Gaining an edge with revamped central agency
If you find yourself up against Goliath, you need to find an edge.
Ryanair’s edge was offering cheap upfront flights and monetising everything else. Netflix struck upon mail-order DVDs, fast-forwarding the demise of local rental stores, even before its explosion with streaming. Uber disrupted taxis and food delivery with an app. David has historically danced around Goliath by thinking on his or her feet.
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Now veteran superyacht broker Russell Crump of Thompson of Monaco has an idea to help boutique brokerages gain an edge. He plans to disrupt the central agency (CA) agreement model to redistribute some power to the smaller operators, offer clients “greater scope” and save them money.
“It is becoming increasingly difficult coming up against the big corporates in terms of securing exclusive marketing rights for a yacht that’s for sale,” he tells us.
Mitigates risk
The former Edmiston and YPI man, who recently rejoined the industry after a spell seeking commercial opportunities in the gas pipeline sector, proposes a CA on a monthly fee, with a marketing budget and strategy agreed each month. The idea is to smooth out the “lumpy cashflow” associated with brokerages.
“What I found was the current sales pitch of the big corporates is done primarily on very glossy brochures that the marketing team puts together, focusing on photography and social media,” says Crump, who began his career in brokerage in Hong Kong in 1989 before a stint with Sunseeker.
“That doesn’t sell it but that is perceived to have value. But because the market is now so competitive, innovative marketing falls by the wayside because it is risky and you don’t get paid to take risks.”
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As it stands, the buyer’s broker pockets about 60% of the commission while the central agency broker representing the seller (linen) trousers about 40% (although the split can differ and often ignites fierce debate).
“Many CAs behave almost exclusively as listing agents: they upload the yacht to the MLS database, blast out a Mailchimp and sit back. My structure removes that stalemate,” he adds.
Crump plans to shift to a monthly “pay-as-you-play” marketing structure, giving the seller the freedom to market to different client bases “without being constrained by a broker who is not personally funding nor incentivised to be creative”.
He points out that there are plenty of qualified and very experienced brokers who understand the market and can advise sellers strategically.
But he says with his model the seller is no longer beholden to a CA who may be reluctant to try new approaches for fear of expense or fear of losing the agreement after carrying costs alone for an extended period.
“This structure mitigates that risk entirely: brokerage houses are no longer gambling their own money on marketing that may never pay off,” he says.
Innovation not inertia
According to Crump, proactive brokers keen to explore different marketing strategies, such as turning up at Art Basel in Switzerland or Miami, or attending business aviation’s EBACE event in Geneva, will be rewarded.
“This model rewards speed and competence — not passive listing,” he says. “It allows boutique brokers to compete with the big corporates not just on cost, but on imagination, reach and speed. Crucially, it creates a marketing framework that encourages innovation rather than inertia.”
Once the sale is completed, the buying broker would get perhaps 3% of the sale price and the CA would receive only the final month’s fee pro-rata plus a performance bonus, limited to a couple of months’ fees, if the vessel sells within an agreed period.
“OK, it’s not the big numbers associated with a CA, but you don’t really need them,” he says.
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Crump says his system is designed to shift the “power of exposure” back to the seller while still giving them expert guidance.
“It’s core purpose is to give the seller far greater scope than they have today,” he says.
Crump acknowledges there could be a fair amount of resistance but says he has floated what he calls a “working model” with some owners who have been supportive.
“I want to get the model absolutely right and stress test it to find out where the pitfalls are before we go blindly on,” he adds.
“We need to break out from the way the system is at the moment. If nothing else, it will develop a bit of interest in the market and the phone might ring a bit more.”
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