“Owning a yacht is like tearing up 100 dollar bills under the shower”

I prefer the quote above to another one I wanted to use “If you have to ask, you can’t afford It” which is attributed to J.P. Morgan, a rich American financier who was famous for his business prowess. Allegedly, he said this to another banker who was enquiring about the cost of his yacht.

The most common indication given is that a yacht costs about 10% of its value per year to run. However, this is somewhat misleading as a recently delivered yacht will cost less to maintain than an older one in its first few years. So which value do you consider? The new construction value when built or value at present, insured or market value? I think that reality is more likely to be somewhere between 7% and 20% per year of a yachts current market value. Large cost items such as painting, engine and machinery overhauls, laying new teak decks etc. will come up every few years and will distort annual spending patterns. Some older or classic yachts will be spending a lot more than newer ones to keep them in pristine condition, and their values may be very hard to ascertain.

Crewing normally makes up the highest regular spending on larger yachts and can easily absorb half of the annual budget. Crew expect to be paid according to their professional qualifications and experience or job roles, regardless of the type, value or the age of the yacht! Good crew are very mobile and low wages may not attract the quality of crew expected.

What is really important, when considering the purchase of a yacht is that a prospective buyer knows what it is realistically likely to cost to maintain the type of yacht they want and that they can research and verify the information in advance of purchasing. It is probably preferable to buy a smaller or different type of yacht, charter or purchase a share in a yacht if the costs seem unbearable or out of reach. What does not work is to think that crew and running costs can be dramatically reduced without the value of a yacht diminishing over time or ending up with an unhappy yacht.

Below is a YouTube video from a former colleague, David Seal, who has put together some useful cost indications.