So you’ve gone through the buy or build process and are keen to set sail. Before you do, Will Mathieson, editor of The Superyacht Report, guides you through the tick sheet to ensuring your yacht is run the way you need.
Article taken from 360 Magazine, Issue 3 (2016). See the full magazine HERE.
PART THREE: YACHT OPERATIONS
As a soon-to-be ecstatic new yacht owner, most of the important points in this article you will have already considered and probably addressed with your team of advisers. But there are some we discuss below that are all too often either missed or left as a costly and time consuming after-thought.
“Clients that enjoy the most efficient experience are those that approach the purchase of a yacht in much the same way as starting their own business,” explains YPI Head of Yacht Management, Nikolas Rabier. “They consider how they want to use the yacht and where, then decide on an ownership structure, location of ownership and flag registration that matches what they want to get out of it.
“They then bring onboard crew who can properly and efficiently operate their yacht, especially senior posts. As with any successful company, quality experienced management with a clear view of the owner’s goals and aspirations is fundamental. (To find out more about choosing a management company click here). But, equally, owners need the crew to be people with whom they feel comfortable when spending quality time on board with guests,” he says.
Every facet of ownership is as bespoke as the vessels they relate to. So seeking out the services of a superyacht-specific Corporate Service Provider (something YPI can assist with) to advise on essential aspects such as where the holding company should be established – invariably the Cayman Islands or another British crown dependency for non-EU nationals – and which flag to fly is paramount.
“Despite popular misconceptions, the holding company and the flag do not have to be intertwined,” explains Rabier. “The latter choice being based on how the yacht will be used – different superyacht-focused flag states offer different operational advantages.”
A solid understanding of your legal and fiscal position and objectives can also save a lot of time, worry and money later on. As Fergal Quinn, Director and Founding Partner of superyacht law firm Wysocki Quinn Woollam, points out: “All prudent superyacht owners will seek legal advice before acquiring their yacht. How the acquisition is structured initially will have a significant bearing on an owner requiring legal advice later on.”
To avoid personal liability, Quinn suggests buying through “a suitable special purpose vehicle, ensuring that the yacht has adequate hull and liability insurance. The latter should be purchased through a specialised superyacht broker who understands the idiosyncrasies of yacht risks and avoids bottom-line pricing comparisons.”
Prospective owners should also guarantee the most agreeable fiscal structure, both at point of sale and during the yacht’s operation, especially if you intend to make the yacht available for charter and therefore have her commercially registered.
Yachts must be registered to a flag state, whose rules govern its construction and operation (the latter is tandem with the jurisdiction whose territorial waters the vessel is in). A number of flag states offer superyachtfriendly rules of operation. The most prestigious comprise the Red Ensign Group, but non-Red Ensign flags, such as Malta and the Marshall Islands, have also bolstered their superyacht offerings in line with the fleet’s growth.
Another consideration is who owns the intellectual property for the yacht’s design, particularly custom builds. Quinn recommends assigning full intellectual property rights to the Owner and any future Owner. Your broker and lawyer can guide you.
Attention eventually turns to running your yacht. This is where your Captain, crew and yacht management company are so important. “The Owner and the Captain need to share the same vision,” stresses Laurence Lewis, Director of YPI Crew. “A circumnavigation, a private or charter programme, a one- or twoseason yacht, a Mediterranean or Florida-based yacht, a rotational position… all these points will be addressed in advance to ensure the owner attracts a captain with similar aspirations.”
The Captain’s responsibilities include handling personnel issues, operational cost budgeting and management, maintenance and itinerary planning, even organising restaurant places in exclusive locations. To achieve all of that, most yachts above 30 metres (98ft) today bring in the land-based support of a professional yacht management company.
When deciding on crew for your yacht, it’s always beneficial to tap the experience and considered advice of your captain, crew recruiter, yacht manager, and charter manager (if required). “This will help avoid unnecessary crew turnover in the future. A good crew is at the heart of every successful yacht,” says Lewis.
"THE OWNER AND THE CAPTAIN NEED TO SHARE THE SAME VISION"
Laurence Lewis, Director of YPI Crew, stresses the importance of the Owner and Captain being on the same wavelength when running a yacht.
YACHT MANAGEMENT SUPPORT
The last decade has seen much yachting regulation. The administrative burden that accompanies that, in addition to significant VAT legislation, can be substantial. Experienced, specialised yacht management companies, such as YPI, help with these.
As YPI’s Senior Fleet Manager and ex-Captain of 25 years, Stephen Heads, says: “Aside from helping with implementation of fundamental safety systems, we are trained in crisis management and planning yacht maintenance or refit work. We can source yacht parts anywhere in the world, deal with warranties, VAT and customs issues, manage the yacht accounts and handle suppliers. We back the Captain up so he can run the yacht, and ensure the owner and their guests enjoy life on board.”
As the Owner of one 50-metre (164ft) yacht says: “In the worst case scenario my yacht manager is my problem fixer. In the best case, he didn’t fix any problems because he pre-empted them.”
Finally, there is the question of whether to give your yacht a permanent home. For a charter yacht, leasing a berth offers a reliable high-season port to call in for provisioning or bunkering; for larger yachts, berth ownership offers the opportunity to rent it out during the busiest months when space is at a premium. A berth also provides a fixed location for maintenance and wintering off-season. As always, your broker will be an excellent source of advice.
THE BENEFITS OF YOUR BROKER
RUSSELL CRUMP, YPI SALES DIRECTOR
“We don’t suddenly leave you once the deal is done. We are there for the whole journey, including helping source choice crew at preferential rates and marketing and managing your yacht for charter. Owners always have teething problems when they first take ownership – it’s our job to douse the fire and clean it up. And when time comes for you to buy another, we are there to help you sell. We keep our owners up-to-date on similar yachts on the market, what their asking price is and what they are selling for. That means our owners are always informed.”
STEP BY STEP
YOUR CHECKLIST FOR
OPERATING THE YACHT
- Location of the owning company
- Choice of flag under which to register the yacht
- Private or commercial classification?
- Appointment of a management company
- Appointment of a Captain, then crew
- Will the yacht be chartered? If so, how will it be marketed?
- Maintenance and compulsory survey work - where and when?
POINT OF SALE
- Is the yacht ready for market?
- If not, is it time for a refit?
- Get yourself a reputable broker who respects market fluctuations
- Move on to the next and start again
To catch up on the previous articles in this series see below.
PART ONE: How to Purchase your own Superyacht
PART TWO: How to Build your own Superyacht
Whether you are looking for Operational Management, Crew, Charter Management or Sales and Purchase Expertise, find out more about the YPI Client Promise.
- For more information on yacht management, please contact YPI Yacht Management.
- For more inforamtion on charter, please contact YPI Charter.
- For more information oh brokerage, please contact YPI Brokerage.