Wednesday, April 25, 2018
Business

For super yacht, 'fire hose economics' — not trickle-down

Dennis M. Jones was struck by an intriguing coincidence when he received his custom-built 164-foot super yacht: 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.

Could the purchase of a super yacht be more than an act of self-indulgence? Could it provide something as significant, Jones wondered, as the financial aid he has given to children, homeless people, drug addicts and groups that promote education and entrepreneurship?

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 super yacht is an essential item, even for someone in the top 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 workforce shrank from 500 to 75 after the financial collapse. Beyond improving the leisure time of one very successful man, the yacht Jones ordered added jobs.

"The company is up and running better because of us," Jones said. Today, Christensen has a three-year waiting period for one of its yachts.

Is Jones just a wealthy man trying to justify spending tens of millions of dollars on a new yacht? Or is 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, Jones contends; in his view, people should be encouraged to seek it.

Jones is unabashed about his lifestyle.

He and his wife, Judy, live in a 31,000-square-foot mansion outside 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 — or anywhere else they want to go — on a private plane.

"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," said Jones, 75. "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.

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," 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."

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.

That's 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 to have their own super yacht built from scratch. They chose Christensen Yachts in Vancouver, Wash., because of its reputation for quality and ability to handle a unique hull design.

What 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. "I learned all three of them had some financial issues with money to finish them. I came in with money transferred from my brokerage account and this got them out of debt and got the project moving again."

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 potentially saving an American company.

Joe F. Foggia, Christensen CEO, does not dispute Jones' 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 other industries like manufacturing wind turbines and making smaller yachts that other companies would sell under their brand.

"Before 2008, no one took any interest in what we were doing," he said of the residents of the city, 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," 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."

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."

Jones' 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 super yacht division at Merle Wood & Associates who oversaw the construction of Jones' 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 1 percent arguments."

Still, some people might think Jones' purchase is excessive. But Ken Nopar, principal at Nopar Consulting, a philanthropic advisory, disagrees. "If people are spending money, it is creating jobs and providing a way of life," he said. "Without that type of spending, there would be a lot more people in need of help from social service agencies."

Comments
Yelp search results reflected racist stereotype that Asian American restaurants serve cat and dog

Yelp search results reflected racist stereotype that Asian American restaurants serve cat and dog

A strange thing happened when typing "dog menu" into the restaurant ratings website and app Yelp. It automatically generated suggested searches. There were dog massage, hot dogs, pet groomers. Also: "dog meat." But it got more disturbing. Take Yelp...
Updated: 2 hours ago
As more emotional support animals fly on U.S. airlines, Congress eyes new ways to tighten the leash

As more emotional support animals fly on U.S. airlines, Congress eyes new ways to tighten the leash

WASHINGTON — With hundreds of thousands of emotional support animals taking to the skies on U.S. airlines, Congress may start pulling a tighter leash.Two new legislative options emerged this week to address a hairy issue for American Airlines, Southw...
Updated: 2 hours ago
Duke Energy announces new Florida leadership

Duke Energy announces new Florida leadership

ST. PETERSBURG — The head of Duke Energy Florida is leaving his post to take a new role with the utility’s parent company June 1, the company announced on Wednesday.Harry Sideris, 47, was appointed this week to serve as vice president and chief distr...
Updated: 2 hours ago

Comcast challenges Murdoch with rival bid for U.K.-based Sky

LONDON — U.S. media giant Comcast on Wednesday offered $30.7 billion for Sky PLC, topping a bid from Rupert Murdoch’s 21st Century Fox and setting up a bidding war for Britain’s biggest satellite TV company.Comcast said it would pay approximately $17...
Updated: 2 hours ago
Sprouts Farmers Market to open new store in Pasco County

Sprouts Farmers Market to open new store in Pasco County

TRINITY — Pasco County will be getting its first Sprouts Farmers Market, the organic grocery chain announced Wednesday. The new store will open at the Village at Mitchell Ranch on State Road 54 and Little Road. Officials with the speciality st...
Updated: 3 hours ago
Circle K launching own gas at eight Hillsborough locations

Circle K launching own gas at eight Hillsborough locations

TAMPA — Circle K is converting the gas station portion of eight of its Hillsborough locations to Circle K fuel. Previously, the fuel was provided by other brands, such as Shell. The new Circle K branding also brings with it the Canadian-owned conveni...
Updated: 3 hours ago
Florida leads other hurricane-prone states in quality of its building codes

Florida leads other hurricane-prone states in quality of its building codes

Florida has the strongest residential building codes among 18 coastal states, according to a new study by the Insurance Institute for Business & Home Safety. Florida’s rating is 95, almost three times higher than lowest-ranked Texas. Other states wit...
Updated: 7 hours ago
Study: Tampa Bay homes in once ‘redlined’ neighborhoods worth half those in other areas

Study: Tampa Bay homes in once ‘redlined’ neighborhoods worth half those in other areas

Times staffRedlining’ — banks’ refusal to make mortgage loans in certain areas — still has a huge effect on housing values even though the practice was banned 50 years ago. According to Zillow, a Tampa Bay house in a once-redlined area is worth less ...
Updated: 7 hours ago
Tex-Mex chain Chuy’s opens first Tampa restaurant, Nebraska Mini-Mart grab-and-go coming soon

Tex-Mex chain Chuy’s opens first Tampa restaurant, Nebraska Mini-Mart grab-and-go coming soon

NOW OPEN: TEX-MEX CHAIN CHUY’SThe Austin, Texas-based Tex-Mex chain Chuy’s opened its first Tampa restaurant on Tuesday, giving away free Chuy’s for two for a year to the first 50 customers. I know, we missed it, it’s a bummer, but we can still visit...
Updated: 7 hours ago
Clearwater looks to move out of City Hall to speed up Imagine Clearwater waterfront redevelopment

Clearwater looks to move out of City Hall to speed up Imagine Clearwater waterfront redevelopment

CLEARWATER — Elected officials have talked about relocating City Hall from the downtown bluff for a good 30 years. Now there’s a jolt of urgency to actually do it.Voters backed a referendum in November that essentially greenlighted the $55 million re...
Published: 04/25/18