Stumbling blocks: The fiscal planning of a superyacht
If operational and maintenance costs are wildly misaligned with expectations it is frustrating, confusing and – in the worst cases – enough to cause abandonment of the yachting dream altogether.…
What are the most common stumbling blocks to fiscal planning of a superyacht, and how do you prevent unnecessary wastage, asks Esther Barney.
For many owners, the ongoing expense of a superyacht is as significant as its original price tag. If operational and maintenance costs are wildly misaligned with expectations it is frustrating, confusing and – in the worst cases – enough to cause abandonment of the yachting dream altogether. So what are some of the common stumbling blocks to fiscal planning of a superyacht and how do you prevent unnecessary wastage?
Be wary of quick budget guesstimates given to you prior to purchase of a superyacht, as these can be misleading if they have not taken into consideration any number of crucial variables. Historically, figures of 10 per cent of a yacht’s value have been bandied about as an annual operational budget, but all those consulted disagreed with quoting a standardised amount.
“What this suggests is that it will be cheaper to maintain an older yacht [of a given size], which is lower priced. But an older yacht needs more maintenance, so this is obviously untrue,” points out Rupert Connor of management company Luxury Yacht Group. The company has an online cost calculator tool (in the management section of its website, luxyachts.com) with over 30 factors – from the type of engines to how many weeks the owner spends on board – to give owners an understanding of their vessel’s potential operating costs. “The tool tends to be accurate, give or take 10 per cent of the stated cost, and it’s a good starting point for building a budget,” says Connor.
"You should create a budget based on the class of builder as well as the operational profile the owner anticipates.”
Maintenance budgets also fluctuate depending on the yacht builder, says Captain AJ Anderson of yacht managers Wright Maritime Group, who has built and run numerous superyachts over several decades: “If you buy a 60m yacht from one builder for 60 to 80 per cent of what you would pay for the same length vessel at a different builder, you should expect that your maintenance, repair and general care expenses will be more on the boat with the lower value, [because it is] lower quality. You should create a budget based on the class of builder as well as the operational profile the owner anticipates.”
Not only is this important for first-time owners to appreciate, but also those who bring preconceived ideas about being able to run vessels to the same budgets as their previous yachts from different builders.
Another area where owners need to understand the financial implications of operations is the creation of budgetary cycles (it’s not always an annual budget – often a three-year time period is more appropriate to take into account maintenance, refit and repair including repaints).
It will also help to set out ground rules for spending with the captain and crew to prevent unexpected big-ticket bills, perhaps even setting up approval limits for single items.
Last-minute ordering of provisions or spares can also add up significantly, so talk to the captain about setting out protocols for purchasing which can have a noticeable impact within a short time period.
One of the best ways to prevent unexpected costs piling up from your superyacht’s operations is to make sure you have the best communication possible with the captain and, if applicable, the management team ashore. Let them know your expectations and listen to their advice on realistic costs. They will have built up years of experience and should be able to advise on how to make the most of your money without losing quality in service and experience. Which should leave you worry-free and able to enjoy your superyacht.
This is an abridged version of a full article in Issue 4 of The Superyacht Owner. To read the full article, subscribe to the magazine.
For many owners, the ongoing expense of a superyacht is as significant as its original price tag. If operational and maintenance costs are wildly misaligned with expectations it is frustrating, confusing and – in the worst cases – enough to cause abandonment of the yachting dream altogether. So what are some of the common stumbling blocks to fiscal planning of a superyacht and how do you prevent unnecessary wastage?
Be wary of quick budget guesstimates given to you prior to purchase of a superyacht, as these can be misleading if they have not taken into consideration any number of crucial variables. Historically, figures of 10 per cent of a yacht’s value have been bandied about as an annual operational budget, but all those consulted disagreed with quoting a standardised amount.
“What this suggests is that it will be cheaper to maintain an older yacht [of a given size], which is lower priced. But an older yacht needs more maintenance, so this is obviously untrue,” points out Rupert Connor of management company Luxury Yacht Group. The company has an online cost calculator tool (in the management section of its website, luxyachts.com) with over 30 factors – from the type of engines to how many weeks the owner spends on board – to give owners an understanding of their vessel’s potential operating costs. “The tool tends to be accurate, give or take 10 per cent of the stated cost, and it’s a good starting point for building a budget,” says Connor.
"You should create a budget based on the class of builder as well as the operational profile the owner anticipates.”
Captain AJ Anderson, Wright Maritime Group
Maintenance budgets also fluctuate depending on the yacht builder, says Captain AJ Anderson of yacht managers Wright Maritime Group, who has built and run numerous superyachts over several decades: “If you buy a 60m yacht from one builder for 60 to 80 per cent of what you would pay for the same length vessel at a different builder, you should expect that your maintenance, repair and general care expenses will be more on the boat with the lower value, [because it is] lower quality. You should create a budget based on the class of builder as well as the operational profile the owner anticipates.”
Not only is this important for first-time owners to appreciate, but also those who bring preconceived ideas about being able to run vessels to the same budgets as their previous yachts from different builders.
Another area where owners need to understand the financial implications of operations is the creation of budgetary cycles (it’s not always an annual budget – often a three-year time period is more appropriate to take into account maintenance, refit and repair including repaints).
It will also help to set out ground rules for spending with the captain and crew to prevent unexpected big-ticket bills, perhaps even setting up approval limits for single items.
Last-minute ordering of provisions or spares can also add up significantly, so talk to the captain about setting out protocols for purchasing which can have a noticeable impact within a short time period.
One of the best ways to prevent unexpected costs piling up from your superyacht’s operations is to make sure you have the best communication possible with the captain and, if applicable, the management team ashore. Let them know your expectations and listen to their advice on realistic costs. They will have built up years of experience and should be able to advise on how to make the most of your money without losing quality in service and experience. Which should leave you worry-free and able to enjoy your superyacht.
This is an abridged version of a full article in Issue 4 of The Superyacht Owner. To read the full article, subscribe to the magazine.
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