American Drivers Fund New Fleet of Megayachts
COSTA SMERALDA, Italy, Aug. 1, 2006 — -- Spend time this summer in any of Europe's elite cruising grounds -- Sardinia, Saint-Tropez, Monaco -- and you can't miss the massive floating palaces littering the coastline.
Called "inch-fever," it's a curious ailment suffered exclusively by the megawealthy.
The cure? Build a bigger megayacht than the next sheik or oligarch. And, yes, a few Americans measure up.
Buyers, however, who want to compete on this circuit need upward of $100 million to make a splash, although these days that's entry level in the world of deca-dulgence.
It's a massive price tag, and increasingly the people who can pay it have one thing in common -- oil. Life is good at $70 a barrel.
"The megayacht industry was virtually invented for the Arabs," said Dirk Johnson, managing partner for Churchill Yacht Partners in Fort Lauderdale, Fla. "They're the ones who funded almost all the big yachts; [in the '90s] ships were built for Arab sheiks and oil money."
The superyacht industry was really born in the 1980s, with Power and Motoryacht Magazine, a listing of the world's largest yachts. Since then, both the number and size of boats have grown beyond anyone's expectations.
Adnan Khashoggi, Eat Your Heart Out
Once colossal, a 200-foot private yacht no longer warrants a head turn.
There are thousands of newer vessels that dwarf the flagships of the past.
In the 1980s, arms dealer Adnan Khashoggi was famous for his 285-footer Nabila. Today, he'd be middle of the pack.
A new and even bigger generation is currently under construction at boatyards across the world, raising the stakes yet again.
"There has been the most amazing escalation in boat-building," said Alev Karagulle, director of marketing and communications at the Nigel Burgess Group, an international yacht brokerage. "It's tied in with the fact that the economy has been buoyant for many industries."
Buoyant, particularly, for those who have trouble finding ways to spend the windfalls of record energy prices.
It's only logical that the top end of Power and Motoryacht's current ranking of the world's 100 largest yachts is dominated by rulers from the oil-rich Gulf monarchies.
Take Al Salamah, the luxury liner owned by Prince Sultan bin Abdul Aziz, son of Saudi Arabian King Fahd.
Measuring an incredible 456 feet, replete with indoor swimming pool and glass ceiling, Al Salamah is the largest privately owned ship in the world.
In the yachting world, there are stories of wealthy Saudis who've built larger boats than the king, or who contemplated it, but sold them so as not to offend the Saudi rulers.
Of course, like other oil magnates, the prince saw his fortunes boosted recently by successive years of rising energy prices. This year, his kingdom anticipates a further 25 percent increase in revenues to coincide with the $3 gallon of gas in America.
As American drivers fuel this luxury naval race, the Gulf monarchies are not the only ones profiting.
"The Arab market has always been strong," said Jim Wallace, yacht broker at Camper & Nicholson, "but it's all the oil countries."
On the water that means Russia.
The Arabs might boast the biggest yachts, but not for long.
Russian oil tycoon Roman Abramovich has the most megayachts -- three -- and he's reported to be building a new ship.
This year Abramovich sailed into the German port of Lübeck for the World Cup onboard the 377-foot Pelorus, impressing crowds and bolstering his image.
The former owner of a controlling stake in oil giant Sibneft, Abramovich recently sold his stock for $13 billion. Worth $18.2 billion, he's Russia's wealthiest man.
He now functions as the Russian ambassador to the megayacht industry, having recently purchased Ecstasea to complement his two other superyachts, Pelorus and Le Grand Bleu.
"[The Russians] have become very real players in the West," said Karagulle from her office in London. "We have to do a lot of homework on the Russian market. It's a very important part of the industry."
Translation: These guys have more money than God, and they're looking to flaunt it.
"They came into the forefront in the last five years," said Johnson, a specialist in brokerage and charter. "[The money] is not just from oil. Lots of it's from other natural resources. Sometimes it's hard to tell where the money comes from."
High-profile American billionaires such as Oracle CEO Larry Ellison, Microsoft co-founder Paul Allen, and Miami Dolphins owner H. Wayne Huizenga are all part of this elite cruising club.
Two weeks after the World Cup, Abramovich's Pelorus lay at anchor in the famed Cala di Volpe along Sardinia's Emerald Coast.
Cala di Volpe means "bay of the foxes." In order to have one of the monsters parked there you probably need a little fox in you (aside from the oil).
Although on this day, one bay over, the Russian ship was dwarfed by something bigger -- Ellison's Rising Sun, pristine at a whopping 452 feet. Man that's got to hurt. The Americans were still bigger. You wonder for how much longer.
ABC's Steven Alperin contributed reporting for this story.