By Elliott Stark
You’ve heard them. You must have… After all, there are just so many… “How do you wind up with a little money in the fishing business? Start with a lot…” “BOAT – bust out another thousand.” “If you have to ask how much it costs, you probably can’t afford it.”
The ability of boats to eat money is legendary. It has spawned jokes, t-shirts, and bumper stickers of all kind. Rather than being simply fairy tales made up out of thin air, these sayings reflect a level of truth – boats can certainly be expensive.
There are, however, a select group of individuals who are able to consistently use their boats to generate income. The following is a look at several strategies used successfully by boat owners to make money with their boats.
With apologies to the owner/operator of the charter program, this view looks into a few less commonly practiced scenarios for boat-driven money-making.
Boat Economics 101 and the Case for Boat Management
One popular avenue to generate revenue with a boat is to leave the boat at a popular charter destination and enter into a yacht management agreement.
Under this scenario, the boat owner hires a third-party company to take care of the boat and book charters on it. The revenue made by chartering the boat can offset the cost of boat ownership, while allowing owners to fish aboard while they are in town. There are some definite advantages to this approach.
Before you can wrap your mind around how to use your boat to generate income, it helps to understand the expenses associated with keeping and operating a vessel. As owner of Maverick Yachts and a principal of Maverick Costa Rica, Larry Drivon understands the economic variables associated with boat ownership from three separate perspectives.
He is a boat owner, he owns a boat building operation and is involved in yacht management, as well.
“There are three operating expense categories. The first are fixed costs. You incur these even if you never leave the dock. These include insurance, crew, dockage, painting, etc. Next, there are daily costs that arise when you use the boat. These include fuel, ice, bait, food, drinks and everything related to running the boat.
Finally, there are hourly costs,” Drivon relates. For the hourly cost category, Maverick Costa Rica uses two inputs – hours between oil changes and an engine reserve. For a 36-foot Maverick walk around, the oil change figure comes out to $2.00 per hour. The engine reserve, which factors the average hourly cost between engine rebuilds, is $8.75. Therefore, the factored cost is $10.75 for every hour that the boat runs.
“People consistently forget reserves for maintenance,” Drivon says. Neglecting to include this into the balance sheet can artificially inflate the profit margin – until you get hit with an astronomical repair bill that eats all the money you thought you made by chartering the boat. From Maverick’s perspective, the maintenance reserves are a line item in the fixed expense category.
“The charter deal is not as simple as people think it might be,” Drivon continues. “First you need to determine whether you are trying to make money or trying to offset expenses. Before you decide on either perspective, you need to know what it’s going to cost. That’s the first thing.”
“Most people who own a charter boat don’t plan on being the hands-on manager. That leaves two options. You can work with a management company or can opt for captain and crew management,” Drivon says.
“At Maverick we charge $650 per month to manage the boat. That’s turn key. It includes all of the work with municipalities, taxes and fees, and proper licenses. Owners get a monthly profit and loss statement and a quarterly balance sheet. Management consists of a booking staff (for charters) and a representative on the dock every morning to make sure to get people on the right boats and to distribute food, etc. We also have a guy on the dock when the boat gets back in the afternoon.”
Once you understand what is included in a management agreement and get a handle on the costs of boat ownership, it is time to determine how much a boat needs to work in order to break even. To do this, you simply compute your fixed costs (slip, insurance, crew salary, management fee, fishing tackle expense, and maintenance reserves). Next, determine an average daily expense rate per day of boat use. Then, assign an average number of engine hours per day of charter fishing (generally 10 hours) and multiply it by the hourly expense rate.
This will give you the daily input for your hourly expense category. Finally, assign the rate that you charge clients for a day of charter fishing – this figure is money coming in (everything else measures money going out). Once you have the annual fixed cost number, inputs for the average daily cost and average hourly cost and the charter rate, you can begin multiplying everything by number of days chartered.
For simplicity’s sake, you can see what it would look like if you chartered 75 days, 100 days, 125 days and 150 days. Up until your breakeven point, the profit brought in by charter fishing is outweighed by the fixed costs of boat ownership.
At some point on the curve, there is a breakeven – at which time the money you bring in by chartering your boat equals the expenses you shell out paying for all the expenses. From that point on, each day chartered generates income. Once you’ve got a handle on all of the numbers, think about your objective – making money or offsetting costs.
The breakeven point for the Maverick 36, using the company’s management pro forma, is 112 days chartered per year. In 2017, the fleet managed by Maverick Costa Rica chartered an average of 180 trips – the low vessel was 177, the high was 183. Getting a grasp on the costs associated and revenue at different levels of charter activity are central to determining whether yacht management is the right course for you.
Using Your Boat to Exploit Economic Opportunity
Based in Surfside, Texas, Captain Anthony Lopez is experienced in many types of sportfishing operation. His next venture is one that is conceptualized to leverage the multiple layers of economic opportunity in the Gulf of Mexico. Lopez is currently building a 46-foot Mussel Ridge out of Maine. The Down East style boat has a large open deck and forward cabin. It is endowed with a 17-feet beams and the ability to cruise in the low 20s.
Lopez’ vision in bringing this beast from the Down East to Texas involves a hybrid model comprised of commercial and charter fishing activities. In many ways, Captain Johnny Walker and his 57-foot Blackwell, the Kitana, has blazed the trail for this type of endeavor. “It’s a hybrid model that incorporates a little bit of several things that the boat can do – charters, corporate type meetings and three to five-day long-range trips in the Gulf,” Lopez relates.
“Then there is the commercial fishing aspect. Ultimately, we’d like to be able to sell sustainably caught fish directly to restaurants. There is a diversity of opportunity in the Gulf – bottom fishing, reef fish, deepwater pelagics – the boat has a greenstick, day and night time swordfishing. We believe the hybrid model includes all the ingredients for a long term, successful family business.”
“A lot of the traditional commercial boats are older and can only do five to ten knots – they can only slow boat out. This is a converted lobster boat that can cruise at 20 knots, enabling us to take advantage of shorter weather windows,” Lopez describes. This is a serious advantage when fishing the spring, fall and winter months in the Gulf. “The boat will be a work horse that folds 1,000
gallons of diesel. With a range of 800-miles and a Seakeeper to provide comfort for charters and safety when commercial fishing, it is a great foundation.”
When it comes to making money, Captain Anthony plans for a diversified approach that is flexible enough to take advantage of opportunities as they arise. “We anticipate the revenue breakdown will likely be in the rage of 70/30 or 60/40 commercial to charter,” he says. “The boat will tournament fish, too – either chartered or privately funded entries. Texas and Louisiana tournaments, mainly.”
Selling Your Build Slot
There are some people wh o are able to make money on boats without ever splashing them. These days many builders are waitlisted for months or years. With more people looking for boats than boats available, those who are in the build process can turn their slot into cash. This scenario occurs most predictably when the demand for boats exceeds the supply and when people are spending money. It is as much a function of the economy as it is the quality and relative scarcity of high end sportfishers available.
Ritchie Howell has been building custom boats in North Carolina for a long time. He has seen a number of these scenarios first hand. “When things were booming, I had four boats going at once. I had a guy sell a slot for $50,000 just to jump back two slots,” Howell describes. “Another time we had just finished a boat and I begged the owner to put it in the boat show because I needed
something to show.
A guy from Texas came up to him and said he wanted to buy it. He said, ‘It’s in the boat show, it must be for sale. What will it take?’ He wrote a number on a piece of paper and gave it to the owner. It was a big number… and the guy was ready right there with a check. The owner got so mad, he got on a plane and left the boat show that afternoon.”
“Most guys that go through the build process could make out pretty good, but they’ve waited so long they don’t want to part with it. You can’t mass produce custom boats,” Howell says. There is another perhaps more popularly utilized method of turning boats into cash.
Rehabbing and Flipping
While the term flipping the hull is generally used to describe the step in the build process when the boat first emerges from the shed, there are those who consistently turn a buck (and have a good time) rehabbing boats and flipping them. “When I was charter fishing, I used to buy boats that had been run into the ground. I’d fix them up and turn around and sell them,” Howell says. “There is pretty good money in refurbing something if you do it right.”
Howell’s latest refit project is a major one. He purchased the hull of the Waste Knot, the Buddy Cannady-built boat that famously sank on the show “Wicked Tuna.” When the vessel hit something at speed, the collision knocked the rudders through the hull and it sank 11-miles offshore of Oregon Inlet. Howell purchased the hull after the boat washed up on the beach. Howell has the boat
at his shop and puts workers on it as he has time. While he has had offers to purchase the boat, once it is ready to go it will be a charter boat for his son.
While there are many tips and things to consider when actually fixing the boat, what should you look for in a prospective sportfish flipper?
“I always looked for boats that perform well any way. Building styles change over time, so a lot of times there are ways to tighten up a boat. I’d look for boats that shove easy and are dry but may have been built with old techniques. I’d do things like put in stiff knees and cut out old frames and just stiffen the boat up,” Howell describes.
“BC (Buddy Cannady) used to build a boat and then charter fish with it in the
summer and commercial fish with it in the winter. He’d then sell the boat in the spring,” Ritchie continues. “I’d do something similar. I’d buy an old boat and charter fish it. I’d fix it up over the winter and sell it. When I was doing it, I was about a boat every two years.”
In addition to his background in boat building, Howell’s position within the North Carolina charter fishing community helped with these projects. “Most of the time, I’d know the history of the boat. What it could do and how it could perform,” he says. “I’d look at some boats and they would have been too big of projects. You’ve really got to have a good foundation to work from.”
“With the Waste Knot, I knew its history and its performance, but also its weaknesses,” he says. “I’ve cut out seen busted frames, took out old knees and glassed things back into place.” The boat is progressing nicely. “I’ve actually had quite a few offers to buy it. If it were for anyone else but my son, I’d have sold it,” Howell says with a laugh. Curious to see how refitting an older, worn-out boat can revitalize a sportfisher?
Check out Captain William Howell, who will be fishing the boat formerly known as Waste Knot out of Oregon Inlet Fishing Center.
Have you ever wondered why so many sportfishing boats are named after owners’ wives? Perhaps this is another reflection of how expensive boats can be. “She can’t divorce me for buying the boat… Afterall, I
named it after her!” All jokes, sayings and bumper stickers aside, boats can certainly cost quite a bit of money, but they can also be used to offset the cost of ownership or even make a bit of money.
Do you have any comments or questions for us? We’d love to hear from you.
By Elliott Stark
Just about everybody has a story about a captain who, despite being able to catch fish like a hawk, is passed up time and again for sportfishing jobs, often for guys who by comparison couldn’t catch fish in a barrel.
And there are stories of the eccentric gazillionaire owner with the newest, trickest boat, the most incredible travel schedule and the latest in electronics who burns through captains like the Cleveland Browns run through quarterbacks. In the end it comes down to the owner/captain relationship.
A Marriage of Sorts
While there are no nuptials or rings exchanged upon taking a new job, the arrangement between a captain and the owner of a sportfisherman can have more in common with a marriage than with the traditional workplace relationship. Consider the following: In terms of hours, there is nothing 9 to 5 about a professional captain.
Each party has quite a bit at stake in the relationship—the owner can easily have several million dollars invested in their floating fish-catching assets (not to mention an annual budget of several hundred thousand dollars’ more). The captain’s livelihood depends quite directly on the relationship.
The marriage metaphor between captain and owner can be especially true on a travelling boat. On an extended trip, the owner and crew may live together for weeks or even months at a time.
During times of extensive travel, the crew may have more interaction with the owner than they do their own families. What starts out as an incredibly spacious and luxuriously appointed sportboat interior can after several months at sea begin to seem like a floating prison inlaid in mahogany.
The Expert Perspective
So what are the secrets to a lasting relationship? We’ve spoken with some individuals with a great deal of experience on both sides of the checkbook. While each hails from different backgrounds and operates unique fishing and travel programs, there is still a great deal in common in the ways they approach sportfishing. Their experiences and insight can be useful for anyone on either side of the owner/captain relationship.
Buddy Schultz owns the Gotcha, a 65-foot Robin Smith. Over his tenure as boat owner, Schultz has worked with some great bridge talent including Captains Jimmy Kitchell, Cujo Brinkmeyer and Mike Canino. While stationed in Los Sueños, Schultz and Kitchell won the 2011 Los Sueños Signature Series title.
In addition to his time fishing in Costa Rica, Schultz’ boats have fished throughout the Gulf Coast and in the Caribbean, up and down the Pacific coast of Central America and off the coast of Africa.
Captain Eddie Wheeler can be found at the helm of the Marlin Darlin, a 62-foot Spencer. He’s spent his life as a sportfishing professional, and at the age of 43 has never had a job outside the field. Among his list of sportfishing accolades, Wheeler was named InTheBite’s Captain of the Year in 2004; his name can be found among the ranks of tournament winners as well. So far this year, his schedule has included the Bahamas Billfish Championship, the Bermuda Triple Crown circuit and will culminate in the sailfish series in South Florida.
Captain Kevin Dunn has worked for Sam and Edwina Friedman since 2002. As captain, he has overseen the Friedmans’ fleet which has grown to include a 112-foot yacht, the Cajun Dancer; a 68-foot sportfisherman called the Ragin’ Cajun; a center console, a bay boat and a flats boat.
As Kevin puts it, he’s got a lot of floating fiberglass to take care of. Dunn and the Friedmans spend about 250 days a year together, whether fishing or cruising. When asked about their years at sea and what is important to maintaining a lasting, functional sportfishing team, it didn’t take long for some common themes to emerge.
Building on Common Ground
Kevin Dunn said that from the moment of their first interview there was a connection between him and his perspective bosses. “The Friedmans and I had a good fit from the get-go,” he says. “From the day we met, it was comfortable.” Dunn and the Friedmans share similar values, are both from the South and have quite a bit in common.
This is an important point.
From an owner’s standpoint, a sportfishing operation is supposed to be fun. A boat can be many things: an outlet for catching fish, winning tournaments, traveling to remote destinations or spending time with family or clients. When it stops being fun, or starts being too difficult to manage, it might be time to change directions or take up golf.
By the same token, few sportfishing captains became captains by accident. Nobody just wakes up one day with a Coast Guard certificate and the ability to back a 65-footer into a tight slip at a crowded marina. Most captains become captains because they love fishing and spending time on the ocean.
For most, the choice between being a captain and an accountant is an easy one. Being a captain can be fun (an accountant, not so much).
A good match in personalities between owner and captain goes a long way to making sure that the boss doesn’t turn into a golfer and the captain doesn’t take up accounting. Buddy Schultz echoes this sentiment. After a period of time working together, Schultz and his captains become friends.
This is easy to do, Buddy says, when you’re living and fishing with someone on an extended trip. When properly matched from the beginning, many longtime captain/owner teams form friendships that sometimes last longer than their time working together.
To make sure that the prospective captains and owners get along, Eddie Wheeler suggests starting every job with an extended trial period. He recommends taking a few trips together to get a sense for how each other handle a variety of situations.
“If you take a trip to the Bahamas with a guy and it rains the whole time, you could really like him. The next trip out, it could be great weather and the guy yells at your wife for missing a fish,” he says. To avoid getting saddled with a poor arrangement, before making a long-term commitment, start out with a trial. Think of it as dating.
The Importance of Communication
When it comes to all the moving parts of a travelling sportfish operation—boat maintenance, international travel logistics, fishing and travel schedules, port entry and visa requirements, tackle rigging and a thousand other details—it is little wonder why communication ranks as perhaps the most important element to a lasting relationship.
According to Wheeler, communication is key. His approach involves making sure that he knows the likes and dislikes of the owner and his guests so that he can plan his trips accordingly. Further, he stresses the importance of being up front and honest in what is happening with the operation. “Sneaking around never works,” he says.
Schultz’ approach places similar emphasis communication. “There are two satellite phones on the Gotcha,” he says. “One is permanently mounted on the bridge and the other is a handheld in the salon.”
Any time the boat is in transit, Schultz and his captain put together a plan similar to those used with private jets, which includes scheduled travel times, nightly calls and reports upon arrival. When the boat is in port, there are meetings at least weekly but usually more frequently. “A good line of communication is critical,” Schultz explains.
Trust, Honesty (and Boat Accounting)
All three pros spoke to the importance of honesty. Even if the relationship between owner and captain is well matched from the beginning, it is important to build trust over time. For Kevin Dunn, this involves a direct approach.
“I try to be straight forward and honest, no beating around the bush. I like to account for every penny I spend,” he reports. To Dunn the relationship is like family, where trust is a critical component. While he and the Friedmans enjoy a great relationship, he offers sage advice on the subject, saying, “You have to remember that the captain works for the owners and not the other way around.”
“For me, the best captains are the guys that treat it like it’s their own boat from an expense perspective,” adds Buddy Schultz. “Running a boat is expensive, and the best captains are those that treat the boss’s money like it was their own.”
When it comes to maintenance or time in the boat yard, little things can add up to big bills in a hurry. Captains who enjoy long careers with the same owners have a knack for keeping an organized, well-maintained boat. Preventative maintenance and keeping the best interests of the operation in mind goes a long way in building trust on both sides of the equation.
Other Things to Consider
The lives and jobs of professional captains and crews must balance time on the boat with time at home. When the owner/captain relationship works well, both sides benefit. Eddie Wheeler speaks to the importance of planning and staying on top of all the captain’s responsibilities.
He will work with the owner to schedule trips ahead of time and will know when guests are coming and going. Before taking personal time, he will take care of all of the maintenance needs for the next trip before leaving. “That way, in case the plans change and our guests come in four days early, we aren’t stuck at the dock doing oil changes.” Once a break is scheduled, Wheeler keeps in communication with the owner and his mates to make sure the operation is in good hands while he’s gone.
“Incorporating family time is very important,” Dunn adds, “Sam and Edwina are very good about this.” With a schedule that involves around 250 days a year, Dunn and the Friedmans have worked out a good arrangement. “Some owners are great about this, others not so much,” he says. When it comes to building a captain/owner relationship that lasts, it makes a lot of sense for both sides to consider how to handle time away from the boat.
The Way It’s Supposed to Work
The unemployed captain who catches fish but can’t get along with anyone? The owner of the great boat who can’t keep a captain? To hell with those stories. Everybody prefers to hear the one about the captain and owner who work together for twenty years, catching fish, hunting together and growing into old friends. It’s not an easy story to recreate, but it is nearly impossible without hard work, honesty, communication and compromise.
The Profile of a Successful Captain
Catching fish is important but with the amount of money and resources invested, there is a lot more to the job. The following are traits that most successful, long time captains possess:
- Honesty: Being upfront with owners and fair with mates is important to sustaining relationships and getting things done.
- A Strong Work Ethic: Captains not only put in long hours but they must be knowledgeable about everything from boat systems to accounting procedures. Performing proper maintenance and the ability to diagnose and resolve problems as they occur can be the difference between a great day on the water and a catastrophe.
- Organization: From logbooks and maintenance reports to keeping track of upcoming trips, organization is a trait possessed by nearly all successful captains.
All three of our pros listed communication as a critical element to building successful relationships. With this in mind, developing communication skills can be a career booster for most anyone. The resources available online or in the bookstore for communication skills are numerous. While this may not be the first thing that comes to mind when considering a career on the water, adding some communication insight to your reading list will pay dividends in the long run.
Do you have any comments or questions for us? We’d love to hear from you.
By Capt. Scott “Fraz” Murie
Job security is something you must earn in our business. The job of a private captain is ultimately to provide for the enjoyment of the wealthy. We always have to keep in mind that the boats we fish on, and the crew employed upon them, are not a necessity for the owners.
Because fishing operations are a luxury, you must earn your job security because…there really is no job security in our business!
When economic circumstances change, there is no doubt in my mind that the first thing the owners get rid of is their boat. Once the boat is sold, the crew is next.
Beyond changes to the bank account, there are also times when owners just get burned out. Generally speaking, when owning a boat and hiring a crew is more of a burden than a source of joy, the operation will not last much longer.
Over the years I have seen a lot of crews come and go. The most common reasons for crews going by the wayside? They are let go for such things as poor work ethics, spending money foolishly, immaturity, too much partying or no common sense. This type of crew does not last long on the same boat.
I believe that you earn your job security by proving to the owner that you can be trusted with the responsibility of maintaining, operating and managing their multi-million-dollar hobby. You must set their mind at ease, treating their money as if it was your money. Knowing that they can trust you with managing their funds means a lot to owners.
Managing yourself and crew is very important to them as well. For instance, rumors that fly around the dock about certain crews getting drunk is not very impressive to the owners. I can guarantee that they are glad that such rumors are not about their crew!
Loyalty, honesty, and trustworthiness are the keys to a job that lasts a long time. It’s pretty easy to tell the crews that are not going to last long just by the way they act around the dock. Conversely, the same goes for the crews that have been on their jobs for a long time.
Just look at their work ethic and the way they conduct themselves. You can see why their jobs last for many years. I also fully understand that regardless of how one acts, there are a few owners out there that can be irrational – but we won’t even go there!
So pay attention to the crews who have been working for the same owner for numbers of years. You’ll see why they keep a job.
– That’s my two-minute warning.
Do you have any comments or questions for us? We’d love to hear from you.