EHMAN Brothers was filing for bankruptcy in September of 2008, Stephen White was sitting in Monaco on the back of Bad Girl, one of the most expensive superyachts in the world, owned by a top New York financier. White was then its highly respected captain. The financier, who had predicted the financial crisis, was busy liquidating his assets, including Bad Girl, while White was watching flocks of brokers trying to cash in on other owners trying to offload their yachts. White saw an opportunity in the crisis: “It became apparent that there needed to be a change.” He spotted an opportunity to start a company that had a different approach to the standard financing and costing model.
White’s next move was to call up Stephen Warren, a yacht captain of 24 years, and entrepreneur Simon Dawson – they arranged to meet in Barcelona and together drew up the model for International Yacht Register (IYR). Having been at the bridge looking after the wealthiest and most famous clientele in the world, they knew they had to put the quality of their boats and service at the centre of their new business. White admits that he wasn’t the most popular captain and he wanted to bring this discipline to the brokerage and build management side.
When IYR was set up, many in the industry were concerned they would try to undercut everyone with an easyJet model. White says “there was a lot of rumour and innuendo.” But superyachts and no-frills don’t mix, not least because the “owner wants to know what is going on in their boats,” explains White.
Their principal objection – and opportunity – was with the commissions charged. Warren relates an experience at a trade event in Nice prior to the crisis, where an owner got up on stage and said to the industry figures in attendance: “I don’t know how you can justify your commission rates – it’s a joke. No other industry in the world has upwards of 10 per cent commission rates.” Although he didn’t get the best reception from the audience, Warren thought he spoke the truth. Prices are now coming down, but as Dawson explains: “To a degree there are certain things that you can do in this economic climate, as a new company, that an existing company can’t – if you have been charging 10 per cent for 50 years, clients will ask why all of a sudden you can get away with 3 per cent?” They are being forced to justify that 7 per cent drop.
White wants to keep IYR small, bespoke and niche: “We definitely don’t see ourselves as one of the large houses on Pall Mall”; but he has a plan for sustained growth: “We built the company on a pyramid, whereby we wanted to build the foundations of the company first.” He says the majority of brokers go straight to the top, wanting to sell that £8m boat. But their best laid plans were upset in getting the chance to manage the build and chartering of Air – an 81-meter superyacht, built in the inner sanctum of the prestigious Feadship yard. Now that Air is out on the seas all attention has turned to building up the business.
Chartering yachts isn’t for everyone (not only because of seasickness) – Air costs €750,000 for the week, sleeping twelve. But there are “cheaper” options. For example, Ubi Bene costs €56,000 and sleeps ten. Split the bill and wait for the euro to drop against sterling a bit more and it starts to look like a deal.