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By Benjamin Stupples (Bloomberg) –Gazing across the sun-dappled harbor in Monaco, even the fathomlessly rich might get the feeling that some people have more money than they know what to do with.
Floating in Port Hercules the other week—ensigns fluttering, halyards singing—was one of the most spectacular displays of seagoing craft ever seen: 125 superyachts with a combined value of $4.4 billion.
The mine’s-bigger-than-yours lineup at the Monaco Yacht Show was yet another sign of how the wealth of today’s ultra-rich is remaking the world in ways that might make many ordinary people cringe. Six hundred million dollars? For a boat?
Even Henk de Vries, one of the world’s foremost superyacht builders, has conceded that no one needs one.
“I make the most unnecessary product that you can want, and I make it so nice that you still want it,” he said a decade ago.
Even at a time of worrying inequality and anxiety over climate change, an astonishing number of the superwealthy want superyachts—so many, in fact, that the de Vries family and their chief yacht-building rivals, the Lurssen and Vitelli clans, have become fabulously rich themselves.
“You’re essentially building a small skyscraper that floats on the water,” said Martin Redmayne, chairman of the Superyacht Group, a London-based media company. To be successful, these shipyard owners must have “patience, time and passion—absolute passion. It’s a very long game.”
The business of building ocean-going palaces really got going in the Gilded Age when robber barons and their descendants traded up from schooners. The Vanderbilts owned a 332-foot steam-fueled vessel for getaways to Europe, while the J.P. Morgan clan built multiple yachts called Corsair, each bigger and better than the last. The 343-foot Corsair IV was launched in 1930 to sail the family up and down the East Coast and across the Atlantic until it was given to the British navy at the start of World War II.
Demand slowed in the immediate aftermath of the conflict, but rebounded as Greek shipping magnates, royalty and Hollywood movie stars became yacht owners.
Paolo Vitelli got his start in 1969 after selling a nightclub business. He used the proceeds to found the yacht-maker now known as Azimut Benetti.
Italy at the time was rocked with labor unrest, but Vitelli imported boats from the Netherlands and later designed and built mass-produced luxury vessels.
He expanded when Benetti, one of the biggest names in the industry, ran into trouble in the 1980s, partly because of the costs of developing “Nabila,” a 282-foot vessel whose owners have included Saudi Arabian arms dealer Adnan Khashoggi and President Donald Trump. Vitelli bought the business in 1985 and overnight turned his firm into a boat-builder for the richest of the rich.
Two years later stock markets tanked and demand tumbled, but Vitelli, 72, stuck it out through this crash and the global financial crisis two decades later.
These days, business is again booming as Middle East royalty, Russian oligarchs, technology titans and real estate moguls compete for ever bigger or more advanced boats. There are more than 350 under construction currently, according to the Superyacht Group, including a 466-footer poised to launch next year codenamed Project Redwood. The future owner’s name is shrouded in secrecy.
Azimut Benetti is the world’s biggest yacht-builder by volume. It reported annual sales—measured in value of production underway—of 900 million euros ($986 million) for the year ended Aug. 31. That’s made the Vitellis wealthy, but the family has little interest in cashing out.
“An American fund once wrote me a check for $1.7 billion,” Vitelli said in an interview at Azimut Benetti’s shipyard in Livorno, Italy. He declined the offer. “Money and cash ruin the family and take away the pleasure of running the company. You have to have rules and simplicity to love the real things.”
That was evident in March, when Vitelli launched “IJE” with the customary Champagne bottle shattering against the side, green, white and red confetti fluttering into a blue sky and Luciano Pavarotti’s voice echoing from throbbing speakers. The 354-foot yacht, built for Australian casino magnate James Packer, comes with a cinema, sauna and fire pit.
It’s a monster by most standards and spent the week of the Monaco Yacht Show off Italy’s western coast. The Monaco event started in 1991 as a place for owners, brokers and fans of megaboating to gawk at the latest designs. The inaugural show featured 32 vessels. Last month, four times that number were on display during a week that drew more than 30,000 visitors to Monaco, including Robert Redford and Gwen Stefani.
But the undoubted stars of the four-day event were the gleaming boats.
Germany’s Lurssen displayed the 364-foot Tis, which comes with a massage room, helipads and nine cabins. It’s owned by Russian commodities trader Alexei Fedorychev and is available for mere mortals to rent for $2.2 million a week, plus expenses.
Lurssen announced plans for Tis three years ago, a typical time frame for the biggest custom superyachts. The process starts with a naval architect and designers, and involves teams representing the owner and project managers, as well as thousands of hours of labor for shipyard workers.
Lurssen traces its roots to 1875, when 24-year-old Friedrich Lurssen started a boatyard near Bremen. At first he made only row boats, but later pioneered motorboats with a founder of automaker Daimler AG. Peter Lurssen, Friedrich’s great grandson, now leads the company, which helped built the 414-foot superyacht of late Microsoft Corp. co-founder Paul Allen. About a third of the German firm’s business is from repeat clients, Peter Lurssen said at a Superyachts.com event in London this year.
“So we must be doing something right,” he added.
But for all the riches floating around there are ominous signs.
Rising inequality and a populist backlash has put a spotlight on the world’s richest and their toys. British retail billionaire Philip Green’s “Lionheart”—made by Azimut Benetti—has become a focus of outrage, highlighted by the media each time Green closes stores and cuts jobs.
In the U.S., the world’s top yachting market, senators Bernie Sanders and Elizabeth Warren have proposed wealth taxes as they campaign for the 2020 Democratic presidential nomination. Across the Atlantic, left-wing firebrand Jeremy Corbyn is vying to lead the U.K., while China’s super-rich are braced for the possibility their government may go after the wealthy to provide tax cuts for the masses.
There’s also the risk of another global recession that could slow sales.
And it’s not just politicians and the global economy to worry about, either. The next generation of the uber-wealthy may have different attitudes towards such fuel-guzzling symbols of conspicuous consumption.
Azimut Benetti, Lurssen and Dutch yacht-builder Feadship, which is half owned by the de Vries family, have pledged to cut carbon emissions, but that’s not easily done for ships that can burn 500 liters of diesel an hour.
“A lot of clients are looking at trying to be environmentally friendly,” said Sean Bianchi, head of new construction at broker Burgess. Options for new yachts include on-board battery banks and installing hybrid or electric motors. But “there is only so far you can take a luxury yacht down that environmental route,” he said.
Vitelli though is optimistic, as he prepares to hand the reigns to his daughter, Giovanna, 44, with hopes of sparking a dynasty to rival the Lurssens and de Vries.
“Her children, although they are young, are already dreaming of becoming the third generation at the company,” Vitelli said. “The idea that we could have 100 years of history is appealing to me very much.”
–With assistance from Devon Pendleton and Tom Maloney.
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