Seeing a Supersize Yacht as a Job Engine, Not a Self-Indulgence
DENNIS M. JONES was struck by an intriguing coincidence when he took delivery of his custom-built 164-foot superyacht: The $34 million he paid for it was equal to the $34 million he had donated to charity since 2000. The contributions helped the neediest around St. Louis get an education, get healthy or get a fresh start.
But the money spent on the yacht helped save the shipbuilder and the jobs of the hundreds of people it employed.
Could the purchase of a such a yacht be more than an act of self-indulgence? Could it provide something as significant, Mr. Jones wondered, as the financial aid he has given to children, homeless people, drug addicts and groups that promote education and entrepreneurship?
Mr. Jones, who made his fortune when he sold Jones Pharma, a niche drug company, to King Pharmaceuticals for $3.4 billion in 2000, is under no illusions that a superyacht is an essential item, even for someone in the 0.1 percent.
“It’s a very expensive enterprise,” he said. “It’s the ultimate for people who want the ultimate.”
Yet the yacht he purchased helped save Christensen Yachts, a 30-year-old American yacht builder, whose work force shrank to 75, from 500, after the financial collapse. Beyond improving the leisure time of one very successful man, the yacht Mr. Jones ordered added jobs for people being paid craftsmen wages.
“The company is up and running better because of us,” Mr. Jones said. Today, Christensen has a three-year waiting period for one of its yachts.
When I heard about Mr. Jones’s story, and his willingness to tell it, I was intrigued. Was he just a wealthy man trying to justify spending tens of millions of dollars on a new yacht?
Or was he subtly challenging the billionaires who make a show of signing the Warren Buffett-Bill Gates pledge to give away most of their money to philanthropies during their lifetimes — those who seem almost embarrassed by the lifestyles funded by their enormous fortunes? Wealth is not something to be embarrassed by, Mr. Jones contends; in his view, people should be encouraged to seek it.
Mr. Jones is unabashed about his lifestyle. It is one that could fairly be called lavish. He and his wife, Judy, live in a 31,000-square-foot mansion outside St. Louis. (According to property records, they pay more in property taxes than all but one person in St. Louis.) When they want to cruise on their new yacht, D’Natalin IV, which will spend winters in the Caribbean and summers in Europe, they fly to it, and anywhere else they want to go, on a private jet.
“I retired at 62 after hitting an unbelievable home run, and now we have the great home, the great yacht and the method of getting there,” Mr. Jones, 75, said. “Wherever we go, we have the same level of service.”
Despite this luxury lifestyle, the charities he supports are not the most glamorous ones. He gives to St. Patrick Center, which provides help for homeless people in St. Louis, and Connections to Success, which helps low-income people find jobs and become self-sufficient. Another favorite organization is Junior Achievement because it teaches children about free enterprise.
On Thursday he donated $500,000 to Ranken Technical College to pay for a program that teaches ex-convicts in St. Louis a trade and helps get them a job.
“The one theme throughout is education,” Mr. Jones said of his charitable giving. “I only have a high school degree. It didn’t matter back then, but we have a different society today.”
Mr. Jones said he wanted to encourage other wealthy people to think about how their opulent lifestyles could provide jobs just as their charity helps people in need.
Which is where the 164-foot yacht comes in. After 15 years with a 151-foot Delta, which had room for 12 guests and 10 crew members, the Joneses wanted their own superyacht built from scratch. They chose Christensen Yachts, in Vancouver, Wash., because of its reputation for quality.
What Mr. Jones didn’t realize in early 2013 was how much Christensen Yachts was struggling from the recession. “There were only two other yachts plus ours being built,” he said.
Mr. Jones, who had employed 650 people at Jones Pharma and gave stock options to employees at all levels, liked the idea of his money providing jobs and maybe saving an American company.
Joe F. Foggia, chief executive of Christensen Yachts, does not dispute Mr. Jones’s recollection. His yacht order was a catalyst for others. “We had finished some boats, but the last one we delivered was in the latter part of 2010,” he said.
His business was so slow in 2013 that the company had reorganized itself and branched out into industries like manufacturing wind turbines and making smaller yachts that other companies would sell under their brand.
I don't mind when rich people buy yachts. . . but let me know when the money that they hoard in Bermuda trickles down to the rest of us. I...
“Before 2008, no one took any interest in what we were doing,” he said of the residents of the city, which is just across the Columbia River from Portland, Ore. “When we started laying people off, we were viewed as the rich man’s toy box.”
That changed when the economic impact of hundreds of jobless workers was felt in the businesses around the shipyard.
“Ninety-plus percent of the contract price of $34 million goes into payroll, health care, American-made materials, goods, services, local and federal taxes,” Mr. Foggia said. “One boat affects close to 1,000 households nationwide. There are 180 brand-new cars in our yard in the last 18 months.”
Mr. Foggia noted that the flow of money kept going with a boat like D’Natalin IV. “It costs $170,000 a month in crew, insurance, moorage, fuel and the crew buying all their things for the boat,” he said. “It’s a constant cash flow machine for the local economy whenever one of those things pulls in.”
Mr. Jones’s friend and financial adviser, Niall Gannon, said this might sound like trickle-down economics, but he considers it something different. “I’d call it ‘fire hose economics’ because the money left his account that fast,” he said. “It’s out of his account and in the accounts of these 200 people who worked on his yacht.”
The yacht also has a full-time crew of 10. An experienced captain on a ship like this earns $200,000 a year, an engineer about $100,000 and the rest of the crew members can expect to earn from $40,000 to $50,000 — on top of living rent-free on the yacht, said Christian Bakewell, a broker in the superyacht division at Merle Wood & Associates, who oversaw the construction of Mr. Jones’s yacht.
“People see the splashy images of Beyoncé stepping on a yacht,” he said. “What they don’t see is how many people go into building that yacht and maintaining that yacht. Those things get missed, and people fall back to the one percent arguments.”
Still, some people may think Mr. Jones’s purchase is excessive. But Ken Nopar, principal at Nopar Consulting, a philanthropic advisory that helps wealthy people give their money away, disagrees. “If people are spending money, it is creating jobs and providing a way of life,” he said. “There is nothing wrong with it. Without that type of spending there would be a lot more people in need of help from social service agencies.”
And Mr. Nopar pointed out that there was still charitable value in D’Natalin IV: If Mr. Jones tires of it, he can give it to a donor-advised fund, which would sell it and give the money away. In doing so, he would get a break on estate taxes.
For now, Mr. Jones is eager to use his yacht. The maiden voyage lasted 29 days. The next trip is to the Panama Canal with his entire family at Christmas. After that, he plans to open it up to friends, as he has done with previous yachts.
“All of our friends on our yacht have been friends well before Jones Pharma was ever started,” he said. “These are regular working folks just like I was. Having them share in our lifestyle is a way of giving only second to giving to others.”
*Original story: New York Times via Google News (search word: yacht)
*Image credits: Flickr/Schristia & Wikimedia
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