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Monthly Archives: August 2012

“It does not mean we are merging — it simply means we have agreed to work together to discuss and analyze a potential merger,” US Airways’ chief executive, W. Douglas Parker, said in a letter to employees Friday.

Such a merger would put the combined airline on par with the world’s largest, United Continental Holdings, and the slightly smaller Delta Air Lines. The merged entity’s position as the No. 1 or No. 2 airline in the world, based on how many miles its passengers fly, would depend on how many routes antitrust regulators force the combined airline to abandon.

Many industry experts say the only way American and US Airways can compete with larger rivals is by merging their strengths. US Airways would gain American’s lucrative international routes, while American’s larger hubs would be fed passengers from US Airways’ network in smaller cities across the nation.

For passengers, a merger would have no immediate impact. But a year or two into the combination, changes would ramp up: Frequent-flier programs would merge, fares could rise, planes would take on American Airlines’ colors and glitches could surface as their reservation systems integrate.

Mr. Parker has been pushing for a merger since American’s parent company, the AMR Corporation, entered Chapter 11 bankruptcy protection on Nov. 29. American Airlines’ chief executive, Thomas W. Horton, has said his airline is weighing several options, including remaining independent or merging with one of several airlines, including the US Airways Group.

One wild card is British Airways’ parent company, the International Consolidated Airlines Group, which confirmed on Friday that it too had signed a nondisclosure agreement with American. Foreign investors are prohibited from owning more than 25 percent of a United States airline, but a cash infusion from British Airways could help American remain independent or give Mr. Horton enough leverage for his leadership team to call the shots in a merger with US Airways.

“It does not mean we are merging — it simply means we have agreed to work together to discuss and analyze a potential merger,” US Airways’ chief executive, W. Douglas Parker, said in a letter to employees Friday.

Such a merger would put the combined airline on par with the world’s largest, United Continental Holdings, and the slightly smaller Delta Air Lines. The merged entity’s position as the No. 1 or No. 2 airline in the world, based on how many miles its passengers fly, would depend on how many routes antitrust regulators force the combined airline to abandon.

Many industry experts say the only way American and US Airways can compete with larger rivals is by merging their strengths. US Airways would gain American’s lucrative international routes, while American’s larger hubs would be fed passengers from US Airways’ network in smaller cities across the nation.

For passengers, a merger would have no immediate impact. But a year or two into the combination, changes would ramp up: Frequent-flier programs would merge, fares could rise, planes would take on American Airlines’ colors and glitches could surface as their reservation systems integrate.

Mr. Parker has been pushing for a merger since American’s parent company, the AMR Corporation, entered Chapter 11 bankruptcy protection on Nov. 29. American Airlines’ chief executive, Thomas W. Horton, has said his airline is weighing several options, including remaining independent or merging with one of several airlines, including the US Airways Group.

One wild card is British Airways’ parent company, the International Consolidated Airlines Group, which confirmed on Friday that it too had signed a nondisclosure agreement with American. Foreign investors are prohibited from owning more than 25 percent of a United States airline, but a cash infusion from British Airways could help American remain independent or give Mr. Horton enough leverage for his leadership team to call the shots in a merger with US Airways.

The dissident, Wang Xiaoning, 62, was released from the Beijing No. 2 prison. Just after 2 a.m., he was taken to a local police station and told that he was not to speak the news media, not to participate in any protests or demonstrations, and not to give any speeches, and that he would be closely monitored, his wife, Yu Ling, said in a telephone interview.

“This was not a condition of his release, but he was told to follow these rules,” she said.

Mr. Wang, a former engineer, distributed pro-democracy writings using e-mail and Yahoo forums, often anonymously. He was detained on Sept. 1, 2002, and convicted of “inciting subversion of state power” using information the Chinese authorities received from Yahoo. Around the same time, Shi Tao, a Chinese journalist, was convicted of providing state secrets to overseas entities also based on evidence provided by Yahoo’s subsidiary in Hong Kong. He is still in prison.

Lawmakers and human rights activists sharply criticized Yahoo for providing information to the Chinese authorities, and for cooperating in investigations involving dissidents.

Yahoo eventually apologized for its role in the case and settled a lawsuit brought by the families of several Chinese activists, paying an undisclosed amount of compensation.

Yahoo issued a statement on Friday but did not comment directly on Mr. Wang’s release. “Yahoo! condemns political suppression wherever and however it occurs, and we are committed to efforts like the Global Network Initiative that bring together companies, human rights groups and other stakeholders to actively promote free expression and privacy on the Internet,” the statement said. “We hope that democratic governments around the world continue to push for the release of any individuals targeted for simply expressing their political beliefs.”

Ms. Yu said described her husband’s “physical and mental conditions” as “relatively good” but said he had been “a little frail and gasping” when he returned. She noted that he had high blood pressure and that he was not able to get enough exercise in prison.

“He was very excited to come out and to be able to see us,” she said. “He didn’t sleep for the whole night until just now.”

Joshua Rosenzweig, a human rights researcher based in Hong Kong, said Mr. Wang’s case showed how the authorities in China could twist the justice system. “That Wang Xiaoning could be deprived of his freedom for a decade on charges of ‘inciting subversion’ is an unambiguous example of how Chinese authorities misuse laws designed to protect national security in an effort to protect its monopoly on power from being subjected to criticism,” Mr. Rosenzweig wrote in an e-mail.

“The Chinese society Wang re-enters enjoys more space for critical voices than it did a decade ago, but those who express themselves politically continue to risk crossing that invisible line that separates ‘acceptable’ criticism from ‘incitement.’ ”

Xu Yan contributed research.

This article has been revised to reflect the following correction:

Correction: August 31, 2012

An earlier version of this article misspelled the name of Wang Xiaoning’s wife. She is Yu Ling, not Lu Ying.

The dissident, Wang Xiaoning, 62, was released from the Beijing No. 2 prison. Just after 2 a.m., he was taken to a local police station and told that he was not to speak the news media, not to participate in any protests or demonstrations, and not to give any speeches, and that he would be closely monitored, his wife, Yu Ling, said in a telephone interview.

“This was not a condition of his release, but he was told to follow these rules,” she said.

Mr. Wang, a former engineer, distributed pro-democracy writings using e-mail and Yahoo forums, often anonymously. He was detained on Sept. 1, 2002, and convicted of “inciting subversion of state power” using information the Chinese authorities received from Yahoo. Around the same time, Shi Tao, a Chinese journalist, was convicted of providing state secrets to overseas entities also based on evidence provided by Yahoo’s subsidiary in Hong Kong. He is still in prison.

Lawmakers and human rights activists sharply criticized Yahoo for providing information to the Chinese authorities, and for cooperating in investigations involving dissidents.

Yahoo eventually apologized for its role in the case and settled a lawsuit brought by the families of several Chinese activists, paying an undisclosed amount of compensation.

Yahoo issued a statement on Friday but did not comment directly on Mr. Wang’s release. “Yahoo! condemns political suppression wherever and however it occurs, and we are committed to efforts like the Global Network Initiative that bring together companies, human rights groups and other stakeholders to actively promote free expression and privacy on the Internet,” the statement said. “We hope that democratic governments around the world continue to push for the release of any individuals targeted for simply expressing their political beliefs.”

Ms. Yu said described her husband’s “physical and mental conditions” as “relatively good” but said he had been “a little frail and gasping” when he returned. She noted that he had high blood pressure and that he was not able to get enough exercise in prison.

“He was very excited to come out and to be able to see us,” she said. “He didn’t sleep for the whole night until just now.”

Joshua Rosenzweig, a human rights researcher based in Hong Kong, said Mr. Wang’s case showed how the authorities in China could twist the justice system. “That Wang Xiaoning could be deprived of his freedom for a decade on charges of ‘inciting subversion’ is an unambiguous example of how Chinese authorities misuse laws designed to protect national security in an effort to protect its monopoly on power from being subjected to criticism,” Mr. Rosenzweig wrote in an e-mail.

“The Chinese society Wang re-enters enjoys more space for critical voices than it did a decade ago, but those who express themselves politically continue to risk crossing that invisible line that separates ‘acceptable’ criticism from ‘incitement.’ ”

Xu Yan contributed research.

This article has been revised to reflect the following correction:

Correction: August 31, 2012

An earlier version of this article misspelled the name of Wang Xiaoning’s wife. She is Yu Ling, not Lu Ying.

Ms. Merkel visited China at the invitation of Prime Minister Wen Jiabao at a time when both countries are facing the prospect of slower growth and weakening demand for their exports.

Traveling with a large delegation of German officials and business executives, the chancellor held talks in Beijing with President Hu Jintao and Mr. Wen, as well as the two men expected to succeed them early next year, Xi Jinping and Li Keqiang.

Neither side indicated any significant progress on political or economic issues, but Mr. Wen called for the European Union to take bolder steps to resolve its debt crisis. He also said China intended to invest more in European debt.

Experts on China say Beijing is eager to have Europe welcome more Chinese investment in key areas, not just the debt market.

“The significance of this visit lies primarily in the bilateral economic relations,” said Shi Yinhong, a professor of international relations at Renmin University in Beijing and an adviser to the State Council, or cabinet. “There has been a lot of discussion over China providing financial assistance to Europe. But Germany cannot solely represent Europe, and Europe as an integrated entity still has some concern over receiving Chinese assistance.”

To soothe Chinese concerns, Ms. Merkel reassured Beijing about the stability of the euro, and China showed its hospitality by organizing big trade ceremonies to coincide with the visit.

On Wednesday, German and Chinese companies signed more than a dozen business contracts, including a deal in which a state-owned Chinese company agreed to purchase 50 Airbus aircraft worth about $3.5 billion.

The trip was not entirely favorable to German companies. Ms. Merkel refused to back Germany’s largest producer of solar panels in its efforts to initiate a trade dispute with China over the alleged dumping of low-cost panels in Europe.

The company, SolarWorld, filed a complaint against Chinese competitors in July with the European trade commissioner, but Ms. Merkel said in the past week that she favored negotiation over a trade case.

“We still have time for this, and it would be better if we could resolve it through discussion,” she said.

Mr. Wen seemed pleased with the comments, and said the principle should be applied in other areas, not just solar panels. “This is an important foundation of our cooperation,” he said, according to Xinhua, the state-run news agency.

Ms. Merkel also steered clear of human rights issues on the trip, at least publicly, which drew the ire of some human rights groups.

Ms. Merkel has faced such criticism before when visiting China. But it was highlighted in Beijing this week after the artist provocateur Ai Weiwei, who is popular in Germany, began poking fun at Ms. Merkel and posting comments online showing his disappointment at not being invited to meet her for lunch. He even uploaded photos onto the Web of himself striding outside, wearing Chinese slippers and carrying a cardboard cutout of Ms. Merkel. He called it “Taking Merkel to Lunch.”

If anything, the trip highlighted Ms. Merkel’s efforts to build closer diplomatic ties with China and to foster what the Chinese and Germans alike have dubbed “a special relationship.”

The Chinese news media noted repeatedly that it was Ms. Merkel’s sixth visit to China since taking office, and her second this year.

This time, with Mr. Wen preparing to leave office early next year, he arranged for Ms. Merkel to visit the Forbidden City in Beijing and to travel by high-speed train to his hometown, Tianjin, to visit an assembly plant managed by the European Aeronautic Defense & Space, the parent company of Airbus.

Xu Yan contributed research. Melissa Eddy contributed reporting from Berlin.

Ms. Merkel visited China at the invitation of Prime Minister Wen Jiabao at a time when both countries are facing the prospect of slower growth and weakening demand for their exports.

Traveling with a large delegation of German officials and business executives, the chancellor held talks in Beijing with President Hu Jintao and Mr. Wen, as well as the two men expected to succeed them early next year, Xi Jinping and Li Keqiang.

Neither side indicated any significant progress on political or economic issues, but Mr. Wen called for the European Union to take bolder steps to resolve its debt crisis. He also said China intended to invest more in European debt.

Experts on China say Beijing is eager to have Europe welcome more Chinese investment in key areas, not just the debt market.

“The significance of this visit lies primarily in the bilateral economic relations,” said Shi Yinhong, a professor of international relations at Renmin University in Beijing and an adviser to the State Council, or cabinet. “There has been a lot of discussion over China providing financial assistance to Europe. But Germany cannot solely represent Europe, and Europe as an integrated entity still has some concern over receiving Chinese assistance.”

To soothe Chinese concerns, Ms. Merkel reassured Beijing about the stability of the euro, and China showed its hospitality by organizing big trade ceremonies to coincide with the visit.

On Wednesday, German and Chinese companies signed more than a dozen business contracts, including a deal in which a state-owned Chinese company agreed to purchase 50 Airbus aircraft worth about $3.5 billion.

The trip was not entirely favorable to German companies. Ms. Merkel refused to back Germany’s largest producer of solar panels in its efforts to initiate a trade dispute with China over the alleged dumping of low-cost panels in Europe.

The company, SolarWorld, filed a complaint against Chinese competitors in July with the European trade commissioner, but Ms. Merkel said in the past week that she favored negotiation over a trade case.

“We still have time for this, and it would be better if we could resolve it through discussion,” she said.

Mr. Wen seemed pleased with the comments, and said the principle should be applied in other areas, not just solar panels. “This is an important foundation of our cooperation,” he said, according to Xinhua, the state-run news agency.

Ms. Merkel also steered clear of human rights issues on the trip, at least publicly, which drew the ire of some human rights groups.

Ms. Merkel has faced such criticism before when visiting China. But it was highlighted in Beijing this week after the artist provocateur Ai Weiwei, who is popular in Germany, began poking fun at Ms. Merkel and posting comments online showing his disappointment at not being invited to meet her for lunch. He even uploaded photos onto the Web of himself striding outside, wearing Chinese slippers and carrying a cardboard cutout of Ms. Merkel. He called it “Taking Merkel to Lunch.”

If anything, the trip highlighted Ms. Merkel’s efforts to build closer diplomatic ties with China and to foster what the Chinese and Germans alike have dubbed “a special relationship.”

The Chinese news media noted repeatedly that it was Ms. Merkel’s sixth visit to China since taking office, and her second this year.

This time, with Mr. Wen preparing to leave office early next year, he arranged for Ms. Merkel to visit the Forbidden City in Beijing and to travel by high-speed train to his hometown, Tianjin, to visit an assembly plant managed by the European Aeronautic Defense & Space, the parent company of Airbus.

Xu Yan contributed research. Melissa Eddy contributed reporting from Berlin.

If it’s $100 million, is it art?

Since Citigroup’s former chairman Sandy Weill sold his penthouse at 15 Central Park West late last year for $88 million, or $13,000 a square foot, to a Russian billionaire, sales prices in Manhattan have been flirting with $100 million, and brokers say it’s only a matter of time until the barrier is broken.

Sales at such stratospheric levels in Manhattan, as well as records in certain neighborhoods in Miami, Los Angeles and a few other pockets isolated from the nationwide collapse in real estate prices, have left real estate professionals struggling to explain the surge. Art may be the answer.

“Art is what people are willing to pay for, and an apartment like this is like a piece of art,” the Long Island real estate developer Steven Klar told a colleague of mine at The Times, Alexei Barrionuevo, in late July as he listed his penthouse on West 56th Street for $100 million.

Kathleen Coumou, senior vice president at Christie’s International Real Estate, said that some residential properties could legitimately be marketed and sold as art.

“When we call a property art, it tends to have architectural or historic significance,” she said.

She cited the recent sale of a Manhattan town house designed by the famed 19th-century architect Stanford White, which was listed by Christie’s at what now seems a bargain, $49 million. “But even new construction could be considered art. It’s the equivalent of postwar and contemporary art, which is setting record prices.”

Something is certainly leading to record prices for what brokers describe interchangeably as trophy or art properties. An apartment at One57, a tower under construction across from Carnegie Hall, sold for $90 million and another is in contract for a sum said to be over $90 million (though less than the list price of $115 million.) The casino executive Steve Wynn, who is also a prominent art collector, bought a penthouse at the Ritz-Carlton on Central Park South for $70 million in June. A duplex co-op on Park Avenue sold for $52 million in May.

For high-end real estate sellers and buyers, the art analogy holds obvious appeal, since prices for paintings cracked the $100 million barrier at auction years ago and quickly rebounded from the financial crisis. The record for the most expensive painting is said to be held by Cezanne’s “The Card Players,” sold last year to the royal family of Qatar for a price estimated by Vanity Fair at $250 million. (A few weeks ago, a member of the same family walked away from a deal at One57, opting instead for a $47 million Upper East Side town house.)

To reduce the Cezanne’s 97-by-130-centimeter dimensions to real estate terms, that’s $19,826 per square centimeter. Mr. Klar is asking only $12,500 per square foot, and his apartment comes with swag drapes and a crystal chandelier.

It may be time for a reality check.

David Kusin, a former Metropolitan Museum of Art curator who also worked on Wall Street and now runs Kusin & Company, a consulting firm in Dallas that specializes in the economics of the art market, told me the comparison of real estate to fine art infuriated him.

“There’s absolutely no statistical validity to it,” he said. “It’s like comparing Earth to Saturn. And I’ve been studying these markets for 18 years. I live in a home designed by the dean of Taliesin,” Frank Lloyd Wright’s school of architecture. “The interior designer and landscape architect are at the apex of their fields. There is no comparability at all between the structure I live in and the art that hangs on the walls.”

Among the more obvious differences he and others mentioned is that most art is portable, and thus sells in a global market; most great art is unique and can’t be replicated; art serves no utilitarian function; art values are based on a wide range of scholarship, research and critical evaluations, which may take generations to evolve; and valuing art is much more complicated than valuing real estate.

This article has been revised to reflect the following correction:

Correction: August 31, 2012

An earlier version of this column published online misidentified the developer of a project at 220 Central Park South. It is Vornado Realty Trust, not the Related Companies.

If it’s $100 million, is it art?

Since Citigroup’s former chairman Sandy Weill sold his penthouse at 15 Central Park West late last year for $88 million, or $13,000 a square foot, to a Russian billionaire, sales prices in Manhattan have been flirting with $100 million, and brokers say it’s only a matter of time until the barrier is broken.

Sales at such stratospheric levels in Manhattan, as well as records in certain neighborhoods in Miami, Los Angeles and a few other pockets isolated from the nationwide collapse in real estate prices, have left real estate professionals struggling to explain the surge. Art may be the answer.

“Art is what people are willing to pay for, and an apartment like this is like a piece of art,” the Long Island real estate developer Steven Klar told a colleague of mine at The Times, Alexei Barrionuevo, in late July as he listed his penthouse on West 56th Street for $100 million.

Kathleen Coumou, senior vice president at Christie’s International Real Estate, said that some residential properties could legitimately be marketed and sold as art.

“When we call a property art, it tends to have architectural or historic significance,” she said.

She cited the recent sale of a Manhattan town house designed by the famed 19th-century architect Stanford White, which was listed by Christie’s at what now seems a bargain, $49 million. “But even new construction could be considered art. It’s the equivalent of postwar and contemporary art, which is setting record prices.”

Something is certainly leading to record prices for what brokers describe interchangeably as trophy or art properties. An apartment at One57, a tower under construction across from Carnegie Hall, sold for $90 million and another is in contract for a sum said to be over $90 million (though less than the list price of $115 million.) The casino executive Steve Wynn, who is also a prominent art collector, bought a penthouse at the Ritz-Carlton on Central Park South for $70 million in June. A duplex co-op on Park Avenue sold for $52 million in May.

For high-end real estate sellers and buyers, the art analogy holds obvious appeal, since prices for paintings cracked the $100 million barrier at auction years ago and quickly rebounded from the financial crisis. The record for the most expensive painting is said to be held by Cezanne’s “The Card Players,” sold last year to the royal family of Qatar for a price estimated by Vanity Fair at $250 million. (A few weeks ago, a member of the same family walked away from a deal at One57, opting instead for a $47 million Upper East Side town house.)

To reduce the Cezanne’s 97-by-130-centimeter dimensions to real estate terms, that’s $19,826 per square centimeter. Mr. Klar is asking only $12,500 per square foot, and his apartment comes with swag drapes and a crystal chandelier.

It may be time for a reality check.

David Kusin, a former Metropolitan Museum of Art curator who also worked on Wall Street and now runs Kusin & Company, a consulting firm in Dallas that specializes in the economics of the art market, told me the comparison of real estate to fine art infuriated him.

“There’s absolutely no statistical validity to it,” he said. “It’s like comparing Earth to Saturn. And I’ve been studying these markets for 18 years. I live in a home designed by the dean of Taliesin,” Frank Lloyd Wright’s school of architecture. “The interior designer and landscape architect are at the apex of their fields. There is no comparability at all between the structure I live in and the art that hangs on the walls.”

Among the more obvious differences he and others mentioned is that most art is portable, and thus sells in a global market; most great art is unique and can’t be replicated; art serves no utilitarian function; art values are based on a wide range of scholarship, research and critical evaluations, which may take generations to evolve; and valuing art is much more complicated than valuing real estate.

This article has been revised to reflect the following correction:

Correction: August 31, 2012

An earlier version of this column published online misidentified the developer of a project at 220 Central Park South. It is Vornado Realty Trust, not the Related Companies.

The smaller ones remind me of the 30-foot Sea Ray that I used to own and still dream of owning again. But like most people, I gawk at the giant yachts, moored in the prime spots on the harbor and wonder who owns them.

Boats, like all luxury assets, lost a lot of value during the financial downturn, and demand for even the big ones dried up. But recently, I’ve been hearing that yacht prices have bottomed out and demand is picking up.

And I started wondering how people were thinking about the expenses of yachts, perhaps second only to private jets in my personal calculus of expensive indulgences. After all, it must cost a small fortune to run a grand yacht, from fuel to insurance to crew. But I also wondered if there were any tricks to saving a bit of money here and there that could help the more modest boating enthusiast.

Of course, true boaters don’t ride the high seas with calculators next to their cocktails. “When we’re cruising and burning 100 gallons of fuel an hour, I don’t think it’s costing me $300 an hour,” said Bob Schmetterer, the former chairman and chief executive of Euro RSCG Worldwide, the giant advertising and marketing company, referring to his 80-foot Marlow Explorer. (It holds 3,000 gallons, and he was moored aboard it in Maine when we spoke.)

He told me that his yacht, named Blue Moon, was the culmination of years of trading up. He started with a 17-foot boat and went to 22, 27, 38 and 51 feet. In 2006, when he retired, he bought the Marlow. It cost $3.5 million.

“It’s a great joy to spend time on her,” he said. “One of the things we’re fortunate about is my wife and I equally love the boat and the yachting lifestyle. We know a few other couples like that, but more often one of them really loves it, and it’s a tricky balance.”

Mr. Schmetterer was lucky in his choice of spouse, but he was wise in gradually buying bigger boats. Many first-time enthusiasts rush to buy the biggest boat they can afford, something that experts say is at risk of happening even more now with prices relatively low.

“We’ve seen a substantial deflation of hull values, whether it’s the $50 million yacht or the $2 million yacht,” said Sean Blue, head of global watercraft at Chartis, the insurance company. “New buyers who are coming on the scene are benefiting by getting a lot of yacht for the money.”

That has several risks, though. For one, it instills a discount mentality. Mr. Blue’s concerns are naturally with insurance: value-minded buyers may look for the cheapest insurer and be disappointed if they have to make a claim.

Repairing or replacing the engines, for example, costs the same whether you bought the boat new or used. Mr. Blue used the example of my old Sea Ray. It had two engines, and each one would have cost about $15,000 to replace. Some insurers would pay this amount in a claim; others would depreciate the value of the engines based on how old they were. Either way, the owner needs to come up with $15,000 if he wants his boat to run again.

Not surprisingly, the buying risks increase with more expensive boats. At the height of the market, buyers were doing whatever they could to move up on the long waiting lists for megayachts, which can take three years to build. Now, with fewer boats built over the last three or four years, buyers need to make sure that the builder is financially sound, exactly because it takes years to build a large yacht.

Ron Gong, co-head of the Palo Alto, Calif., office at Harris myCFO, a wealth management firm, said he advised clients buying megayachts to use escrow accounts where both parties need to agree to release payments. “You need to have a trusted, informed person such as the yacht architect or a knowledgeable builders’ representative to measure progress and determine if the work invoiced has been completed,” he said.

Another risk is that you buy the wrong boat for the waters where you want to cruise. Jeff Vrana, who oversees one man’s five yachts, the largest of which is a 192-foot Lurssen called Ronin, said new buyers might not understand that there are specific yachts for the Bahamas, for example, where the waters are shallower, and the Caribbean, where they are deeper.

Mr. Vrana said he would also encourage people to buy a smaller yacht until they understood the real costs of owning a boat. “When you have money to burn and don’t mind writing checks for $1 million a month, then buy that 190-footer,” he said.

When he takes Ronin to Germany from Florida for service this fall, it will cost 180,000 euros in fuel one way and 3 million euros for maintenance work.

The smaller ones remind me of the 30-foot Sea Ray that I used to own and still dream of owning again. But like most people, I gawk at the giant yachts, moored in the prime spots on the harbor and wonder who owns them.

Boats, like all luxury assets, lost a lot of value during the financial downturn, and demand for even the big ones dried up. But recently, I’ve been hearing that yacht prices have bottomed out and demand is picking up.

And I started wondering how people were thinking about the expenses of yachts, perhaps second only to private jets in my personal calculus of expensive indulgences. After all, it must cost a small fortune to run a grand yacht, from fuel to insurance to crew. But I also wondered if there were any tricks to saving a bit of money here and there that could help the more modest boating enthusiast.

Of course, true boaters don’t ride the high seas with calculators next to their cocktails. “When we’re cruising and burning 100 gallons of fuel an hour, I don’t think it’s costing me $300 an hour,” said Bob Schmetterer, the former chairman and chief executive of Euro RSCG Worldwide, the giant advertising and marketing company, referring to his 80-foot Marlow Explorer. (It holds 3,000 gallons, and he was moored aboard it in Maine when we spoke.)

He told me that his yacht, named Blue Moon, was the culmination of years of trading up. He started with a 17-foot boat and went to 22, 27, 38 and 51 feet. In 2006, when he retired, he bought the Marlow. It cost $3.5 million.

“It’s a great joy to spend time on her,” he said. “One of the things we’re fortunate about is my wife and I equally love the boat and the yachting lifestyle. We know a few other couples like that, but more often one of them really loves it, and it’s a tricky balance.”

Mr. Schmetterer was lucky in his choice of spouse, but he was wise in gradually buying bigger boats. Many first-time enthusiasts rush to buy the biggest boat they can afford, something that experts say is at risk of happening even more now with prices relatively low.

“We’ve seen a substantial deflation of hull values, whether it’s the $50 million yacht or the $2 million yacht,” said Sean Blue, head of global watercraft at Chartis, the insurance company. “New buyers who are coming on the scene are benefiting by getting a lot of yacht for the money.”

That has several risks, though. For one, it instills a discount mentality. Mr. Blue’s concerns are naturally with insurance: value-minded buyers may look for the cheapest insurer and be disappointed if they have to make a claim.

Repairing or replacing the engines, for example, costs the same whether you bought the boat new or used. Mr. Blue used the example of my old Sea Ray. It had two engines, and each one would have cost about $15,000 to replace. Some insurers would pay this amount in a claim; others would depreciate the value of the engines based on how old they were. Either way, the owner needs to come up with $15,000 if he wants his boat to run again.

Not surprisingly, the buying risks increase with more expensive boats. At the height of the market, buyers were doing whatever they could to move up on the long waiting lists for megayachts, which can take three years to build. Now, with fewer boats built over the last three or four years, buyers need to make sure that the builder is financially sound, exactly because it takes years to build a large yacht.

Ron Gong, co-head of the Palo Alto, Calif., office at Harris myCFO, a wealth management firm, said he advised clients buying megayachts to use escrow accounts where both parties need to agree to release payments. “You need to have a trusted, informed person such as the yacht architect or a knowledgeable builders’ representative to measure progress and determine if the work invoiced has been completed,” he said.

Another risk is that you buy the wrong boat for the waters where you want to cruise. Jeff Vrana, who oversees one man’s five yachts, the largest of which is a 192-foot Lurssen called Ronin, said new buyers might not understand that there are specific yachts for the Bahamas, for example, where the waters are shallower, and the Caribbean, where they are deeper.

Mr. Vrana said he would also encourage people to buy a smaller yacht until they understood the real costs of owning a boat. “When you have money to burn and don’t mind writing checks for $1 million a month, then buy that 190-footer,” he said.

When he takes Ronin to Germany from Florida for service this fall, it will cost 180,000 euros in fuel one way and 3 million euros for maintenance work.