Posted by: Jerry Garrett | August 5, 2017

Rough Seas Ahead for French Riviera Superyachts

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Dilbar, largest yacht by tonnage in the world, off coast of Monaco

(Jerry Garrett Photos)

MONACO

Superyachts cruise back in forth all day, in front of my modest balcony here, overlooking the Côte d’Azur.

Where are they going? To Monaco to visit their money? To the casino? To take on a new load of supermodels and aspiring actresses for another big “Wolf of Wall Street” type orgy? The imagination runs wild.

The truth, it turns out, may be rather boring. Many are just headed to Sanremo, Italy to get gas.

Big deal? Wait: This actually is a big story.

A fill-up for a superyacht can mean 200,000 liters of fuel! Enough for a trans-Atlantic crossing. The tab can easily run into the hundreds of thousands of euros. That’s if you fill up in French ports like Monaco, Nice, Cannes or Saint-Tropez.

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Just another thirsty superyacht.

If you can make it to Italy – Sanremo is only about 20 nautical miles from Monaco – you can save tens of thousands!

In fact, a fueling station attendant in Monaco tells the story of a mid-size 42-meter yacht owner who missed the station closing in Sanremo by a few minutes, and ended up paying an extra €40,000 to top up in Monaco! Ouch!

By “superyacht” I will arbitarily focus on yachts longer than 67 meters, or 220 feet. There are at least 200 of those in the world. In many countries, yachts larger than 24 meters must have a fulltime professional crew. Believe it or not, there are something like 5,000 yachts longer than 24 meters right now in the world.

The yacht pictured above, the 156-meter-long (512 feet) Dilbar, is the world’s largest yacht by tonnage (15,917 gross). Its 30,000-kilowatt diesel electric engine is the largest fitted to any yacht, said its builder, Lurssen.

Delivered to its new owner, Russian oligarch Alisher Usmanov, in May 2016, it reportedly cost more than €500 million.

It can accommodate 40 guests, and has a fulltime crew of 80 crew.

Right now, the Dilbar is berthed in Porto Cervo on the Italian island of Sardinia. It has moved to Italy – from Monaco, where I spotted it – as have so many of the world’s biggest yachts this summer. Why? Because of a bit of a dust-up over French prices and taxes.

The average daily mooring fee in Porto Cervo is actually twice as much as, say, Saint-Tropez (about €2,500 a day versus €1,200 or so). But fuel is cheaper in Italy now. And that crew of 80 costs literally millions less to base there.

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Fuel ahoy!

More and more yachting money is flowing out of the south of France to Spain, Italy, Greece, Turkey and other Mediterranean countries, because the French have tried to tighten the screws on loose regulation of taxes and social services that they claim yachts are supposed to pay.

But in recent years, those taxes and fees have been getting dodged.

Many family members of yacht crews officially reside in France, where they enjoy generous social services, while claiming tax-free salaries because their wages are earned offshore. France now is sending out tax bills reflecting tougher rules, collections for pensions, health insurance, and other compulsory contributions – which are up from less than 15 percent of their wages to now 55 percent!

France is also now strictly imposing a 20 percent VAT on yacht fuel sales, which were previously much easier to avoid.

fullsizeoutput_1992Harbors on the French Riviera have seen busier summers.

Revenue at the iconic marinas such as Saint-Tropez, Cannes, Nice and Toulon are off 30-40 percent this summer, prompting a needy letter from local leaders to President Emmanuel Macron, asking for relief.

Their letter cited an example of a 42-meter yacht being refueled in Italy instead of France “gives a saving of nearly €21,000 a week because of the difference in tax.” Fuel sales by the four largest French marine fuel vendors has fallen by 50 percent this summer, the letter added.

As to crew wages and taxes, the letter stated that while the least experienced crew member may only make €24,000 per year, a captain can command €300,000. The letter noted that “the additional cost of maintaining a seven-person crew in France is €300,000 a year.”

Do the math on how much that crew of 80 on the Dilbar must cost!

Not surprisingly, crew members are being laid off in droves.

Even less surprising: Over one-third of those 5,000+ over-24-meter yachts are up for sale.

Yes, the people who own these yachts can probably afford to pay more, but not surprisingly, they prefer not to. It’s hard to muster much sympathy for them.

But there is a wider problem here, and it’s a problem for France’s new President Macron, who is trying to revamp the country’s severe labor and tax laws.

Wine producers in the south of France claim that it costs them far more to produce their wines than it does for producers in neighboring Italy or Spain. Liquor also costs far less in Italy; the same is true of building materials, designer clothing and food. Market days in Ventimiglia, Italy, on the French border are thronged with French shoppers, buying all they can carry.

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Artist rendering of what Ventimiglia’s yacht harbor will look like.

His Serene Highness Prince Albert of Monaco just recently bought the entire unfinished yacht harbor in nearby Ventimiglia, Italy (for a bargain €34 million); he means to finish it off and open it as a cheaper alternative affiliated with the harbor in Monaco.

Nicholas Edmiston, of the Edmiston yacht brokerage in Monaco, recently told The Daily Beast, “The possibility of this happening if taxes and fees were increased has actually been talked about for the last two years, and everyone warned what would happen. This where the French government so often goes wrong, this attitude of, ‘Well, we are France, people will always come here.'”

This time they may have miscalculated.

Edmiston said yachting is an important contributor to the Côte d’Azur economy, beyond the port fees, fueling costs and taxes, because yachts bring high-end shoppers and home buyers.

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If people are not made to feel feel welcome in the area, he warned, they will go elsewhere.

Something like this happened about 30 years ago, he recalled, and the yachting community did indeed go elsewhere – and they stayed away until the French eased off.

Maybe this is just history repeating and the problem will be eventually solve itself. Until then, it could be costly for France’s economy, but a welcome boon for beleaguered neighbors like Italy.

Jerry Garrett

August 5, 2017

 

 

 

 

 

 

 

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Responses

  1. […] as noted on this blog in a previous post, is owned by Russian oligarch Alisher Usmanov, GazProm CEO and Vladimir Putin pal. The ship, which […]


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