart on the financial side (which is why they have spare cash, of course) and will not be interested in dreams.

John

<hr width=100% size=1>