Owning a boat is undoubtedly expensive and that last check you sign before driving your new boat home is just the tip of the iceberg. Budgets are in the eye of the beholder as operating costs can vary greatly depending on how many days, weeks or months the boat will be in use and also how extensive your travel or tournament participation will be. A lot of people dream of owning a lavish sportfishing yacht and touring the world chasing billfish, but few have the financial backing to coax that dream to life. Keeping a large sportfish, or even a small charter boat, up and running through an entire season can be challenging. Any little hiccup can cost thousands of dollars in repairs and it is important to prioritize a realistic long-term budget for time and finances. 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, says owner of Maverick Yachts and a principal of Maverick Costa Rica, Larry Drivon. For the hourly cost category, Maverick Costa Rica uses two inputs ”hours between oil changes and an engine reserve. For a 36-foot Maverick walkaround entered in his Costa Rica management program, 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. Accordingly, the factored cost is $10.75 for every hour that the boat runs.
Not surprisingly, these costs can vary greatly depending on the age and condition of the boat and its location. Once you are aware of the total operating costs, it time to decide if you need to offset the expenses to keep the dream afloat. While it not an easy task, there are a select group of individuals who are able to consistently use their boats to generate income, while deriving substantial tax benefits.
To determine how much a boat needs to work in order to break even simply compute your fixed costs. Next, determine an average expense rate per day of boat use. Then you can 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. With 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 the number of days chartered.
For simplicity’s sake, see what it would look like if you chartered 75 days, 100 days and 125 days. At some point on the curve there is a break even ”at which time the money you bring in chartering equals what you shell out paying for all the expenses. From here, each day chartered generates income. Once you’ve got a handle on all of the financials, think about your objective. Are you trying to run a business or simply looking to offset some expenses? Allowing other people to charter your boat is not for everyone and using charter as a tool to ease the cost of ownership requires careful consideration for all parties involved.
The following total cost of ownership estimate is based on a $2 million, 60-foot sportfish averaging 300 hours per year and incurring no major malfunctions. Fuel has been excluded as there are just too many variables that affect annual consumption.
Engine Maintenance: Oil Changes, [email protected]$2,500 (every 100 hours) $7,500 Transmission Oil (every 200 hours) $750 Oil Leaks Repaired $2,000 Heat Exchanger/Aftercooler Cleaning $5000 ($10,000 every 2 years) Raw Water Pump Maintenance $3,000 Fuel Injectors Replacement $9,333 amortized over 3 year injector replacement (1,000 hours $28,000)
Annual Engine Maintenance: $27,583
Generator Maintenance Oil Change $750 Generator Impellers $250
Annual Generator Maintenance: $1,000
Boatyard Maintenance Cutlass Bearings $3,000 Bottom Paint and Prep (20 coats) $8,000 Propeller Balancing $3,000 Full Hull Wax and Detail $3,500
Annual Boatyard Maintenance: $17,500 Insurance
Annual Policy: $12,000 – $18,000
Crew Captain Salary $70,000 – $120,000 Mate Salary $50,000 – $70,000
Annual Crew Costs: $120,000 – $190,000
Dockage Year Round (South Florida) $20,000 – $23,000 Electric Cost $2,400 – $3,600
Annual Dockage: $22,400 – $26,600
Electronics Upgrades & Subscriptions Sirius XM Radio, Weather & Fish Mapping $600 – $840 Satellite TV $1,200 Updates and Upgrades $15,000- $33,000 amortized over 3 years ($45,000 – $100,000 level of replacement every 3-5 years.)
Annual Electronics Costs: $16,800 – $35,040
Registration and Documentation Registration (State of FL) $128 Coast Guard Documentation $26
Annual Documentation Renewals: $154
Miscellaneous Costs, Repairs & Maintenance Watermaker $2,500 Ice Machine $2,500 Air Conditioning $2,000 – $6,000 Fire Suppression $500
Total Miscellaneous Costs: $7,500 – $11,500