Pirate Franchise Opportunities

Ah, the life of a pirate!

Of course Dimitry in his sailboat might not be thrilled with a bunch of pirates roaming his pristine post apocalyptic waters. But for the rest of us...the life!

So what exactly does one need to become a pirate. The following quote is from an excellent and much larger article and I would encourage you to hit the link and read the rest (hat tip The Big Picture).

Somali Pirates' Rich Returns

Robert Young Pelton, Bloomberg Businessweek, 12 May 2011

One reason for piracy's rise is that, while the risks—prison, death—are high, it's easy for startups to gain market share. All you need is a fishing boat and a relationship with one of the "big three" money men—or a relationship with someone who has a relationship. If you have successfully grabbed ships in the past and have a decent crew, according to a recent investigation by Somalia Report's Mwangura, one of the big three—known by their nicknames, Boyah, Garaad, and Afweyne—will back you for 50 percent of expenses. Then you need to canvas the eight small backers who are good for 25 percent. In all, Mwangura has learned, it takes around $300,000 for a solid run.

Expenses break down as follows: weapons and ammo ($2,000); skiffs and outboards ($14,000); grappling hooks and curved ladders ($1,200); GPS and radios ($4,000); food ($70,000); miscellaneous equipment ($30,000); bribes ($180,000). Once you take hostages, allot $15,000 to pay the land crew to watch over them and the hijacked ship.

Ambitious pirates use rusty skiffs to board and control a "mother ship"—a larger vessel that can deliver a good ransom but can also provide fuel, food, water, and shelter as a staging platform for more attacks farther out to sea. Eventually, when you are pressed too hard by the world's navies, or the mother ship runs out of supplies, you can always abandon ship and grab another.

Naturally, pirates have specialized to make themselves more valuable to gang leaders. A pirate intel crew identifies ships and tracks them via their automatic identification system, or AIS. Once a ship has been taken, pirates use the ship's phone to call a trusted negotiator. Meanwhile, they anchor the ships offshore. According to NATO, about a quarter of pirate attacks are successful, and most pirated ships yield a ransom.

What pirates must excel at is waiting. From the adrenaline rush of attack to the moment of payoff can stretch to a tedious 153 days. Five months is a long time to be responsible for 25 or 30 hostages.

Ransoms are set based on previous payouts. The $13.5 million paid for the Irene SL was an extreme high; the IMB says $2 million to $3 million is a more standard ask. The average payout has been creeping upward as negotiators get smarter and push for automatic insurance payments for cargo or ships. Western hostages on small pleasure craft—a different business altogether—are worth about $500,000 each, but these operations often result in violent retribution. Increasingly, the French, Americans, and Danes will either try to rescue their citizens or go after pirates once a ransom is paid. Overall, that $300,000 investment should yield a payoff of at least $600,000 to $1 million. The lucky can score anywhere from $1.5 million to $8 million. But this is a business: Shoot a crew member, destroy the cargo, damage the ship, and your ransom will be less and take much longer to collect.

Generally speaking, pirate takes are split among several groups. Thirty percent goes to the maritime crew (with a bonus of a Land Cruiser to the first pirate that lands on the ship). The ground crew that watches the ship and hostages for extended periods receives 10 percent. Another 10 percent gets splashed around with local elders, community, and politicians. Twenty percent goes to the little backers. And the big boss receives 30 percent.

One important note, piracy requires a certain level of stability and civilization to work well. It always has. In previous periods there needed to be functional markets for slaves, goods, and a surplus of food that could be bought at a price. Even the Vikings would sell their christian slaves to Islamic merchants. Today's market uses the cash ransom and rapid banking to make the payoff much quicker. There are cases of ships disappearing and then showing up latter under different names, particularly in Asian piracy, but that is a slow way to make your money.

So for those who anticipate SHTF scenario of complete chaos, piracy may not be an option.