The mad economics of boat ownership

[Zing]

Here's an interesting example. The owners spent $2m on refitting her in 2018 and now 5 years later will sell her off an asking price of $2.95m, so let's say $2m for a quick cash sale - they get the refit cost back only. That means whatever the original purchase price was is totally lost, maybe another $2M, so 100% depreciation in 5 years. Running costs on top of course. Probably over $1m.

MIRAGGIO Yacht for Sale in Fort Lauderdale | 134' 7" (41.02m) 1988 Siar & Moschini | N&J

 

[jfm]

Nice refit it would seem, other than helm station. You're 100% right on economics.

Photos are taken at the Lerin islands, near Cannes. She is the old m/y Talon, renamed, which is an old banger brand-X yacht that has hung around south of France for the last 20 years in a cloud of quite black smoke. I think but not sure that Talon was owned by a guy who set up one of the "we come to your office" made to measure tailor services in London and elsewhere - I bought a couple of suits off them once

This yacht is in the no man's land that many yachts of its genre are in. Running a 41m yacht requires its owner to be quite rich, but such people don't want to own no-brand-name old bangers like this, just as they don't want a resprayed old Ford Granada/Zephyr on their driveway either. So yachts like this basically have to be given away, and even that's a vicious circle because the give-away price just serves to alert buyers in the lower purchase cost bracket even more to the running costs problem. There's little charter income, because charter customers are fussy too and don't want this.

All this applies generally in the ~27-45m size range. You can have your pick of big old Mangustas and Leopards (which are much stronger brand names than this yacht has) , etc, for the price of a new Princess ~40

These economics are very particular to yachts in this zone. I don't think you get the same economics in other yacht categories

 

[Momac]

I guess you could apply similar mathematics to any other boat of that age.
If you are paying others to do all of the work it seems to me better to buy a boat in the condition you are happy with rather than buy a tired example for restoration.

 

[Zing]

Nice refit it would seem, other than helm station. You're 100% right on economics.

Photos are taken at the Lerin islands, near Cannes. She is the old m/y Talon, renamed, which is an old banger brand-X yacht that has hung around south of France for the last 20 years in a cloud of quire black smoke. I think but not sure that Talon was owned by a guy who set up one of the "we come to your office" made to measure tailor services in London and elsewhere - I bought a couple of suits off them once

This yacht is in the no man's land that many yachts of its genre are in. Running a 41m yacht requires its owner to be quite rich, but such people don't want to own no-brand-name old bangers like this, just as they don't want a resprayed old Ford Granada/Zephyr on their driveway either. So yachts like this basically have to be given away, and even that's a vicious circle because the give-away price just serves to alert buyers in the lower purchase cost bracket even more to the running costs problem. There's little charter income, because charter customers are fussy too and don't want this.

All this applies generally in the ~27-45m size range. You can have your pick of big old Mangustas Leopards (which are much stronger brand names than this yacht has) , etc, for the price of a new Princess ~40

These economics are very particular to yachts in this zone. I don't think you get the same economics in other yacht categories

Indeed and interesting comments. She probably is at a level where if you don't spend any money on her you may if lucky and extract enough use to justify losing most of your purchase price in a few years. There will come a point where that will happen and she will then have to be scrapped.

I have noticed a few 4 year old boats selling recently for near to the original purchase price. A pretty unheard of situation for boats and this is In the 60'-70' area where I looked. I'm not sure what the best sector is going forwards.

 

[roa312]

Nice refit it would seem, other than helm station. You're 100% right on economics.

Photos are taken at the Lerin islands, near Cannes. She is the old m/y Talon, renamed, which is an old banger brand-X yacht that has hung around south of France for the last 20 years in a cloud of quire black smoke. I think but not sure that Talon was owned by a guy who set up one of the "we come to your office" made to measure tailor services in London and elsewhere - I bought a couple of suits off them once

This yacht is in the no man's land that many yachts of its genre are in. Running a 41m yacht requires its owner to be quite rich, but such people don't want to own no-brand-name old bangers like this, just as they don't want a resprayed old Ford Granada/Zephyr on their driveway either. So yachts like this basically have to be given away, and even that's a vicious circle because the give-away price just serves to alert buyers in the lower purchase cost bracket even more to the running costs problem. There's little charter income, because charter customers are fussy too and don't want this.

All this applies generally in the ~27-45m size range. You can have your pick of big old Mangustas Leopards (which are much stronger brand names than this yacht has) , etc, for the price of a new Princess ~40

These economics are very particular to yachts in this zone. I don't think you get the same economics in other yacht categories

@jfm may I ask you (only out of curiosity) what you think the total annual upkeep for this yacht would be if it were located in a decent harbor in the Mediterranean (high-level estimate)?

 

[jointventureII]

A boat I worked on was purchased for around €15m new. It was then sold, 3 years later, for €8m.

Lost over €6k / day just in depreciation.

 

[ari]

At proper custom superyacht level, I'm not sure economics works in quite the same way as it does for us lesser mortals. This 1969 Feadship had a $20M refit and was then for sale for about $6M. Apparently the owner died, and of course the boat is worth what it's worth, not what's been spent. But clearly at this level, some owners just do it for love - the money is spent to get what they want. What it's worth after that is presumably immaterial (otherwise they wouldn't do it).

 

[benjenbav]

At proper custom superyacht level, I'm not sure economics works in quite the same way as it does for us lesser mortals. This 1969 Feadship had a $20M refit and was then for sale for about $6M. Apparently the owner died, and of course the boat is worth what it's worth, not what's been spent. But clearly at this level, some owners just do it for love - the money is spent to get what they want. What it's worth after that is presumably immaterial (otherwise they wouldn't do it).

Doing it ‘for love’ is a nice turn of phrase. I’m sure that anyone who can cheerfully pay $20m for a refit isn’t doing it with an expectation of getting their money back 3 years down the road.

 

[Zing]

At proper custom superyacht level, I'm not sure economics works in quite the same way as it does for us lesser mortals. This 1969 Feadship had a $20M refit and was then for sale for about $6M. Apparently the owner died, and of course the boat is worth what it's worth, not what's been spent. But clearly at this level, some owners just do it for love - the money is spent to get what they want. What it's worth after that is presumably immaterial (otherwise they wouldn't do it).

Fantastic yacht. Now that might preserve its $6m current price a bit better. Pity about the $14m + purchase cost lost on the refit though.

 

[roa312]

A boat I worked on was purchased for around €15m new. It was then sold, 3 years later, for €8m.

Lost over €6k / day just in depreciation.

Those are some astounding figures, but depreciation seems to vary so much across the boating industry and different time periods. I've been subscribed to Boats.co.uk (James Barke) on YouTube, and I've noticed a general decrease in his depreciation estimates over the time he's been publishing videos, . In his latest video on a 2011 Fairline Phantom 48, the price was set at GBP 410k, and he estimates annual depreciation to be GBP 10k per year (2.4%!). Since the beginning of Covid, I believe used boat prices have generally increased significantly, which is probably one reason why his depreciation estimates are trending down. But who knows what the future holds - boats are very strange assets!

 

[SC35]

That interior woodwork would do my head in.
But I can see the point of it in a "superyacht on a budget" kind of way, assuming you had a large enough budget for repairs.
E.g. that port side storage compartment lifting hatch seems to get stuck in the video half way!

 

[jakew009]

Those are some astounding figures, but depreciation seems to vary so much across the boating industry and different time periods. I've been subscribed to Boats.co.uk (James Barke) on YouTube, and I've noticed a general decrease in his depreciation estimates over the time he's been publishing videos, . In his latest video on a 2011 Fairline Phantom 48, the price was set at GBP 410k, and he estimates annual depreciation to be GBP 10k per year (2.4%!). Since the beginning of Covid, I believe used boat prices have generally increased significantly, which is probably one reason why his depreciation estimates are trending down. But who knows what the future holds - boats are very strange assets!

I’d suggest the market is definitely starting to slow down now, lots of boats being dropped in price or simply not moving when a year or so ago they were never even being publicly advertised.

 

[jfm]

@jfm may I ask you (only out of curiosity) what you think the total annual upkeep for this yacht would be if it were located in a decent harbor in the Mediterranean (high-level estimate)?

Obvs a how long piece of string Q . I know the elements of typical expenditure because I have real time line-by line on a few 55-70m yachts owned by colleagues, and a few 30-35m including mine. The total cost is very variable because it depends on which elements the owner needs/buys.

Crewing isn't cheap: you might get lucky but as a general rule crew are building careers and an old banger like this isn't good on their CV. So young deckies in their first couple of years will do junior work but senior crew members won't be rushing for this job. You can even have that problem on a smart Dutch yacht if it's "only" 50m. Of course there is always a deal to be done, but crew will not be cheap.

So the tab might look like this in €...
8 or 9 crew. Numbers are €k monthly captain 11, engineer 8, first officer 6, chief stew 4, 4 others about 3 each . So that's 500k/pa with social security etc All ballparky. and if you lay off junior crew for winter this might become 350k. This assumes no crew rotation deals (so you're not paying 2 folks to do one job) which is an ok assumeption at 41 metres but the demand for rotation is increasing and might reach down to 40m soo

30-40 nice harbour hotspot docking nights 50k
250 crummy off duty docking nights 150k
Servicing and maintenance of everything 100k incl haulout @ potentially 2 years not 1
Replacements of equipment as it wears out 50k
Insurance 20k
management fee 50k
Crew food, uniforms consumables 20
Fuel for a typical med season during owner use periods? How long piece of string. Generators are say 15 litres/hour so 15 x 50 x 16 hour periods x 2 euros per litre is 24k. 25k on engines burn, so 50k pa on diesel. Maybe get commercial or Gibraltar/Montenegro fuel to cut this/halve this, fwiw.

So, VERY ballparky, that's €850k - €1m pa. If you charter heavily you could get a few hundred grand in income, but you'd deprive yourself of the peak periods, which is a bit self defeating. My comments are very general and YMMV.

Which shows my point: most who have the financial resources to handle this kind of expense without blinking do not want an old banger of a boat like this. So this boat is in the no mans land I described.

 

[MapisM]

Mangustas and Leopards (which are much stronger brand names than this yacht has)

Not disagreeing at all with anything you said, but actually Moschini heritage is rather respectable.
In fact, Carlo Moschini established also Custom Line in partnership with Ferretti, though the brand really grew and became valuable only after Norberto, years later, took full control of it.

Just saying, 'cause if I had much more money than sense I'd rather go for this Miraggio thing, than any 'Gustas.
Then again, folks with more money than sense would probably disagree!

None of this affects the validity of your reasoning, anyhow!

 

[PowerYachtBlog]

Not disagreeing at all with anything you said, but actually Moschini heritage is rather respectable.
In fact, Carlo Moschini established also Custom Line in partnership with Ferretti, though the brand really grew and became valuable only after Norberto, years later, took full control of it.

Just saying, 'cause if I had much more money than sense I'd rather go for this Miraggio thing, than any 'Gustas.
Then again, folks with more money than sense would probably disagree!

None of this affects the validity of your reasoning, anyhow!

That is not correct, as I was working with Ferretti Malta dealer at the time. Siar Moschini was sub-contracted to build the moulds and hulls 0f the first CL 94, 106, and 112.
We where give the brochure in 1997, and all the planning in that Spring/Summer.
If I remember the FCL was build in Forli in reality with the hull made at Siar Moschini.
IT ALL WENT DIFFERENT THOUGH
What happened is that Siar Moshini was actually bought by Azimut-Benetti Group in 1998 in a very clever strategic move, to make the hulls of the bigger Benetti and Azimut, with the bonus of slowing a player who was becoming extremely competitive. Although this did not last long, with FG purchasing CRN in 2000.
The first FCL 94 was launched in 1998.

But I agree SIAR MOSCHINI is highly respected and apart building with there brand, they did build under sub-contracting most if not all Intermarine Yachts in the nineties, and also Mochi's bigger hulls.
They where top tier in fiberglass in the nineties and large sizes, and if I remember well where also regarded in alloy construction.
I also think that Miraggio Siar Moschini 41m is still a very elegant machine.
I think more then brand name, what is a hard sell in this size is that in the last decade and the advances of large stern area which are lower and with pools and beach club area, people see this as old and as no fun.
I do agree that for those who have eye and want a seaworthy machine this is a nice machine though.
There is also a very similar Feadship to it, which I saw in one of the MC videos during the GP.

 

[ari]

Fantastic yacht. Now that might preserve its $6m current price a bit better. Pity about the $14m + purchase cost lost on the refit though.

I suspect the two owners concerned have bigger things to worry about, like being dead. (Or perhaps nothing at all to worry about anymore, depending on how you look at it).

 

[MapisM]

That is not correct, ...

I am well aware that eventually Moschini sold his own yard to Vitelli.
What I didn't remember is that it happened just two years after the Custom Line foundation.

Anyway, I maintain that I was correct in saying that there was more than just a sub-contracting agreement between Moschini and CL, which was indeed founded jointly by Ferretti and Carlo Moschini as shareholders.
If you check out this article, you will see that CL was established in 1996, and they even specify the ownership shares of Ferretti, Moschini, and their other two partners.
Unsurprisingly, Ferretti took over the whole CL, that became FCL as we know it now, right after Moschini sold his own production to AziBen, becoming for all intent and purposes a Ferretti competitor.

 

[PowerYachtBlog]

I am well aware that eventually Moschini sold his own yard to Vitelli.
What I didn't remember is that it happened just two years after the Custom Line foundation.

Anyway, I maintain that I was correct in saying that there was more than just a sub-contracting agreement between Moschini and CL, which was indeed founded jointly by Ferretti and Carlo Moschini as shareholders.
If you check out this article, you will see that CL was established in 1996, and they even specify the ownership shares of Ferretti, Moschini, and their other two partners.
Unsurprisingly, Ferretti took over the whole CL, that became FCL as we know it now, right after Moschini sold his own production to AziBen, becoming for all intent and purposes a Ferretti competitor.

Yes but the first unit which was the 94 was launched in 1998. The designs where made in 1996.

The idea with Moschini was that, you do the hulls for us in subcontracting and eventually if the CL brand picks up what we think will do, you become a share holder and one of the directors and Siar Moschini boat yard becomes a FG shipyard.
Up until the first CL Moschini was more of a partner who does the hulls and moulds then a share holder.

tbh why would Moschini sell to Azimut-Benetti if he had such a big cake.
I think only he can answer this question. The sale happened in the end of 1998. Not like in 2002.

 

[MapisM]

The idea with Moschini was that, you do the hulls for us in subcontracting and eventually if the CL brand picks up what we think will do, you become a share holder and one of the directors and Siar Moschini boat yard becomes a FG shipyard.

No idea of what those guys had in mind originally, but pretty sure a CL shareholder, Moschini already was right from the 1996 establishment, as also the article mention.
I can recall to have read more details back in the days, but God only knows where, and frankly I can't be arsed to google further, aside from the above article that took me a minute to find.
BTW, Ferretti as a company was formally unrelated to the original CL, which was instead directly owned by Moschini, Norberto and the other two chaps.
Only later, Ferretti (the company) took over the whole ownership, and CL became FCL.

Ref. why exactly Moschini sold to AziBen in between, again no idea, but money is usually a good reason for such transactions.
And pretty sure Vitelli knows how to be convincing, if his group growth is anything to go by!

That's all rather irrelevant anyhow, since you already agreed that it's unfair to tar Moschini with the "low-end builder" brush, which is all my first post was meant to say...