Tuesday, July 17, 2007

Super-Rich Dive in Luxury Submarines


Seafaring Super-Rich Dive to Ocean Bottom in Luxury Submarines
By A. Craig Copetas

(Bloomberg) -- The luxury-submarine business is sometimes hard to fathom.

``If you can find my submarine, it's yours,'' says Russian oil billionaire Roman Abramovich. And that's all the reclusive owner of the Chelsea Football Club has to say.

The ocean floor is the final spending frontier for the world's richest people. Journeying to see what's on the bottom aboard a personal submersible is a wretched excess guaranteed to trump the average mogul's stable of vintage Bugattis or a $38 million round-trip ticket to the International Space Station aboard a Russian rocket.

Luxury-submarine makers and salesmen from the Pacific Ocean to the Persian Gulf say fantasy and secrecy are the foundations of this nautical niche industry built on madcap multibillionaires.

``Everyone down there is a wealthy eccentric,'' says Jean- Claude Carme, vice president of marketing for U.S. Submarines Inc., a Portland, Oregon-based bespoke submarine builder. ``They're all intensely secretive.''

Who owns the estimated 100 luxury subs carousing the Seven Seas mostly remains a mystery.

Paul Allen, co-founder of Microsoft Corp., warned his boat builder that loose lips sink ships.

Undersea Yacht

``Not really supposed to talk about the sub, but it's a fancy one, a mighty nice piece of work,'' says Fred Rodie, one of the engineers who designed Allen's undersea yacht at Olympic Tool & Engineering Inc. in Shelton, Washington.

``If I told you, I'd have to shoot you,'' says Bruce Jones, president and founder of U.S. Submarines, about the names in his client book.

Jones, the 50-year-old son of a marine-construction engineer, built his first diesel- and battery-powered sub in 1993. Every sales contract since then has included a confidentiality clause to protect the buyer's identity.

``This is a nasty cut-throat business,'' Jones says.

Herve Jaubert, a former French Navy commando, swapped his cutlass for a screwdriver in 1995 to build his first luxury submarine. Now chief executive officer of Exomos, a Dubai-based custom-sub maker, Jaubert takes a more romantic view of the work: ``I'm a poet who builds submersible yachts for rich people.''

$80 Million

``Spending $80 million for a boat that goes underwater in a market where one that doesn't costs $150 million is a deal,'' Jones says. ``Our Phoenix 1000 is four stories tall, a 65-meter- long blend of a tourist and military sub.''

The ultimate war submarine, the U.S. Navy's Virginia-class New Attack Submarine, costs $2.4 billion and carries 16 Tomahawk cruise missiles. Jones says the most dangerous projectile aboard the Phoenix 1000 is a Champagne cork.

``Navies want weapon-delivery systems,'' Jones says, walking in a forest near Idaho's Lake Pend Oreille, site of the U.S. Navy's Farragut Naval Submarine Training Station. ``I build luxury-delivery systems for people who have more money than they know what to do with.''

It isn't cheap to run silent and sleep deep.

Jaubert's 10-passenger sub costs $15 million. A gymnasium is optional. U.S. Submarines' mid-size model is the $25 million Seattle 1000, a three-story-tall vessel with five staterooms, five bathrooms, two kitchens, a gym, a wine cellar and a 30- foot-long by 15-foot-wide observation portal. It has a range of 3,000 nautical miles.

Yellow Submarine

``The one thing I won't make for anyone is a yellow submarine,'' Jones says.

The 40-foot-long sub owned by Microsoft's Allen came with a $12 million sticker price and enough extras to remain submerged for a week. Its color: yellow.

Inside the Exomos showroom at Dubai's Jebel Ali Free Zone, customers choose from 14 luxury models. Since 2005, Jaubert's 170 workers have launched 18 vessels. There are 26 clients awaiting delivery on subs such as the trendy Stingray runabout and the fashionable 65-foot-long Proteus luxury liner.

``The Proteus is an underwater bus,'' Jaubert says. ``It's more fun in the Stingray, drives like a Ferrari.''

Jaubert says one of the dangers shared by members of this underwater fraternity of the super-rich is being blown to smithereens by depth charges.

No Torpedoes

``Side sonar scanners are always mistaken for torpedo tubes,'' the 50-year-old engineer says, slapping the blue hull of a three-seat, $350,000 ``sport luxury model'' under construction in his factory. ``Government agencies make visits to see if there are torpedoes aboard our boats. Owners are supposed to let authorities know when they're in the area. They often don't, and it causes problems.''

``What we might do gets into classified Tactics, Techniques and Procedures,'' says U.S. Coast Guard spokesman Steve Blando. ``TTP is not something we talk about.''

As for the chance of Allen's sub being reduced to flotsam, ``We don't comment on personal matters that involve the Allen family,'' says his spokesman, Michael Nank.

In Tahiti, Tetuahau Temaru, son and chief economic- development adviser to former president and current opposition leader Oscar Temaru, says the Pacific island territory is pursuing luxury-submarine skippers to sail into French Polynesia's warm crystal waters.

``Luxury submarines are the future vision for Tahiti,'' Temaru says. ``We call it our life-saving plan. Developing a luxury-submarine market and the tourism that would come from it is on target with visitors enjoying our beaches and marine life.''

As for that marine life, the local dolphin population can be a problem for some submariners.

Jaubert says he has clients who wrestle with how to conduct a deep-sea love affair in front of an observation window without creating an underwater paparazzi.

``Dolphins are easily excited when they sense people making love,'' Jones says. ``They get jealous and bang their noses against the window.''

The best solution? Curtains, says Jones.

To contact the reporter on this story: A. Craig Copetas in the Strait of Hormuz at ccopetas@bloomberg.net

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