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What's an average yacht program look like?

Discussion in 'General Yachting Discussion' started by Gulfer, Jan 27, 2020.

  1. f3504x4ps

    f3504x4ps Member

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    Very interesting thread and an eye opener for me as to costs. Thanks for sharing
  2. ranger42c

    ranger42c Senior member

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    Comment from the smaller-boat audience, and pardon if I didn't understand you comment: Your Captain shouldn't be made to feel like that at all. Should be a mental partnership between owner and Captain. Of course that means the onus is on both to make that happen.

    And FWIW, that likely doesn't always mean complete agreement during the analysis phases. I, for example, as both owner and Captain... often don't completely agree with myself while I'm trying to work out a way forward.

    -Chris
  3. olderboater

    olderboater Senior Member

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    A fun little tool to play around with.

    https://www.luxyachts.com/yacht-cost-calculator

    I did a 112' boat there with 10 weeks of owner usage and the low end was $847k and the high end was $3.8 million with the middle ground being around $1.4 million so $1-1.2 million seems achievable. The $1.4 million number does include a $200k reserve for capital repairs, $20k for interior, $86k for exterior, $66k for "engineering"/equipment rebuilds, and $30k for other equipment such as AV, Tender and Electronics.
    Last edited: Jan 29, 2020
  4. German Yachting

    German Yachting Senior Member

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    That tool gets exaggerated if used outside the 20-80% range. I couldn’t imagine a 112 being $3.8M yearly even when you consider that includes fairly high reserves.
  5. olderboater

    olderboater Senior Member

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    Yes, it does, as the instructions advise.
  6. Beau

    Beau Senior Member

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    So we have a fair number of very seasoned captains on the forum, I think. Can one or more of you give us first hand knowledge of the average annual costs of operating a recreational vessel in the 110-120 foot range in a similar manner as described by the OP? Maybe another owner?
  7. Gulfer

    Gulfer New Member

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    We've always had a good relationship. But, when you're new owner and ask deep questions like "What is Port again?" :) At that point, it's hard to say it's a partnership. It's more neophyte and master. Which translates into a lot of dumb ass questions and having the same **** conversation over and over again, until it gets through to my thick head.

    Today, I think we have a good partnership.

    p.s. I'm sure some of you Captains know what's it like to break-in a new owner.
  8. mapism

    mapism Member

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    Yep. With pleasure boats, it's indeed normal that the market value, among other thing, depends on the engine hours clocked.

    But I am a bit surprised to hear that happening also with such a big vessel, professionally managed.
    I mean, measuring engines wear based on running hours is actually a wrong convention. A very widespread one, but still wrong.
    The real indicator that should be considered (and in fact, that's what the maintenance of truly big engines depends on) is the amount of fuel burnt.
    And I expected this to be well known to anyone who is supported by a professional captain, when evaluating a boat.

    I mean, for any given distance covered, the faster of those two boats clocked just about half the hours of the slower one.
    On the other hand, it's easy to guess that she actually burned MORE fuel, not less.
    And THAT is the correct parameter to consider, in order to estimate the engines wear and tear, not the running hours.
    Assuming all other usual things to be equal (conditions, maintenance, etc.), I would rather have the slower boat with twice the hours but less stressed engines, with no hesitation.
  9. ranger42c

    ranger42c Senior member

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    Heh... don't feel like the Lone Stranger... almost nobody is born knowing everything about boats and boating.

    Heard of a Captain the other day -- who was also acting as broker for a boat some friends were looking at, who didn't know, when asked, where the watermaker was.... There are many circumstances where that might not have been a surprise response, but in this case it apparently didn't lead to instant trust.

    -Chris
  10. Ken Bracewell

    Ken Bracewell Senior Member

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    How long is a piece of string? There are so many variables to consider. Such as age of the boat, owners usage level, distances traveled, geographical location (ease-of-shipping for spare/replacement parts), construction material (fiberglass is much less expensive to maintain than metal).
    As an average I would suggest a range somewhere in the neighborhood of $100K-$130K/month. This is an all-in number, including insurance, payroll, dockage, maintenance, etc. It does not, however, include Capital Improvements.
  11. ychtcptn

    ychtcptn Senior Member

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    5 years ago a very heavily used WP 130 was about 1.7 million
  12. Beau

    Beau Senior Member

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    Thanks gentlemen. At least its some real world info to add to this discussion. Seems the operating cost exceeds $1.2m by all measures, so anyone who is thinking it might be $750K is in for year end sticker shock?

    These number are way out of my wheelhouse! I'll keep my little Post....
  13. ychtcptn

    ychtcptn Senior Member

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    Broker said "400k to run boat"
    Time to find another broker.
    I've had many an argument with brokers about this. To them they always low ball running costs, they want to sell you the biggest boat possible, if he told the truth, you might buy a smaller boat for less money.
    Honest question: If he told you 1 million a year, would you still have bought the boat?
  14. SATPHONE

    SATPHONE New Member

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    I'm a longtime forum lurker, and until now, a never poster. My family and I have been chartering boats from 112' thru 170' for almost a decade. Over the past several years we have been contemplating the purchase of yachts of similar size. On each occasion, the numbers do not work in comparison to chartering. We frequently charter W112's at $45k/week and w130's at $90k/week. We have spent more for larger boats, but have found that the extra space and extra crew to be more of a liability than an asset to our enjoyment. Our typical load is 2 adults and 5 kids. Even as we approach 5-7 weeks of charter a year, it still makes great financial sense for us to continue "renting" in lieu of ownership. I think as we head towards retirement and the ability to spend 8-10 weeks on board, we will still charter. Based on our particular needs, the best captains and brokers always seem to whisper in our ears.........."never purchase".

    Regards,

    David
  15. olderboater

    olderboater Senior Member

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    One little thing can make a significant difference too. Many do bottom paint annually. We average 2.5 years. However, we clean the bottom every three to four weeks and never scrape it. We do prop speed annually. We use hard rather than ablative paint.

    Your usage likely determines how much of your crew is full time and how much you fill in.

    I've attempted to normalize our costs, removing extras we provide such as condos for all our crew and treating the crew as full time assigned to the boat, when in reality we save on the 130 because our crew works on other boats we own. I've also eliminated meals when at home and put only the costs when cruising. Ours is still quite high as we often take everyone aboard including crew to five star restaurants. However, we save on beverages as we very seldom consume or serve alcohol. Our marina costs are high as we very seldom anchor. Also, we include all costs for entertainment, for us, guests, and crew. We've also adjusted dockage to leasing rather than owning.

    Here's our adjusted average on a 130

    Food, provisions, entertainment. $220k
    Transportation to and from boat $65k
    Crew salaries $720k
    Fringe benefits including payroll taxes, health insurance, 401K $170k
    Uniforms, licensing and training $60k
    Insurance $70k
    Regulatory, Legal, Accounting, Administrative $24k
    Dockage $100k
    Customs and port fees $20k
    Fuel and lubricants $150k
    Maintenance (including bottom paint, diving, consumables, chart subscriptions, equipment, tenders) $120k
    Communication (satellite phone, internet, tv) $50k
    Total average operating expenses $1.769 million

    Now that reflects no refits, no rebuilds, nothing major as we haven't yet done anything major. It also doesn't include depreciation.

    Our capital reserve started at $200k per year but has been reduced since no expenditures so now an average of $170 per year.

    Depreciation about $1.5 million per year on average over the first five years with more at first and starting to depreciate less now.

    To change that to a 112':

    Reduce salaries and fringes by $150k
    Reduce dockage, fuel and insurance $50k
    Reduce other $20k
    At our level would be around $1.5 million

    While I do think it's beneficial to look at others information, you then need to go through and do your own line by line based on your usage and your hiring and your details.

    Something like the calculator on luxyachts is a good place to start as it gives you detailed numbers against which to compare and argue. It's hard to argue with a lump sum of $1.8 million but if it shows uniforms of $31,000 then you can quickly say what you think you'll spend or say you don't use uniforms so it's $0. At least it tells you many things you need to budget and helps you not overlook any.
  16. olderboater

    olderboater Senior Member

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    They casually toss out those numbers. Go back and bill him for the excess. See the reaction. That's not a misjudgment or mistake, that's a gross misrepresentation. Either the broker or captain or whoever knows no better in which case they're incompetent or they're intentionally misrepresenting in which case they're dishonest. Neither incompetent or dishonest is good. The potential is ruining the experience, which I'm glad you haven't let it do to you.

    Another place I've seen serious misrepresentation is telling one the size crew required and the pay for various crew positions. Now, in my numbers for crew costs, you could reduce those costs if not flagged US and using a US crew if that was one's choice.
  17. olderboater

    olderboater Senior Member

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    We chartered WP 130's, 112, PM 85, Hatteras, Burger etc for over a year and absolutely is less expensive for any normal usage. We chartered a total of 30 weeks in one year, 36 weeks in 15 months. Even at that level, by the time you figure depreciation, chartering is less expensive. We spent nearly $3.6 million chartering in those 15 months (including expenses and tips and other), an annual rate of $2.9 million. That compares to an operating cost of $1.8 million without depreciation and capital reserves.

    Financially, chartering, partial ownership/timeshare, and many other arrangements make sense. However, we still chose to and will continue to own. We like being able to personalize, to keep stuff aboard, to have our own, to have our own crew, and all the other aspects of owning, but would never profess it makes sense financially.

    If you spend as many as 20 weeks a year using a boat, then I'd likely recommend owning. Fewer than 10 weeks, then absolutely chartering. In between one must look at all the factors.

    Now, of course, the other option is to own and then put your boat into charter to recover some costs but that has it's own pluses and minuses.

    But then we own cars we drive 4000 miles a year and a house we're in 120 days a year and wouldn't change a thing. I don't let the CFO in me run my life.
  18. Gulfer

    Gulfer New Member

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    IMHO, I think your financial analysis is spot on. :( I've done the same analysis multiple times on owning a plane. So, we agree financially speaking owning a boating is INSANE. (evil laugh) You can run the numbers a million different ways; if you're objective... it's crazy.

    For what's it's worth, here is my 2-cents. First, you have to have PASSION for boating. The day it becomes another vacation or something I do, I'm out.

    When you own the boat, it's like having a vacation house that moves. But, the real difference that makes it special is the crew. The crew becomes your friends and family. You take care of them, they take care of you. It becomes a unique bond that's hard to describe.

    So, we go go on a trip, it's not like going to a nice resort. It's like coming home with 5 star service.

    I used to joke, that our family vacations needed to be a max of 10 days. We tried longer stays, at great places in 1st class accommodations. But, sometime on day 8 or so, the kids start turning on us. It's becomes almost a count down to "Dad, when are we going home?".

    Due to the REFIT, we went to Hawaii. Stayed at a nice resort and all that. Same thing happened. Arg!

    But this summer the entire family did 3 weeks in the Northeast (even some in-laws joined us here & there). Honestly, if schedules permitted I we would have stayed longer.

    We did 2 weeks in the Bahamas, and there was no Cell Service. NO CELL SERVICES for a teenager, is like HELL on earth. But, they didn't care. We actually just hung out, talked to each other, and had fun. No Drama. Priceless.

    I know I talk about the numbers. It's the business man in me. But, I can't put a price tag on how the boat has changed my life, the my relationship my family.

    One last thing... sorry for the tangent here. I'll try to keep this short. I saw this speaker in December, really good. He started out talking about this Billionaire on his death bed. He said, him... You've accomplished so much, what do you wish you did differently. He said, he wish he had more time.

    Then proceeds to ask the audience how many truly memorable moments you've had in the last month. People thought, and he said on average it's maybe 1 a month. That's only 12 special moments a year... You add all those moments up, that's your life. Most of life is on cruise control. He goes on.

    I sat and thought, I had more truly memorable moments in the last couple of years on the boat, than probably the previous 10+ years.

    In short, that's my justification.
  19. Ken Bracewell

    Ken Bracewell Senior Member

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    And just like that, you're now speaking like an educated and seasoned boat owner.
  20. Seasmaster

    Seasmaster Senior Member

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    Here's the engineering side of the program.

    Engineering flow chart.jpg