I was working on an article about independent brokers a couple of weeks ago which mentioned Ken Densison’s sale of Pegasus last year. After the article appeared, Ken got in touch to say that, really, I should hear the thoughts of his long time client and friend, Stanley Bey on the topic of yachts, brokers and the business of big boats.
I had a sense I knew what was coming. Bey had spoken at one of The Superyacht Group’s events in the United States back in 2006, offering remarkable detail on, insight into and honesty regarding his hobby of building and chartering superyachts. His passion, his guidance and his clear desire to help improve the experience of other owners and potential owners were clear. (We published Bey's talk in issue 77 of The Yacht Report, in September 2006. It is in many ways the model of what we continue to seek to achieve with The Superyacht Owner.)
Bey had, for many years bought, built and enjoyed yachts and had been able to sell them for a profit. But 18 months ago, he finally sold his last beloved yacht, Perle Bleue for a sum substantially less than it has cost him to build it. The spell was broken, and Bey and his wife decided they were done with yachting.
Ken Denison put us in touch, and before our scheduled telephone interview (which will appear in Issue 15 of The Superyacht Owner magazine), Stanley sat down to write me a preface in order that our chat start on the right footing. I have his permission to relay some of those thoughts here.
Hi Don. It's a rainy Sunday afternoon in New Jersey and since I usually express myself better in writing, I thought I would knock out a few words to you in reply to your last e mail:
You ask why I no longer build boats:
The size category of 38–45m that is best suited for my pocketbook and experience with building has ben destroyed by the resale marketplace. It is a category in which I believe we produced the most yachts, and is today's entry-level custom yacht for most people; hence the market is flooded with production and semi production yachts of this size. I had to sell 38m Perle Bleue at approximately half the cost to build her after trying for five years to sell the boat. Unfortunately we had several truly bad experiences with buyers including full deposits and written acceptances that reneged and tried to renegotiate the deal. Very disheartening! That is at the heart of the reason we withdrew from the construction market one and a half years ago.
I would not hesitate to put a large part of the blame on very hungry large shop brokers (at least that is what they called themselves) who whispered in the ears of buyers, ‘we can knock this price down’ to induce a commission for themselves. Many of these brokers were very young inexperienced individuals trying to make the next sale at any cost to the market. I had Ken Denison representing me on the buy and sell for over twenty years. Both of us would scratch our heads at the type of buyers that were brought to us and the conduct of the brokers and their pre sale demands, from on-board lunches to reams of documentation on service and operational records and charter bookings. We generously complied with all.
There is no question that today, one and one half years later, based on my market observations, the price of Perle Bleue would be even less. So to answer your second question, I would as a buyer today hunt down the best deal you could find using a very experienced broker. The best deals appear to be in the 25–45m range based on the observation I have made of the market place as it stands today.
The brokerage business is still a vital link for the buyer and the seller. This also applies to the charter market. The problem is finding the right people to work with. I have been lucky to have working with me a forty year veteran who owned a mega yacht construction business (Broward Yachts), owned a large house brokerage shop and then evolved to a boutique shop when he realized the younger and or less experienced brokers were nothing but a headache.
On the subject of brokerage houses for the charter business, that is the only route to go for the owners of yachts that wish to charter. Having worked with many large and small houses again it boils down to the experience of the individual broker. I always had a large house broker handle our book and finances of the charter. It worked very well until the brokers started giving away the charters.
From 2007 on, I handled my own charters averaging over one million dollars per year and it was a lot of work. The two and four week charters dissolved into one week and long weekend charters with the resulting increase of work on my part to arrange these charters and all the details of the trip. 2012 saw the collapse of our charter business as prices slid to less than half of our previous revenues.
With a Lloyd’s five year survey looming large and over seventy thousand miles logged in four and one half years it was time to get the boat in shape so we withdrew from the market and spent six months getting Perle Bleue perfect mechanically and cosmetically including engine room repaint and exterior paint. The interior also received a complete refit.
If you are going to charter, be sure that your investment will have a proper return. People lose sight of the fact that chartering is a business. The new owners that have bought these half price pre owned boats that are on today’s market could probably afford to get the lower rates for charter since their investment is much less. However, that is the tip of the iceberg.
Running costs are higher than ever and must be accounted for to return fair value to the owner.”
To sum up about brokerage houses: I have never bought, sold or chartered a vessel with out using a broker. They are vital to the deal! But you have to have the right person.
Stanley Bey’s insights and observations, reflections and advice are a rare and wonderful thing: He speaks from a position of considerable experience and with an honest love of the topic. Though he says he’s done with sailing his own boats, he still manages to enjoy time on his friends’ yachts and is clearly someone who is more than willing to discuss the intricacies of what was his hobby.
A full interview with Stanley Bey will appear in the forthcoming Issue 15 of The Superyacht Owner magazine.