Megayacht market strong, but signs suggest possible dip

Nigel Ingram was once a typical yacht captain of the 1970s and ’80s, delivering racing boats throughout the United States and Europe with pickup crews and pushing 40- to 60-foot yachts across starting lines and race courses throughout the Atlantic.

He learned through experience how to manage the care of a racing and cruising yacht. But in 1987, tired of this vagabond life, the Briton hung up the gym bag he had been living out of and started managing construction of the elegant, aluminum Sparkman and Stephens 73-footer Encore.

Back then, Ingram’s detailed approach to making sure yacht designs moved from drafting boards to working versions of an owner’s dreams allowed him to capitalize on a niche in the marine industry that has since become yacht management. By the time his company, MCM, added the yacht operations component to their construction management business in 2001, there were still only three companies specializing in the managing of luxury yachts. Now, however, nearly three decades after Encore’s launch, there are dozens of companies like MCM.

Ingram, 68, was off to visit one of his 22 charges, the 115-foot superyacht Nikata, at the recently held Maxi Yacht Rolex Cup in Porto Cervo, Sardinia. He was the owner’s representative for the building of the boat last year at Baltic Yachts in Finland and MCM manages the yacht’s annual operations.

The superyachts that compete for the Rolex Cup are often referred to as small cities. Since owners began racing these 100-footers a decade ago, an industry has sprouted up around them, complete with training schools for every level of staffing and trade, including the highly specialized Superyacht Crew Academy in Australia.

“I went out sailing on Nilaya in 2010,” Ingram, referring to a superyacht that MCM helped build, said before leaving his office in Rhode Island for Porto Cervo, Sardinia, and the Rolex Cup. “And I thought that this is exactly the way a boat should be: fast and exciting.”

After Nilaya’s design hit the racecourse, Ingram said a crop of the same type yacht were built.

In a three- to four-year period, boat builders around Europe and South Africa, including Swan, Baltic, Wally, Southern Wind and Vitters, built more than a dozen carbon racer-cruisers in Nilaya’s 100- to 130-foot range.

The army of builders it takes to construct yachts like Ingram’s Nikata is exceeded by the annual ebb and flow of professional sailing crew, engineers, wait staff and industry professionals employed to sail such a boat through races, transoceanic deliveries and cruising vacations.

It can cost more than $4 million annually to run a superyacht, according to the U.S. Superyacht Association. Expenses range from hundreds of thousands dollars spent on insurance, dockage and fuel, to more than $1 million in crew salaries.

Super yachts racing in the Rolex Cup at the Yacht Club Costa Smeralda bolster their crew, adding two dozen professionals and industry specialists to the usual full-time crew of about six. The standard full-time crew includes a captain, engineer, mate, chef, stewardess and deck hand.

“In the past, crew didn’t go to school for this,” Ingram said. “Those days are gone. You need qualifications to work on a boat of this magnitude. All the way down to stewardess, they go to crew schools.”

Though superyachts are designed and built for the pleasure of one owner, he said the commissioning of one of these luxurious craft has far-reaching effects.

“It’s very easy to see yachting as an elitist sport,” he said. But, he added, “all the money they spend goes somewhere.”

“In the build of a boat, 50 percent of the cost goes to labor,” Ingram said. “So that goes to the dining-room tables of the people who work at the shipyard.”

But Ingram, who just delivered the new 130-foot yacht My Song to a client last month, is acutely aware that the entire industry is dependent on the disposable income of wealthy owners.

“The last three years things have started to slow down,” he said. “Most boat builders are really hungry for new projects. The industry has to be feeling it because the architects aren’t busy and that’s where it starts.”

Still, the Maxi Yacht Rolex Cup saw record numbers, sailmakers are reporting a boom in the commissioning of racing and cruising sails, and MCM has four new construction projects.

Like many of his contemporaries in the superyacht industry, Ingram is nonetheless measured when evaluating the business climate. After all, he is reminded that it wasn’t that long ago that yacht captains lived out of duffel bags and ran the whole boat themselves.

“It’s hard to predict industry direction,” he said. “It’s out of our control. There is a real boom in small-boat performance sailing. I hope to goodness that as these people get older they stay in yachting. It’s a big industry and it needs to continue.”