Measuring the Wealth of Nations with Yachts !

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The Golden Question - When are we going to have a yacht that is worth ONE BILLION US$s ??! With the way things are moving and the constant battle of the egos between the world's 'super-billionaires', it is just a matter of time that someone will be willing to dish out a precious billion for their sea-worthy 'toy'.

Blohm & Voss, Germany's favourite shipyard, birthplace to many-a-yacht prodigies - has its workers round the clock building a mammoth yacht called the Eclipse. Surely, the owner seems to be giving out a message through its name to other yacht-owners.


Measuring Wealth by the Foot Like many things in the secretive world of superyachts, its exact length is hard to pin down. So is the name of its owner, and the cost of building it.


WHAT"S THE SIZE?

But according to the Web site of The Yacht Report, one of several publications that track yachting with the same intensity that gossip magazines cover Hollywood hunks, the Eclipse is 531.5 feet long. Others like www.CruisingYatch.com go one step ahead and claim it to be a 550 feet mini-ship. It would not be surprising if it is like many super-structures (towers and skyscrapers) on land nowadays, where the height is flexible - so just incase your competitor claims a height, they go out and better it by a few metres.


Likewise, that’s six and a half feet longer than the Dubai, an 11,600-ton behemoth that now holds the record as the world’s largest yacht. Its owner is the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum (covered gloriously on this blog, click on Dubai in the Label Cloud).

The extra length on the Eclipse surely isn’t an accident. Supersized yachts are the latest examples of one-upmanship among billionaires, many of whom already own a private jet, a fleet of Rolls-Royces, and multiple mansions from one end of the world to another.

With the fear of a global economic recession and unrelenting job pressures among those who remain yachtless, there’s still a lot of money floating around the world and always will be. And as the superrich get richer, the size of yachts grows bigger and bigger, too.

Many feel that when a yacht is over 325 feet, it’s so big that you lose the intimacy that yachts carry. But considering the bragging rights you get it seems like a good pay-off.

Who will be the one to wrest bragging rights from the Sheikh? Blohm & Voss, isn’t saying. According to the grapevine, it is being built for Roman Abramovich, a Russian tycoon.


Mr. Abramovich already owns the 282-foot Ecstasea and the 377-foot Pelorus, and Web sites that track yachts speculate that he may be the owner of a new 394-foot yacht called Sigma that resembles a battleship. A spokesman for Mr. Abramovich declined to comment.

PAST DEVELOPMENTS AND FUTURE TRENDS

Just four years ago, when Lawrence J. Ellison, the chief executive of the Oracle Corporation, took possession of the 454-foot Rising Sun, he gained crowing rights over Paul Allen, the Microsoft co-founder. Mr. Allen’s yacht, the Octopus, is relatively minuscule at 417 feet. (Since then, David Geffen, the Hollywood mogul, has bought a 50 percent share of the Rising Sun from Mr. Ellison.)

Many yacht owners are entrepreneurs or industrialists, rather than royalty or bold-faced names from Silicon Valley, according to yacht designers and builders.

Like Mr. Abramovich, a growing number of yacht buyers are from emerging markets. There’s an incredible amount of disposable money in the world at the moment, and a lot of money is coming out of new markets like Russia and Ukraine, as well as India. These people have made a lot of money very quickly and have an appetite.

According to ShowBoats International, a luxury yacht magazine, 916 yachts measuring 80 feet or longer — the traditional definition of a superyacht — were on order or under construction as of last Sept. 1, four times the number in 1997. The biggest gains were among the biggest yachts: 47 yachts were 200 to 249 feet long, up 68 percent from a year earlier, while 23 were 250 feet or longer, an increase of 28 percent.

In the early 1970s, a 60-foot boat was considered pretty large. Infact a 150-foot boat was queen of the show in Monaco in 1982. In 2008, surely you wouldn’t be able to find that boat in the marina.

Some new megayachts are so big that they have to dock in commercial ports. The growth in the number and size of yachts is also making it hard to find qualified crew members.

Still, many yacht owners trade in their boats every few years for bigger models.

People want more toys to play with. Gyms were unusual 20 years ago, and no yacht is being built now without a gym. They’re buying two- to four-person submarines, have four Jet Skis and little sailboats stored on board, as well as helicopter landing pads.

It takes two to four years to build a yacht, and prices are rising so quickly that some owners are selling their boats before they’re even finished — for a tidy profit. Prices have risen 10 percent to 20 percent in the past two years alone. He estimates that a yacht 328 feet long would cost about $230 million today, with prices rising to $650 million for a 500-foot yacht.

RECOVERING COSTS

Some owners recoup part of their costs by chartering their yachts. Want to sail the Maltese Falcon, the innovative clipper ship built by Tom Perkins, the Silicon Valley venture capitalist? That will put you back around $539,000 to $555,000 a week, not counting expenses for fuel, food or crew. Or the Mirabella V, the elegant sloop owned by Joe Vittoria, the former chief executive of Avis Rent A Car System? That’s $325,000 to $375,000 a week, depending on the season.

There are no signs that demand will slacken. There are 2,000 superyachts in the world today over 120 feet long, and nearly 200,000 people who could afford to buy them.

"MINE'S BIGGER"

The arms race in yachts echoes the competition among business titans in the last century to build the world’s tallest skyscraper. In his book “Mine’s Bigger,” David A. Kaplan describes the battle between Mr. Perkins and Jim Clark, the co-founder of three Silicon Valley companies, including Netscape, as they competed to build the world’s biggest sailing megayacht.

By the time Mr. Perkins completed his Maltese Falcon, measuring 288 feet, in 2006, it was substantially longer than Mr. Clark’s Athena if measured at the water line.

Mr. Clark could console himself only with the fact that if you included his 33-foot stainless steel bowsprit as part of the length, then his was bigger than anybody else’s.

Mr. Vittoria holds a different record. His 247-foot Mirabella V has a 292-foot mast — so tall that it can’t fit under the Golden Gate Bridge (covered on our blog).

Surely, yachts are a good parameter to gauge the Wealth of Nations, since all developed and budding economies come hand-in-hand with new buyers and an increase in demand of yachts of all types and from all over the world.