How to Run a $14 Million Superyacht | WSJ Operating Costs

Summary

The Wall Street Journal's video provides an in-depth analysis of the substantial operating costs involved in owning a superyacht. A $14 million purchase price is just the beginning, as owning such luxurious vessels requires extensive yearly maintenance, often nearing 10-20% of its value annually. Highlights of these expenses include mooring fees, fuel costs, crew salaries, and constant upkeep of materials like teak flooring and paint. Owners frequently charter their yachts to offset costs, but break-even is generally the best-case scenario, making superyacht ownership an extravagant venture reserved for the significantly wealthy.

Highlights

• Superyacht ownership can cost tens of millions annually, with maintenance swallowing 10-20% of value 🏦.
• Dockage fees are steep due to high demand and limited space, costing up to $7.50 per foot daily 📈.
• Fuel expenses hit around $360,000 yearly, with Snowbird's tank capable of holding up to 12,000 gallons ⛽.
• Crew salaries and related expenses are the largest cost, exceeding $800,000 per year 👔.
• Maintaining luxury materials like teak and paint is crucial to preserving a yacht’s value ⚓.

Key Takeaways

• Owning a superyacht is a lavish commitment beyond the initial $14 million purchase 💸.
• Annual maintenance can consume up to 20% of the yacht's value, making it pricy to keep afloat 🛥️.
• Key operating costs include docking fees, fuel, crew salaries, and teak maintenance 💼.
• Superyachts need constant use to avoid expensive idle time repairs 🚤.
• Chartering might cover expenses, but profitability is rare without meticulous maintenance 🤑.

Overview

Ever dreamed of owning a superyacht? Well, hold onto that dream, because while a $14 million yacht might sound tantalizing, the real bottom line needs a deep wallet. The yearly upkeep alone can run up to 20% of the yacht’s value, and that’s before you even set sail! Between pricey dockage, a relentless appetite for fuel, and the constant need to pamper its luxurious materials, owning a yacht is a lifestyle commitment that’s certainly not for everyone.

Take Snowbird, a grand 128-foot wonder, requiring substantial financial input to keep shipshape. Fuel's the lifeline of any yacht, but it doesn’t come cheap—especially at sea where costs climb to over $360,000 annually. Then there’s the dedicated crew, whose expertise keeps everything running smoothly but with a hefty price tag of over $800,000 a year. If you think leaving it docked saves money, think again. The costs for stationary luxury are just as high, if not higher, due to extra maintenance needs.

Trying to balance out these expenses, many owners charter their yachts, allowing passionate sailors to enjoy the high seas without the full-time commitment. Yet, breaking even is the name of the game, with complete profitability rarely on the horizon. For those with the means, though, the unmatched experience of sailing a superyacht makes every penny worthwhile—even if it's a good-sized piggy bank's worth!

Chapters

• 00:00 - 00:30: Introduction to $14 Million Superyacht The chapter introduces a 128-foot-long superyacht, highlighting its initial purchase price of nearly $14 million. It emphasizes the continuous expenses associated with owning such a luxury vessel, stating that maintenance costs alone can range from 10 to 20% of the yacht's value annually. The superyacht is described as a mobile city and resort, alluding to its luxurious and comprehensive amenities. Additionally, it mentions that superyachts, defined as yachts longer than 82 feet, can be sold for hundreds of millions of dollars.
• 00:30 - 01:00: Dockage and Maintenance Costs This chapter discusses the dockage and maintenance costs associated with owning a superyacht, highlighting that maintenance alone could cost tens of millions per year. The annual budget for a superyacht is nearly 1.9 million. Dockage fees are a significant expense, ranging from $3.50 to $7.50 per foot per day, primarily because of high demand and limited dock spaces.
• 01:00 - 02:00: Fuel Costs The chapter "Fuel Costs" discusses the various maintenance expenses associated with owning a yacht. It highlights how the bottom of the vessel often accumulates marine life like oysters, clams, and barnacles, which necessitates regular cleaning. Electronics on the yacht can also become problematic if not used regularly. The text emphasizes that it's better to keep a yacht in use rather than letting it sit idle. Moreover, the yacht requires a significant amount of fuel when out at sea, although it can connect to a marina's power grid while docked to support basic operations. The chapter also introduces a concept humorously referred to as "boat yoga," related to tank maintenance, emphasizing the hands-on aspect of managing fuel supplies on board.
• 02:00 - 03:00: Day-to-Day Maintenance The chapter highlights the fuel consumption and costs associated with the operation of a yacht named Snowbird. It describes the yacht's fuel capacity, which is approximately 12,000 gallons, and the fuel needs of additional watercraft like jet skis and a support boat. The yacht burns between 60 to 120 gallons of fuel per hour, with the fuel costing $4.50 per gallon, leading to an annual cost of about $360,000 to fuel the yacht. Additionally, day-to-day maintenance is identified as the fourth largest operating expense.
• 03:00 - 04:00: Crew Expenses The chapter titled 'Crew Expenses' discusses the importance of maintaining the engine's crankcase ventilation filter on a yacht. The filter plays a crucial role in keeping the turbos and after cooler clean, reducing oil consumption, and minimizing air pollution by aiding in further combustion within the engine. Although the replacement cost of the filter is relatively low, at approximately $60 to $70, its impact on prolonging the life of the yacht's motors is significant. Overall, maintaining the engines of a yacht like Snowbird demands substantial annual costs, estimated around $60,000.
• 04:00 - 05:00: Major Repairs and Inspections This chapter discusses the various aspects of major repairs and inspections required for superyachts, emphasizing the importance of regular maintenance. Essential tasks include changing oils and keeping the yacht's machinery and parts functioning optimally. In addition to the mechanical parts, the upkeep of luxury features like teak flooring is crucial. While teak is favored for its weather-resistant properties and luxury appeal, it requires frequent maintenance, such as scrubbing, which may only last a week or two. Hence, superyacht owners need to regularly invest in both technical maintenance and aesthetic upkeep to ensure the yacht remains in top condition.
• 05:00 - 06:00: Chartering and Cost Recoupment The chapter discusses the costs associated with maintaining super yachts, focusing on the teak flooring and crew expenses. The teak flooring requires annual maintenance costing around $18,000 and is impacted by environmental factors like rain. The overall expenses, including smaller ones, can easily surpass $1 million. The most significant expense, however, is the crew, with an estimated budget exceeding $800,000 per year. This highlights the high cost of maintaining such luxury vessels.

How to Run a $14 Million Superyacht | WSJ Operating Costs Transcription

• 00:00 - 00:30 - [Presenter] This 128 foot long super yacht runs almost $14 million to purchase, but that's just the beginning of its expenses. - [James] It's a city, it's a resort, and it moves. - [Presenter] But imagine if that resort sat on top of one of the planet's saltiest, wettest environments. Yacht owners can also expect to pay 10 to 20% of the yachts value each year simply to maintain it. Superyachts or yachts longer than 82 feet can sell for hundreds of millions of dollars.
• 00:30 - 01:00 This means maintenance could be tens of millions per year. Here's what goes into this superyacht's estimated annual budget of nearly 1.9 million. - [James] Welcome aboard Snowbird. - [Presenter] Cost that up even before owner set sail. - [James] Dockage fees are very expensive. They range from $3.50 a foot to 7.50 a foot per day. - [Presenter] Dockage fees can be so high for superyachts in part because there's a large demand for a limited number of spaces, but if owners keep their yachts docked,
• 01:00 - 01:30 they could face other large maintenance expenses. - All the works of the bottom of the vessel gets scummed up with oysters and clams and barnacles. A lot of these electronics, they get fouled up if they sit dormant for a long time. It's definitely better to use it than let it sit. - [Presenter] While docked, the yacht can connect to the Marina's power grid for basic operations, but when it's out at sea, this 368 ton vessel requires fuel, a lot of it. - For someone like myself, I call this boat yoga. What we have here is the day tank.
• 01:30 - 02:00 This holds approximately 800 gallons of fuel. See the red? That's the amount that's in the tank. - [Presenter] In total, this yacht can hold almost 12,000 gallons of fuel. Plus, other water vehicles like its jet skis and support boat will need even more gas. - Generally, we burn anywhere from 60 gallons an hour to 120 gallons an hour. - [Presenter] At around four and a half dollars a gallon. - [James] It costs approximately $360,000 per year to fuel Snowbird. - [Presenter] But day-to-day maintenance is actually the fourth largest operating cost
• 02:00 - 02:30 and it can get messy. - Today we're gonna be changing out the crankcase ventilation filter. That keeps your turbos and your after cooler from getting gummed up, and it also helps reduce oil consumption and reduce air pollution by further combustion inside the engine. This part probably costs $60, $70 to replace, but it has immeasurable value in prolonging the longevity of your motors. Maintaining the engines on a yacht like Snowbird typically costs around $60,000 a year,
• 02:30 - 03:00 and you're looking at parts, time, and the materials involved to change the oils and keep everything up and going. - [Presenter] That's just below deck. Superyacht owners also need to invest in keeping the rest of the yacht in pristine condition, like the teak flooring. Teak is typically used on yachts because it's a weather resistant luxury material, but it's also challenging to maintain. - [Josh] When we scrub the teak, oftentimes it only lasts roughly a week or two
• 03:00 - 03:30 depending on the traffic on board. It wants to go back to its natural color, and, you know, between rain and rinsing it down, you kinda wash away all of that, you know, hard work that you've done. Annually the teak flooring costs about $18,000 to maintain. - [Presenter] Adding on smaller expenses, you're already looking at just over $1 million. But by far, there's one cost for maintaining superyachts that completely surpasses the others, the crew. The estimated budget for Snowbird's crew is over $800,000 per year and that's because super yachts
• 03:30 - 04:00 must always have a crew even when docked. - You have to take care of the teak the paint, wash windows, machinery. Rust never sleeps, maintenance never stops. - [Presenter] Cost towards their health insurance, travel expenses, uniforms, and cell phone bills can add thousands to the budget. Adding in crew expenses brings the annual operating cost estimate to nearly 1.9 million a year, but that's only when there are no major repairs or maintenance
• 04:00 - 04:30 while owners generally spend around 10% a year in maintenance costs for new superyachts. - [James] It's kind of a guideline, but as she gets three years or five years, or hits her 10 year, it's gonna be more than 10%. - [Presenter] Every five years or so, superyacht owners have to shell out for one of their largest expenses. - Paint jobs are sometimes from a hundred thousand to a million bucks, depending on your size of your boat. Paint is about $1,800 an inch, - [Presenter] Salt in the water and air corrodes the yachts paint. To repaint the entire yacht,
• 04:30 - 05:00 it needs to be hauled out of the water, then it can take months to complete a fresh paint job. There are also other major potential expenses. Some yacht owners need to spend hundreds of thousands of dollars every few years on detailed inspections. And if a yacht fails in inspection, repairing or replacing it could run $200,000 or more. - Certain boats, you can't get the engines out. You have to cut a hole in the side and then reweld it, recertify the hole. Now you're into the multi-millions to change out an engine.
• 05:00 - 05:30 - [Presenter] To recoup some of these costs, superyacht owners will rent out their vessels. The charter fee for this super yacht ranges from $125 to $145,000 per week, that covers the boat and the crew, but renters also need to pay for additional expenses like fuel, food, and customs fees. Plus, there's a customary tip of 18 to 25% for the crew members. At best, superyacht owners might break-even on maintenance costs with income earned from chartering. - I don't think it's a profitable situation.
• 05:30 - 06:00 At best, they're covering their salaries and the boat's way as it travels. Wear and tear is always there and the money would have to go back into the vessel. If you didn't properly maintain your vessel, your value would decrease. Most people that buy yachts of this size and this stature really wanna take care of them. (upbeat music)