Running a superyacht

If you were one of those who eyed Russian oligarch Roman Abramovich’s 557-foot (170 metre) superyacht Eclipse with envy, then take heart.

It costs him an absolutely frightening amount of money to run. The oligarch is spending at least €1,000 to simply keep the engine ticking over for around 10 minutes, at present prices. If you’d thought that taking care of your multi-million-dollar mansion was arduous enough, then a yacht should probably not be on your shopping list.

Even a small yacht – that is, one of less than 60 metres – will take a big bite out of your wallet. Having one of these boats is sometimes compared to running a five-star hotel at sea.

For an average-sized yacht of 45 metres, the maintainance price can range from anywhere between €2.5 million and €4 million per year, reckons Allan Wilson, chairman of independent yacht manager Wilson Yacht Management. “The magic number is 10% of the purchase price each year on crew and routine management. It’s either that, or double what you pay your staff and crew,” he says.

Crew costs vary depending on the size of the boat, but be prepared to shell out at least €1 million in the form of wages, food and flight costs, say experts. A 50-metre yacht will require around 15 crewmen, with the best captains charging a hefty fee to the tune of €10,000 per month, according to 2010 research by yacht networking website Dockwalk.

Top chefs on board are paid an average of €5,000 per month, chief engineers get more than €8,000, while the lowest paid – the deckhands – still rake up around €2,000 every month.

But the costs of management don’t simply stop with the crew. Dr Brian Gowans, director of yacht management at Cape Town-based Martech Group, compares running a yacht to running a small company.

“There are fixed costs, such as cost of ownership of a yacht, crew and mooring costs, and continuous upkeep costs – some of which are quite high. Then there are variable costs that are in proportion to the usage, and cover fuel, maintenance based on running hours and mooring costs away from home port,” he says.

Gowans says that some of the more expensive docking spots in the Mediterranean can cost up to $8,500 (€6,200) per day, while annual docking charges can be around $100,000, depending on the work to be done on the yacht.

Age and usage of the vessel are also factors that can shoot up or down costs – a “green vessel” used only occasionally by its owner will cost less to run than an older vessel being used at high speeds in all weathers, no thanks to the high cost of fuel.

“With the current fuel price, a full fill of a 55-metre motor yacht can cost around $99,750. But price varies and can change dramatically depending on the port – the sky is the limit for some of the costs incurred,” says Daniel Taylor, business development manager at London-based Andrew Weir Yacht Management. Experts reckon a 60-metre yacht will need around 150,000 litres of fuel.

As costs pile up, managing a yacht will demand professional help, says Wilson, and that’s where yacht management agencies come into play. While independent firms, such as Andrew Weir and Wilson Yacht Management, provide assistance with the daily running of boats – by hiring and firing crew, complying with sea regulations, and providing accounting help – bigger agencies often present a one-stop shop by including charter management, engineering assistance and brokerage services, too.

One such group is Monaco-based Fraser Yachts, which calls itself a “full-service yachting company”. It offers expertise on the purchase and sale of yachts, charter and yacht management, construction of boats, and crew recruitment, all of which are dependent on establishing a good relationship with the yacht owner, says Timon Fisher, the company’s manager of yacht services. “Working closely with an owner is vital to accurately determine the yacht’s running costs. Owners are increasingly more involved in running their yachts and our services ensure they get the best value from them.”

Typically, an annual budget is set up at the beginning of the year, later broken down into monthly budgets to give the owner a detailed plan of the funds needed. “Although actual figures depend on size, type, age and pattern of usage of the vessel, a lack of tight financial control has caused many an owner grey hairs,” says Gowans, who authored a book entitled Managing Boat Building.

The result is that more yacht owners are looking for professional management, despite the downturn. “It is a service that is necessary,” says Taylor. “Finding new clients is a problem at the moment but there is definite interest and we are cautiously optimistic about the future.”

Wilson, who estimates that his company has experienced a 15% decline in business during the financial crisis, expects a quick rebound. “The market was dire and we have to work harder to keep what we have, but the industry is not contracting,” he says. “As confidence grows, we expect a steady rise in the market in the next five years.”