In 1970 a hardworking Italian shop owner from New York fell in love with a tornado-devastated marina on Anna Maria Island and poured every dime he had into a down payment to buy it. Mike Galati moved his wife and five children, including a six-month-old baby, into a beat-up house at the marina where they lived for a time like “the Beverly Hillbillies,” with smelly well water, folding cots and a portable outdoor burner to cook clams that the children collected.
From that austere beginning, Galati Yacht Sales has evolved into a thriving marine dealership that sells and services million-dollar boats, employs 140 people at seven Gulf Coast locations from Naples to Houston, sends representatives to market its boats in places as faraway as Dubai and last year had about $150 million in revenues.
Topping off these achievements is Galati’s ranking as the No. 1 boat dealer in North America by Boating Industry magazine for the last two years. This ranking recognizes the family-owned and operated Galati Yacht Sales as the best-of-the-best of the more than 5,000 marine dealers in North America.
“The Galati team does a phenomenal job, and that is not an easy thing to do in this industry or this economy,” says Boating Industry editor Matt Gruhn. “They are a first-class organization in the way they operate and the way they satisfy their customers.”
Gruhn says Galati is a good model for the entire boating industry, which has been hard hit by the recession. New unit boat sales of 704,820 in 2008 were down 16.3 percent from the 841,820 units sold in 2007. The retail market for boats, engines, accessories and services dropped 10 percent ($33.6 billon in 2008 compared to $37.5 billon in 2007).
The five Galati siblings, who learned the boating business at an early age, have operated Galati Yacht Sales as a team since their father died in 1992. The family includes eldest son Joe Galati, 49; second son Carmine, 47; daughter Fran, 45; third son Mike, 44; youngest son Chris, 39; and their mother, Anna Maria Galati—yes, she has the same name as the island where the family business is headquartered.
Galati has not completely escaped the economic downturn, however. Its 2008 revenues were down $50 million from 2006 when the company took in $200 million. The number of employees has fallen from 175 in 2006 to today’s 140.
But Chris Galati, dockmaster of Galati’s Anna Maria Yacht Basin, says the family business “has survived spells like this before.” He cited the 10 percent luxury tax imposed on pleasure boats in 1991 as a challenge that “almost put large boat dealers out of business.” Galati “overcame that,” he says, “and we will overcome this.”
The secret to the company’s success, Galati says, is its “very strong customer base built over 39 years that keeps us going through hard times. Our motto is to exceed the customer’s expectations, and we work very hard to do that.”
He believes the economy has hit bottom. “But the recovery is slow; it is not V-shaped. It is more of a U.”
Galati says April was a good month that extended into May and then summer. New boat sales are suffering, but the company’s used and pre-owned boats are “selling very well” and its service and maintenance business is always busy, in part because many people are keeping their boats instead of buying new ones. “So if one end of the company is slow, the other end picks up,” he says.
Galati chief financial officer Mike Eiffert says the company overall continues to do better than many other dealers because of steps taken to diversify and expand its basic business of selling and servicing big luxury yachts.
“The analogy I like to use,” Eiffert says, “is that if you are a sailor, you catch whichever wind is blowing. We have a good diversified business strategy, so if the new boat sales slow down a little bit, we can refocus on our brokerage business or our service business.”
One of Galati’s most important strategies in the current economy is acting as an agent to sell repossessed boats owned by banks. Galati has been busy marketing them in Europe, Asia and Australia as well as the U.S., and the result is that brokerage sales now account for the biggest part of Galati’s business.
Galati also has developed relationships with high-end insurers and financers. “After the hurricanes of 2005, nobody would write insurance on boats,” Eiffert says. “And that was a critical path to getting boats sold. To solve this problem, we established a business relationship with a company out of Tampa, which dealt with high-end customers. Since our customers are also high-end, we had the same customer base—this is a customer with a boat, an airplane, a retirement home. So we were able to have the Tampa company write insurance. And when financing became an issue [because of the recent credit crunch], we were able to get another company to do the financing for the same reason—we have the same customer base. It has been a very symbiotic relationship. We help them by funneling high-end customers to them. They help us with insurance and financing.”
Other Galati operations include launching a coastal marina management division to help other marina owners, starting a fractional ownership program and becoming part owners of EPIRB Films, which generates DVDs to help boat owners operate and maintain their boats.
In 1997, Galati was offered the opportunity to become a dealer for Viking, the luxury yacht that bills itself as the Rolls-Royce of the sport fishing industry. Today Galati is one of 18 Viking dealers in the world, including 10 in the U.S. The Galati territory for Viking sales and service extends from Naples around the Gulf Coast to Houston.
Viking yachts average 46 feet to 82 feet in length and sell for $1.4 million to $6.5 million. The 82-foot Viking holds 3,000 gallons of diesel, making a fill-up about $7,500 if fuel is selling for $2.50 a gallon. Most of the big boats that Galati sells are operated by a crew of two to five people who take the boats to fishing tournaments or other vacation destinations, which the owner then flies to.
“It was a big decision for us because taking on a boat line of that magnitude can make or break you,” Chris Galati says. “If you have a couple of million-dollar boats sitting in your inventory that you can’t sell, it could put a small company like us out of business. But we felt like we had been successful in selling boats in the past, and we had already been servicing the Vikings, so let’s take this on and do it. We did, and in three years we were the world’s largest Viking dealer [in units sold and in revenue].”
To accommodate the Vikings and the other big boats they sell (other lines include Marquis, Tiara, Cruisers, Carver and Regulator), Galati reconfigured its Anna Maria Island facility, reducing the number of slips from 100 to 70 and setting a 30-foot minimum for boats using the slips.
The Galati marina covers six acres on the northern end of Anna Maria: four acres under water, where dozens of big yachts are secured to piers jutting into Bimini Bay—a popular location since boats have direct access to Tampa Bay—and two acres of land.
At the heart of the Galati operation is its parts and service department with about 70 workers—half its workforce. The technicians get special training to keep their skills up to date. When a call for help comes in from a customer, the service department typically dispatches a technician in one of the 35 Galati vans to look at the problem and solve it on the scene if possible. Some technicians travel with laptops that can be connected to the boat’s systems to help diagnose the trouble. If the boat is in another country, Galati will fly a technician to the scene.
This customer-service business philosophy has been part of the family creed from the beginning. Mrs. Galati was in charge of billing and paperwork and managed the ship’s store at the marina. If a boat showed up and needed fuel, she picked up Chris, then about a year old, and held him with one arm while pumping fuel with the other.
The children, meantime, were painting boat bottoms, running forklifts and learning from their father how to make deals.
In the new house they built on the property, there was a vent opening between Mike Galati’s office and the family room. “If he was working late, I had to do something to keep the children quiet, so I would tell them to listen to how Daddy closes a deal,” says Anna Marie Galati. “Then I would ask them questions to see if they were listening. What kind of boat? Who was the customer? And they would know the answers.”
As the children got older, they were assigned to take customers out in the boats. “If the boys would say, ‘But, Dad, what if I break the boat?’ my husband would tell them, ‘If you break it, I’ll fix it. Now go,’” Mrs. Galati says.
For almost 40 years that get-the-job-done attitude has guided the family.
“Each of us runs our own departments and we respect each other,” says Chris Galati. “We were taught that at a very young age. If we argued, we were told to go get another job. If you are born and raised to get along, you get along. And we didn’t have time to argue much.”
Even tragedy didn’t crush the family or its business.
In August 1985, Chris Galati broke his neck in a diving accident off Beer Can Island on the tip of Longboat Key. He was 15 years old, a wrestler and football player about to start his sophomore year at Manatee High School. He and two school friends were on the beach when they spotted a rope swing, attached to a big Australian pine, which they could use to swing out over the water.
“I went off the rope swing and dove head first and that was it,” Galati says.
“I hit something, maybe a drainage pipe.”
The accident broke his neck, leaving him paralyzed. Immediately after he was hurt, doctors performed a fusion operation on his arms that gives him enough mobility today to operate his wheelchair, his computer and the big Galati fishing yachts. He is married and has two children. But the medical bills, including months of rehabilitation, nearly broke the family, he says.
“Not to mention taking my Mom and Dad out of the business for the nine months that I was in rehab in Orlando. They dropped everything to stay with me. All the decisions of running the business were left with my brothers,” he says.
His mother remembers every painful minute of what happened to Chris and how the family pulled together. “My husband and I were in Orlando with Chris every day for months. For his 16th birthday, when he was still in physical therapy, my husband gave him a van. The therapist just looked at us and said, ‘He can’t drive that.’ My husband said, ‘Not only is he going to drive it, he is going to tow a boat behind it.’ And on weekends, when we could take Chris home from rehab, the brothers would put Chris in the new van and have him sit in the driver’s seat while they went around the cul-de-sac where we lived. One brother would be on the floor working the gas and the brakes. Another brother would be helping with the steering while another brother helped with something else. They were there for each other then, and they are there for each other now.”
A year after the accident, the family filed suit against Manatee County, which owns Beer Can Island, alleging that the county had failed to remove the swing or post warnings, even though there had been accidents before involving the swing. The town of Longboat Key was added as a defendant to the suit in April 1987.
The county removed the rope swing several times after the Galati accident, but beachgoers kept putting up new ropes until the county eventually cut down the tree. In October 1992, six years after the accident, Manatee County and the town of Longboat Key agreed to settle the suit and pay $2.7 million in damages to Chris Galati.
The Galati family is now bringing in a new generation to master the business. Mike Galati, 19, the oldest of the 12 grandchildren and a business management student at the University of Mississippi, spent the summer after his freshman year working for his father, Carmine, at the marina.
Chris Galati Jr., 13, is also continuing the family tradition. With his father, Chris, at the helm of the Team Galati fishing boat, Chris Jr. was recently named top angler at the Treasure Cay Billfish Tournament in the Bahamas after the 80-pound teen reeled in a 200-pound blue marlin and a 500-pound marlin. A taped interview with Chris Jr. and his father about the tournament win has been posted on YouTube.
Mrs. Galati says this togetherness is typical of her family. “In the beginning, it was a hassle, living like the Beverly Hillbillies at the marina, but time went by and things got better,” she says. “We were together and we had fun. The kids loved the business then and they love it now.” ■