If you are a living, breathing person with a small amount of disposable income, you have, at some point in your life, probably bought a frivolous thing that ended up being a waste of money. That thing may be a fancy pair of shoes, or perhaps a silly hat. And for a handful of very wealthy people, that thing is apparently yachts — not just regular yachts, but superyachts.
Superyachts are like regular yachts but bigger and therefore more expensive. Yachts are large, but superyachts are huge: Think 100 feet or longer. If a yacht is a symbol of luxury and excess, a superyacht is a symbol of even more luxury and excess.
Sales of these massive vessels are way up, Bloomberg reported last week, and the PPY (price per yacht, a term I just made up) also appears to be on the rise. Last year, the seafaring superrich spent $2.9 billion on these vessels — a 21 percent increase from 2016 — according to the Superyacht Intelligence Agency (which is real). There have been “nearly 300” superyacht sales this year, compared to 249 such sales in 2017.
This may not seem like a huge jump in sales, but these boats cost hundreds of millions of dollars and require full-time maintenance crews; we’re not talking about an easily accessible or rapidly expanding market here. “We look at it as a ballpark 1,500 to 2,000 serious ultra-high-net-worth individuals who drive the industry,” William Mathieson, the editorial and intelligence director of the Superyacht Group, told Bloomberg. In addition to your standard yacht amenities, like swimming pools and helipads, these boats often come equipped with submarines and missile defense systems. (David Geffen’s $590 million yacht reportedly has a basketball court).
But, it turns out, these floating monuments to wealth aren’t the smartest financial decision. Unlike real estate or blue-chip art, which can rapidly appreciate in value, superyachts tend to depreciate, and most owners lose money on resale.
Maintaining these vessels is an extra expense on top of the sale price, and it doesn’t come cheap. Even if you keep the boat docked for most of the year, you still have to pay to dock and maintain the superyacht, and you have to pay the salaries of its captain and crew. Bloomberg estimates that superyacht owners pay about 10 percent of the boat’s total value in upkeep each year, meaning that a $500 million boat like Geffen’s would cost at least $50 million per year to maintain.
Most superyacht owners don’t spend nearly enough time on their boats to make the cost worth it. Secretary of Education Betsy DeVos spends so little time on her $40 million yacht — one of at least 10 ships belonging to the DeVos family — that a group of vandals managed to set it free over the summer. (The yacht liberation cost a reported $5,000 to $10,000 in damages, which is not a lot compared to the $40 million that the yacht cost in the first place.)
Rich people — sorry, ultra-high-net-worth individuals (or UHNIs) — often go to great lengths to show that they’re just like us, even when they objectively are not. These superyachts would be symbols of extreme luxury and ostentatious wealth even if they didn’t sit unused for most of the calendar year. And unlike other UHNI purchases — art, stocks, luxury condos — superyachts aren’t even a good investment.
So why do they buy giant ships that sit empty for most of the year and depreciate the second they’re sold? Because they can.