Measuring Wealth by the foot

by Patricia Kranz on 16 Mar 2008 At Blohm & Voss, a ship builder in Germany, workers are building a mammoth yacht called the Eclipse. Like many things in the secretive world of superyachts, its exact length is hard to pin down. So is the name of its owner, and the cost of building it.

But according to the web site of The Yacht Report, one of several publications that track yachting with the same intensity that gossip magazines cover Hollywood hunks, the Eclipse is 531.5 feet long. That’s six and a half feet longer than the Dubai, an 11,600-ton behemoth that now holds the record as the world’s largest yacht. Its owner is the ruler of Dubai, Sheik Mohammed bin Rashid al-Maktoum.

The extra length on the Eclipse isn’t an accident. Supersized yachts are the latest examples of one-upmanship among billionaires, many of whom already own a private jet, a Rolls-Royce or two, and multiple mansions. Despite fear of an economic recession and unrelenting job pressures among those who remain yachtless, there’s still a lot of money floating around the world. And as the superrich get richer, the size of yachts grows bigger and bigger, too.

'When a yacht is over 328 feet, it’s so big that you lose the intimacy,' says Tork Buckley, editor of The Yacht Report. 'On the other hand, you’ve got bragging rights. No question, that’s a very strong part of the motivation.' Who will be the one to wrest bragging rights from the sheik? Blohm & Voss, a leading shipbuilder, isn’t saying. According to an executive at a different yacht company, who requested anonymity because he was concerned about losing clients, it is being built for Roman Abramovich, a Russian tycoon.

Mr. Abramovich already owns the 282-foot Ecstasea and the 377-foot Pelorus, and Web sites that track yachts speculate that he may be the owner of a new 394-foot yacht called Sigma that resembles a battleship. A spokesman for Mr. Abramovich declined to comment.

Just four years ago, when Larry Ellison, the chief executive of the Oracle Corporation, took possession of the 454-foot Rising Sun, he gained crowing rights over Paul Allen, the Microsoft co-founder. Mr. Allen’s yacht, the Octopus, is relatively minuscule at 417 feet. (Since then, David Geffen, the Hollywood mogul, has bought a 50 percent share of the Rising Sun from Mr. Ellison.)

Like Mr. Abramovich, a growing number of yacht buyers are from emerging markets. 'There’s an incredible amount of disposable money in the world at the moment, and a lot of money is coming out of new markets like Russia and Ukraine, as well as India,' says Jonathan Beckett, chief executive of Burgess, a company that helps owners build and charter yachts. 'These people have made a lot of money very quickly and have an appetite.' According to ShowBoats International, a luxury yacht magazine, 916 yachts measuring 80 feet or longer — the traditional definition of a superyacht — were on order or under construction as of last Sept. 1, four times the number in 1997.

The biggest gains were among the biggest yachts: 47 yachts were 200 to 249 feet long, up 68 percent from a year earlier, while 23 were 250 feet or longer, an increase of 28 percent. 'When I started in the early 1970s, a 60-foot boat was considered pretty large,' Mr. Sharp said. 'A 150-foot boat was queen of the show in Monaco in 1982. In 2008, you wouldn’t be able to find that boat in the marina.' Some new megayachts are so big that they have to dock in commercial ports. The growth in the number and size of yachts is also making it hard to find qualified crew members.

Still, many yacht owners trade in their boats every few years for bigger models. It takes two to four years to build a yacht, and prices are rising so quickly that some owners are selling their boats before they’re even finished — for a tidy profit. Mr. Beckett of Burgess says prices have risen 10 percent to 20 percent in the past two years alone. He estimates that a yacht 328 feet long would cost about $230 million today, with prices rising to $650 million for a 500-foot yacht.

Some owners recoup part of their costs by chartering their yachts. Want to sail the Maltese Falcon, the innovative clipper ship built by Tom Perkins, the Silicon Valley venture capitalist. That will put you back around $539,000 to $555,000 a week, not counting expenses for fuel, food or crew. Or the Mirabella V, the elegant sloop owned by Joe Vittoria, the former chief executive of Avis Rent A Car System. That’s $325,000 to $375,000 a week, depending on the season.

There are no signs that demand will slacken. 'There are 2,000 superyachts in the world today' over 120 feet long, 'and nearly 200,000 people who could afford to buy them,' Mr. Beckett says. The arms race in yachts echoes the competition among business titans in the last century to build the world’s tallest skyscraper. In his book 'Mine’s Bigger,' David A. Kaplan describes the battle between Mr. Perkins and Jim Clark, the co-founder of three Silicon Valley companies, including Netscape, as they competed to build the world’s biggest sailing megayacht.

By the time Mr. Perkins completed his Maltese Falcon, measuring 288 feet, in 2006, it was substantially longer than Mr. Clark’s Athena if measured at the water line. 'Clark could console himself only with the fact that if you included his 33-foot stainless steel bowsprit as part of the length, then his was bigger than anybody else’s,' Mr. Kaplan writes.

Mr. Vittoria holds a different record. His 247-foot Mirabella V has a 292-foot mast — so tall that it can’t fit under the Golden Gate Bridge

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