By Dorie Cox
When captains look at a yacht, they see line items in a large budget. From the first cup of coffee in the morning, many are preoccupied with saving money for yacht owners. And that was right where this month’s Triton From the Bridge lunch discussion started – with single-serving coffee systems.
“That comes out of the crew budget,” a captain said. “They’re not very cost effective; we go through hundreds. Say there are 20 crew, figure they cost about 45 cents and use about 100 capsules a day. That’s a lot of coffee.”
Individual comments are not attributed to encourage candid discussion; attending captains are identified in the accompanying photograph.
These coffees are one example of the details captains examine when it comes to the yacht’s budget.
“It’s a smaller expense compared to what we spend, but I ask new crew if they drink coffee,” a captain said. He laughed as he added, “If not, that leaves more for me.”
Budgets range from formal to none
Budgets are the backbone of most yachts, and most are compiled by trial and error.
Attendees of The Triton’s December From the Bridge luncheon were, back row, from left, Capt. Ned Stone (freelance), Capt. Phil Frost of M/Y H; front row, from left, Capt. Jack McKay of M/Y Harmony and Capt. Stephen Fleming. Photo by Dorie Cox
“I’ve just done next year’s budget; we run on last year’s numbers,” a captain said. He pulled up his spreadsheet on his phone and scrolled through about a hundred line items for categories including fuel, dockage, insurance, crew food, flowers, tips, cell phone, internet and satellite phone. He has learned from experience and estimates the numbers according to where the yacht will be and who will be using it.
“They’re listed when I think expenses will hit,” he said. “Like fuel, I think it will hit every second month. Or if we’re in the Mediterranean, it’s more expensive for dockage and agent fees. If I’m wrong, I can change each month.”
Even with experienced captains, budgeting is not an exact science.
“I give them [owners] an idea of what we will spend to redecorate or paint, so some years are more than others,” a captain said. “It goes up and down.”
“If we get charters, it helps the budget,” another captain said. “We don’t pay dockage, we eat leftovers. But when we don’t have charters, he [the owner] expects us to meet those numbers, but we can’t.”
Some captains create the initial budget using a template from a management company.
“We deduct items from that and remove categories that don’t pertain to us,” a captain said.
A starting point for many captains is a base operating budget of about 10 percent of the value of the boat when it was new.
“For a $20 million boat, $2 million is average for crew wages, insurance, everything,” a captain said.
Several captains said their budgets are lower than the 10 percent. One captain aims to keep expenses at 6 percent, and another is mandated to keep costs that low.
“He makes me work harder to make sure we’re saving money,” that captain said. “Not to do it cheaply, but to make sure we’re not wasting.”
“He wants you to be efficient,” another captain said.
But several of the captains said they have worked on yachts without a budget at all.
“The last boat was common sense,” a captain said. “The owner said, ‘How much money could you possibly spend?’”
Captains said they always work in the future.
“We have to make a fund request – not for the month coming up, but the one after,” a captain said.
“You have to be working several months ahead,” another captain said. “Most prefer a three-month projection.”
Line items in a budget
A yacht budget typically includes everything to run the yacht. The captains said they concentrate on getting good rates on expenditures, such as dockage, insurance and fuel. But as the conversation veered to the crew budget, things stirred up.
“Many crew are wasteful, especially with food,” a captain said. “Can I have this or that? No, the the chef needs to cook what he’s going to cook. If you want a specialty item, you need to get it yourself.”
Another captain commiserated.
“This has been a pet peeve,” this captain said. “Someone tells the chef they prefer almond milk and the other prefers soy milk and there are all these things lining the fridge.”
“You can have six cartons of flavors of milk,” another captain said. “It’s expensive to buy all of these.”
“There’s not enough room; there are too many choices these days,” a third captain said.
The theme segued into another expenditure that irks captains: single-serving water bottles.
“It’s getting more extreme each year, the plastic bottled water is insane,” a captain said.
This expense frustrates all of the captains at the discussion.
“Pallets and truckloads of plastic bottles of water,” one said. “Someone has to go get them, fill shopping carts, load them on the boat, store them, drink them, load the recycles back off the boat and take them back to shore.”
“And the percentage not drunk?” another captain said. He peered at the halfway mark on an imaginary water bottle and said, “Whose is this? Don’t know, chuck it.”
Several yachts installed water filtration systems. One captain calculated large savings using filtered water instead of disposable bottles.
“Estimate three [bottles] a day times the number of crew, and it’s quite an expense,” he said.
With exhaustion of the beverage topic, captains dove into other parts of the crew budget. Most yachts cover soap, toothpaste, toothbrush and shampoo – just the basics, a captain said.
“But some boats have tampons, condoms, all sorts of things in the cupboard,” he said.
“Gillette Mach 5 vibrating razors,” another captain said. “Crew from other boats say, ‘If you want us to shave, we each want our own shaver.'”
“We provide them; we go to Costco and get the big bag of disposable razors,” the first captain said. “If you want to use those, you can – or you can buy your own. I’m shocked when I go in some of these boats with what they buy for the crew.”
Several captains said they focus on categories instead of such specific expenditures.
“I like to see consistency,” a captain said. “If the bill is within reason to what my experience is and running at a certain historical rate, I don’t nitpick, I just let it flow.”
He said small inconsistencies are not a problem.
“I don’t examine it line item to line item; I do take notes and observe,” he said. “But let’s say it goes from 250 to 350 euros, then we may have a casual conversation about changes. My biggest interest is at end of month.”
Most monthly budgets are not a problem because seasoned crew know their captain’s expectations, he said. But the new crew are known to go two directions, either safely within the budget or out to test the boundaries.
“Often new crew are conscientious or too timid to request something special,” a captain said.
“I have green crew who are excited to have a bed and a job,” another captain said. “They are like, ‘Wow, we get shampoo.’ ”
“I have a new one who is much more cautious about spending,” a captain said. “But I have a guy who has been with me for years, and he is much more comfortable. Now he spends more money.”
And some yachts allocate more money for the crew budget as a hiring incentive.
“Some of that goes back to keeping good crew, crew remuneration, how satisfied the crew are with how they’re paid and their time off,” a captain said.
Most of the group agreed that crew uniforms are one of the biggest expenses in the crew budget. A captain explained that the yacht has three color schemes for uniforms.
“We got long-sleeve shirts, short-sleeve shirts, sweaters, jumpers, shorts, skirts, pants and more,” he said. “We got it all – then two crew left. We have all that stuff and no one fits it.”
“Unfortunately, crew need to fit into the existing inventory so you don’t spend any more money,” another captain said. “We got new crew and had to get more uniforms. Now we keep small, medium, large in our colors.”
Because of the inexact nature of yacht budgets, captains spend a surprising amount of time thinking about costs in an effort to optimize. And they shared tips to that end.
“Ask for more than you need. It is always way more than you think,” one captain said. Even the most experienced captains face surprises and most budgets don’t include emergencies, haul outs and unforeseen costs.
“I didn’t think it was $4,000 for flame retardant on the carpet. Incidentals,” a captain said.
“That comes under, ‘It’s not my fault, we just didn’t know,’ ” another captain said.
“Send the boss the ‘you’re not going to believe it’ letter,” a third captain said.
“Or you make that funny ‘um’ noise before you talk,” a fourth captain said. “Um, well, sir …”
Another reason to ask for more money in the budget is that owners often cut it, a captain said.
“Sometimes you have to add categories,” he said.
Saving push beyond captain’s preference
This group of captains is comfortable creating, managing and running yacht budgets – where they teeter is at the fine line between saving money for the owner and maintaining the yacht in the manner they prefer.
“Sometimes the experience is penny-wise and pound-foolish,” a captain said of saving money.
Previously, he worked with a yacht owner uninterested in detailed expenses. Per instructions, the captain provided the owner only the total price for projects.
“But then he wants to knock money off of it,” the captain said. “He says, ‘Can you do it for this much instead?'”
That, the captain said, can leave a captain to cut out items he would prefer to retain.
“As captains, we say yes, but you can shoot yourself in the foot on this,” he said.
A captain with a similar experience said he cuts corners to keep the budget low, even saving dockage by anchoring out.
“I’m naturally cheap. I push hard to save,” he said. “It keeps the boss happy.”
Most all in the group have put off something they would do if they had a larger budget.
“I don’t always do the suggested maintenance and I’ll push things longer to avoid spending the money,” a captain said. “I’m always concerned about that. We use our best judgment, but this emphasis on saving can hurt the boat.”
Dorie Cox is editor of The Triton. Comments on this story are welcome below. Captains who make their living running someone else’s yacht are welcome to join in the conversation. Email us for an invitation to our monthly From the Bridge lunch.