Firm Will Shift to Luxury Market : Lancer Yacht Reports Sale Agreement

Lancer Yacht Corp. said this week that its president and a partner reached a verbal agreement to purchase the company from Bally Manufacturing Corp. of Chicago, which acquired the Irvine-based boat-builder in 1983 for $2.7 million in stock.

Saul Padek, Lancer’s president, would not disclose how much he and partner Bill Mead plan to pay for the company. Robert Hood, Bally’s director of planning and development, refused to comment on the pending sale.

When completed, the Lancer purchase will mark the second such deal to take place in Orange County this year.

In June, Erickson Yachts, also based in Irvine, was purchased from its Concord, Mass.-based parent for more than $3 million by an investor group led by Gene Kohlman, Erickson’s president.

Sailboat manufacturing, Kohlman said, is a business better suited to entrepreneurs than to public companies owned by armies of nervous stockholders.

“I think that what has been true in the industry is that sailboat companies are much better off as privately owned firms rather than as parts of large corporations,” he said. “With the sailboat market being so small and cyclical, it was hard for us (under the corporate ownership) to predict our results from year to year, and the public tends to like predictability.”

Erickson since has dropped an unsuccessful line of catamarans and has begun emphasizing less expensive boats. Sailboats manufactured by Erickson range from 26 feet to 38 feet and are priced from about $40,000 to $120,000, Kohlman said.

Although Lancer will continue to operate out of its 70,000-square-foot facility in Irvine, Padek said the company will shift its product line from mass-produced sailboats to custom motor-sailers built on a special-order basis--the opposite end of the market from Erickson.

Options and cabin design will be limited mostly by the buyer’s imagination, he said, and could include luxuries such as on-board saunas and his-and-hers bathrooms.

Prices, Padek said, will range from about $35,000 for a 30-foot sloop up to $1 million for a 71-foot, ketch-rigged motor-sailer.

“The sailboat industry has almost disappeared, so you have to find yourself a niche in the market,” he said. “The guy who used to buy a boat for $25,000 is gone because his discretionary income has decreased. We want customers who are buying million-dollar boats.”