Owners' guide to yacht management companies

20 January 2015 • Written by Kenny Wooten
Superyachts cruising far from home exposes owners to challenges with fiscal issues, regulatory compliance and logistics.

Moving up from a yacht of less than 30m to 40m, 50m or more, increases the complexity of the yacht orders of magnitude. The owner of a large yacht likely will find he or she no longer has the time, the will, or the administrative resources to navigate a jungle of yard contracts, legal hurdles, insurance options, regulations, crew management, charter management, logistics or the myriad other details associated with building, repairing or ownership.

A yacht owner going it alone may find what once was a pleasant escape from the stress and pressures of the workaday world is now a surly beast in constant need of attention.

'As yachts increase in tonnage, so do the demands on the owner. A management company takes the day-to-day burden and responsibility of running the yacht away from the owner,' says a member of the Burgess Yachts management team. 'More importantly, [managers] are there to respond to urgent situations and emergencies around the clock, and to provide advice to the owner and crew in all areas.'

Running a yacht is a full-time job

Boats are inherently needy machines. Quality time on the water rarely comes without at least a modicum of thought for their care and feeding.

Owning a superyacht can take on characteristics of running an international business. For some, a competent corporate accountant and a talented captain may be able to manage the program, but for many, at least some level of professional shore-based yacht management can be a welcome relief.

'Administration of a yacht, managing its safety, paying suppliers, managing crew and charter agents is a full-time job,' says Barbara Jolly, yacht and aircraft manager of Abacus Trust Company Ltd. 'The larger the yacht, the more likely it is for such services to be contracted out. This will allow the captain to focus on its safe and smooth operation.'

Yacht management comes in many shapes and sizes depending on an owner's individual requirements. Owners may decide to hire a small firm or individual expert to handle one element. such as regulatory compliance, and another for charter management.

'Administration of a yacht, managing its safety, paying suppliers, managing crew and charter agents is a full-time job

Barbara Jolly, yacht and aircraft manager, Abacus Trust Company'

A number of firms, large and small, offer 'full lifecycle' management for every aspect of ownership, beginning with an owner's decision to build a new yacht and end with its sale.

'Our yacht management services,' says the Burgess manager, 'are tailored to each owner's specific needs and can include operations support, technical management, safety management, security management, crew administration, emergency response, insurance administration, creation of a robust offshore crew employment structure, financial management and technical consultancy.

'We also can be used as an on-call advisor for any of the owner's yachting needs.'

Other large companies offer similar menus covering a broad range of services from which owners can choose a full or partial package or take the services à la carte. Burgess says 90 per cent of its fleet is under what is termed 'full management'.

Edmiston & Company says 80 per cent of its fleet is under full management, with the remainder having contracts for some, but not all, of the services the firm offers.

'We have been asked for many other services and are always happy to support a client in any way,' says a senior manager at Edmiston. 'This has included making all necessary arrangements for three tigers to attend a party for 300 people on board a 60m yacht in a US marina.'

Administration of a yacht, managing its safety, paying suppliers, managing crew and charter agents is a full-time job

Barbara Jolly, yacht and aircraft manager, Abacus Trust Company

Owners with appropriate infrastructure in their businesses can handle some of the details of superyacht management.

Management networks

If a management company does not have on-staff expertise in a specific area, it often has relationships with specialists who do.

For regulatory compliance, it may go to someone like Ken Argent of Water’s Edge Consulting Ltd., who specializes in ISM and ISPS (International Safety Management Code/International Ship and Port Facility Security Code) management and MLC (Maritime Labor Convention) compliance.

Argent’s business provides shore-based regulatory compliance services to yachts over 500GT that are engaged in trade (charter in the case of yachts) as required by the various codes, regulations and conventions.

Most broad-brush brokerage companies offer regulatory compliance services, but, says Argent, ‘Some owners prefer to deal with people who have no connection to a brokerage house.’

Other firms offer a wide range of services, but specialize in a narrower branch of management. Isle of Man-based I-Cap Marine Ltd., is an example of a larger company that focuses on a speciality slice of the management pie. I-Cap Director Stephen Brew described his company as a ‘corporate and statutory manager’.

‘A yacht manager will undertake technical management, day-to-day crew management, and day-to-day operational management of the yacht, in close co-ordination with the captain and crew,’ says Brew. ‘The corporate and statutory management of the yacht, which is what we undertake at I-Cap Marine Ltd., is in very simple terms, the management of the corporate ownership structure.

‘At the same time, we work with nearly all of the major yacht managers for yachts of all shapes and sizes. [When there is a] yacht manager involved, we tend to look after the ownership structure, accounting and VAT compliance, while the yacht managers handle all day-to-day, operational oversight of the yacht.’

Managing private yachts

By some estimates, there are more than 7,000 yachts 24m and above worldwide, but only a small percentage of their owners retain the services of a management company. Those who don’t are likely owners of private yachts that do not engage in commercial activity such as charter. So who’s coordinating all the details if not a management company?

Often captains serve as the lead management executive, hiring crew, keeping books and managing the technical aspects of the yacht. But an owner moving up in class may find the added layers of regulation and compliance strain the resources and time of his captain.

Some owners use accountants or managers within their businesses and software such as Marine CFO or Manage My Vessel to coordinate those activities in conjunction with the captain. The owner of the 85m Cakewalk, launched in the US in 2010, established a separate entity to handle the management details of his yachts.

‘We started our own management company, Yacht Logistics Inc., in 2000, after the launch of the 62m Cakewalk [the owner’s previous yacht],’ says the owner’s long-time captain, William Zinser.

‘We sent a former crew member to school to learn the safety management program required to manage our vessel. We set up our own payroll, insurance, immigration lawyer, accountant and our own safety management program,’ continues Zinser, ‘which ended up being less expensive than the alternatives. We use a shoreside engineering company and pay them as we go.

‘I initiate and oversee all of the SMS [Safety Management System] on board Cakewalk and delegate its implementation to the necessary crew to make sure it is adhered to.’

Zinser, who is a partner in Yacht Logistics, says the company now handles safety management, payroll, mail and other services for four other vessels. He thinks a management company is a good choice for novice large yacht owners.

‘A person who has never been a yacht owner before could definitely benefit from a large management company, unless he or she can put all this together himself or herself before purchasing a large yacht,’ he says.

A management company will oversee a superyacht owner's regulatory, financial and legal responsibilities.
Beware of the well-presented ‘one-stop shop’ approach, as very few companies can actually deliver this in a meaningful way.

Robert Tobin, director, Döhle Private Clients

Superyacht Owners’ Guide 2012

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