'Old Money' Not Buying Repossessed Yachts As They 'Used To Do'

Discussion in 'Economics' started by ByLoSellHi, Aug 2, 2008.

  1. http://www.bloomberg.com/apps/news?pid=20601093&sid=at2ZofPoCGrM&refer=home

    Newport Yacht Owners Find $10,800 Buys Gas, or Two Chanel Bags

    By Brian K. Sullivan

    Aug. 1 (Bloomberg) --
    Durand Blane measures the rising cost of filling her husband's 75-foot, white motor yacht by what the money would buy at the mall.

    ``It's like pumping Chanel bags into a boat hull,'' said Blane from the well-scrubbed deck of the Durand-Marie docked at the West Wind Marina in Newport, Rhode Island. ``Every time we fill up, it's like two Chanel bags, minus the wallet.''

    Power boats sit docked at the South Jersey Marina in Cape May, New Jersey on July 17, 2008. Photographer: Mike Mergen/Bloomberg News

    While it costs Durand and her venture-capitalist husband, Chris, $10,800 to fill the Durand-Marie since the cost of marine diesel doubled to $5.40 a gallon from $2.61 a year ago, fewer boat owners can afford the rising tab. Even in Newport, a city of 24,400 known for oceanfront mansions and a biennial sailing race to Bermuda, high fuel prices are keeping boaters at the pier.

    Business at the West Wind Marina, 61 miles (98 kilometers) south of Boston, is down about 30 percent from last year, says dock master Cathie Thurston.

    Owners of craft 45 feet or less in length ``are totally affected,'' said Thurston, 58, whose marina can accommodate as many as 75 vessels. ``They're not here. Most are just able to keep up with the payments for the boat.''

    Sales of watercraft have fallen 20 percent since the beginning of 2008 after plunging to a 40-year low in 2007, Brunswick Corp. spokesman Dan Kubera said.

    ``By any measure, the U.S. marine industry is in an unprecedented downturn,'' said Kubera, whose Lake Forest, Illinois-based company makes Sea Ray yachts.

    `Prolonged Slowdown'

    A cooling economy, higher fuel prices and the housing slump have accelerated a ``prolonged slowdown'' in the boat industry that began in 2005, Kubera said. ``We're not assuming these economic pressures and a lot of the things that are biting at consumers' wallets are going to abate any time soon.''

    Brunswick has fallen 24 percent in New York Stock Exchange trading this year and plans to close boat plants and cut as many as 2,700 jobs to reverse two years of falling profit. Standard & Poor's reduced the company's long-term corporate-debt rating to non-investment grade July 8, citing falling boat demand.

    ``Wall Street and water don't mix,'' said Mike Joyce, 65, chief executive officer of closely held Hargrave Custom Yachts in Fort Lauderdale, Florida. ``The reality is the boating business is cyclical.''

    Drive-In Visitors

    At the Newport Harbor Hotel & Marina, a half-mile north of the West Wind Marina, more guests are driving up instead of sailing in, said dock master Mark Holden.

    Boaters who do show up eat breakfast and lunch on the water instead of spending money in restaurants, Holden said. Some are also taking shorter cruises to scrimp on fuel, said Mike Keyworth, 58, general manager at Brewer Cove Haven Marina in Barrington, Rhode Island, 17 miles north of Newport along Narragansett Bay.

    Instead of cruising to the Massachusetts island resorts of Martha's Vineyard and Nantucket or across Long Island Sound to New York, boaters are exploring the nearby bay, he said. Some sailors keep their craft docked to entertain families, he said.

    Some boaters are losing their vessels to lenders, said Ray Bethel, president of Certified Sales Inc. in Warwick, Rhode Island, which handles craft reclaimed by creditors.

    ``The repossessions are starting to pile up,'' Bethel said. Shoppers hunting for bargains aren't appearing, as they did in past economic declines, he said.

    A gas pump stands at the South Jersey Marina in Cape May, New Jersey on July 17, 2008.Photographer: Mike Mergen/Bloomberg News

    No Buyers

    ``This has got a different feel,'' Bethel said. ``The old money is not coming out and buying stuff. The old money always used to come out in times like this.''

    While owners of smaller craft are limiting cruises or staying at the dock, sales of boats of 100 feet and longer crafted by Hargrave Custom Yachts remain strong, Joyce said.

    Hargrave builds six to 10 yachts a year, costing $5 million to $15 million apiece, for clients with a net worth of $50 million to $300 million, he said. They're over 60, ``chained to a desk on Wall Street or Los Angeles'' and ``tend to go ahead with their decision,'' he said.

    Once luxury yachts hit the water, fuel costs aren't a concern, said Chris Blane, the Durand-Marie's owner.

    Those with large craft may have to spend an extra $100,000 a year to fill their tanks, and a 100-foot yacht may need a crew of six, with the captain making about $100,000 a year, he said.

    ``One hundred thousand a year extra for fuel isn't going to slow them down,'' said Blane, of Vero Beach, Florida. ``The middle-American guy is hit harder. It's the smaller boats that belong to the hard-working, good old American guy.''

    Meanwhile, people-powered craft such as canoes and kayaks are enjoying a resurgence, said Al Johnson, 64, a Coast Guard recreational-boating specialist in Boston.

    ``I see a difference in the water,'' said Michael Scicutella, 47, as he winched his 22-foot motor boat up the ramp at Theodore Roosevelt Memorial Park in Oyster Bay, New York, after a sunny Sunday morning fishing with his son. The fuel cost him $120. ``There are half the number of people out there. I still see a lot of big boats. The upper class isn't feeling it yet.''
  2. That's Dubai. There are record petrol dollars supporting that market, while record high petrol dollars are putting the pinch on boat sales in the U.S.
  3. One of them 75 foot yatchs could make a nice floating home... :D
  4. I'm so poor that all I have is a 15 ft. canoe. And I have to paddle upstream. Good exercise though.
  5. At least you have a paddle.
  6. This sounds eerily familiar; the 'Chanel bag' currency :(
  7. Cutten


    Any time you get the urge to buy a boat, go and lie down until the feeling passes. If you still aren't convinced, just go fully clothed into the shower, turn on the tap, then tear up $100 bills for the next 5 hours - you will replicate the experience but for considerably less cost.

    Don't forget - the 2nd happiest day in your life is when you buy a boat. The happiest is when you sell it.
  8. You could put a Chanel bag in each hand put a couple bricks in the bags and toss her over the side, grab your crotch and say,"I got your fucking wallet right here".

  9. LMAO...twice. :D
    #10     Aug 3, 2008