Is it the fact we are an island nation? Is it the fact that our ancestors arrived here as boat people? Is it some sort of deep, spiritual connection to the sea?
Whatever the reason, Australia’s Rich List members love boats: big, expensive, floating-palace-of-the-high-seas boats that cost a large fortune to own and a smaller fortune to run.
But owning a big motor yacht or super-yacht isn’t always smooth sailing (don’t worry, I’ve got a million of them), as Noosa-based millionaire Paul McDonald found out this week.
McDonald struck trouble off the coast of Canada as he was attempting take his super-yacht Fortus through the Northwest Passage, part of a circumnavigation of North America.
While the Northwest Passage, the sea route through the Arctic Ocean that skirts the top of North America, is famous for claiming the lives of early arctic explorer such as Sir James Franklin, McDonald’s expedition wasn’t exactly a rugged trip into the wild.
The 34-metre Fortus has seven staterooms, a jacuzzi and a crew including a private chef. In this sort of environment, it’s not hard to imagine McDonald and his passengers would enjoy a party or 29 as they cruised around North America. But it’s these parties that landed McDonald in not water.
McDonald has been charged with one count of providing liquor to a minor and one count of being in unauthorised possession of liquor by authorities in Cambridge Bay, a small town located deep in Nunuvat Territory in Canada. The locals have strict rules about the possession of alcohol and what has been reported to be a “wild” party on board Fortrus did not go unnoticed.
McDonald is a notoriously private entrepreneur whose empire spans building products, resource and agribusiness. He rose to prominence last year when he sold a quarry in the Queensland town of Gympie to Boral for more than $80 million.
So far, his statements on the incident have been limited to a release through his lawyers saying that McDonald “regrets he was not familiar with the local laws or the restriction on fireworks or liquor at the time of the alleged incident”.
McDonald’s lawyers denied reports that a cheque used to pay $10,000 in fines had bounced and they say the fines will be paid in full by November 15.
The fact that McDonald remains on a boat thousands of kilometres from Australia means he doesn’t need to answer the questions from pesky journalists. And, of course, that’s one of the key attractions of a super-yacht.
For the super-rich, being able to get away from the pressures of work – and least some of the interruptions of modern communications – in a luxurious environment is one of the big attractions of owning a super-yacht.
The privacy offered – at least when you’re on the open sea and away from paparazzi and pesky locals in port – must also be extremely attractive.
But at least part of the allure of the big yacht must be its power as a status symbol. Nothing says you’ve made it in quite the same way.
Firstly, there’s upfront cost. To play in the real big leagues of the super-yacht world, your floating palace needs to be at least 70 metres long – in a list of the top 100 super-yachts produced earlier this year by Superyachts.com, the smallest boat was 76 metres long, but increasingly the biggest yachts are over 100 metres long.
The biggest – and most expensive – yacht ever built was made for Russian billionaire Roman Abramovich, whose 164-metre monster called Eclipse was built in 2009 for somewhere between $600 million and $1 billion. But even smaller boats – take Frank Lowy’s 73.6 metre Ilona – can cost more than $100 million and a lot more, depending on how expensive the owner’s taste is.
But the purchase price only gets you into the super-yacht money pit. The industry rule of thumb says that annual running costs for a yacht is 10% of the purchase price; for owners like Microsoft co-founder Paul Allen, who owns the $200 million yacht Octopus (which includes its very own recording studio) it can cost up to $20 million a year to keep his palace afloat.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
