August 21, 2014

Odyssey Marine Exploration

Treasure, Interrupted for Odyssey Marine

The country's largest publicly traded shipwreck exploration company has three promising finds but faces hurdles in opening the treasure chests.

Mike Vogel | 10/1/2008

“We believe that there are billions of dollars worth of fascinating and valuable historical assets lying on the ocean floor and that the technology exists to find and recover them.” — Odyssey co-founder Greg Stemm

Odyssey is trying to mine other veins. It operates a traveling museum attraction and has done marketing partnerships with feature filmmakers. To broaden the market beyond buyers of $2,000 coins and $1,200 bottles from shipwrecks, it offers crew caps ($18) and jewelry made from SS Republic glass debris. Odyssey is being paid a “couple million” for participating in an 11-part series to be televised next year on the Discovery Channel, says Odyssey’s president, Mark Gordon. The first $300,000 payment was welcomed. Without it, Odyssey’s revenue would have been down 53% in the second quarter, rather than the 35% drop it reported.

But that ancillary revenue isn’t enough to offset the $2.4 million the company goes through each month. Alone, one ship costs $250,000 to fill up with fuel. Profits hinge on finding gold and silver, which is why the stock market took notice in the past 18 months as Odyssey found the two promising wrecks in the English Channel and the Spanish wreck — code-named “Black Swan,” which Odyssey hypothesizes is the remains of the Mercedes. Shares more than doubled to $9.45 last year on the news that the company had flown “hundreds of gold coins” and half a million silver coins weighing 17 tons to Florida from the putative Mercedes site. Investor enthusiasm has since waned, with the stock now trading for less than $5.

But just as the three recent wrecks promise to restock its coin inventory, Odyssey has sailed into a legal storm. University archaeologists take a hostile view of treasure hunters and are pressuring governments to prohibit for-profit search and recovery. “This industry could be regulated out of business,” Gordon says.

Odyssey Marine
Odyssey co-founder Greg Stemm and a coin expert are surrounded by buckets of coins salvaged from the company’s latest discovery, the “Black Swan,” off the coast of Spain. The company theorizes the “Black Swan” is the Mercedes, a Spanish frigate. Both Spain and Peru have filed claims on the treasure, but Odyssey says that the Mercedes was carrying mostly commercial cargo, eliminating Spain’s sovereign immunity claim. [Photos: Odyssey Marine]

Explorer
The company’s largest excavation vessel costs $250,000 to fill up

The climate behooves Odyssey to eliminate risk by cutting deals. The company has executed a revenue-sharing deal with England for the recovery of the HMS Sussex, a ship-of-the-line lost in 1694 in the Mediterranean. “Cultural heritage” items go to England, and the two parties split the value of the cargo. But Odyssey had no such deal with Spain on what may be the Mercedes, and Spain is asking a federal judge in Tampa to make Odyssey return what the country sees as its property. Last year, Spanish authorities even seized Odyssey vessels off Gibraltar and detained them temporarily.

coins
Odyssey has no plans to return to the site of the SS Republic, even though it uncovered less than it expected to. The steamer sank off the Florida-Georgia coast in 1865.
Spain’s attorney, James Goold, of counsel to the Washington, D.C., firm of Covington and Burling, says the Mercedes wreck is the gravesite of Spanish sailors, analogous to the USS Arizona at Pearl Harbor. It “may not be interfered with or looted anymore than you could do a United States Navy ship. These ships are irreplaceable time capsules and national patrimony and cultural heritage.”

Goold successfully represented Spain in a 2000 case against treasure hunters who found two sunken Spanish frigates in Virginia waters. The case set a “terrible precedent,” says David Paul Horan, the Key West lawyer who successfully represented Mel Fisher in his 1982 U.S. Supreme Court case involving the treasure Fisher found from the Atocha galleon. Horan says it will be “very hard for Odyssey to prevail in the district court” and predicts Odyssey will be forced to go the U.S. Supreme Court to win.

Odyssey says it found the treasure in international waters, obeyed applicable laws, found no human remains and no ship — just a coin dump on the bottom. Some evidence even conflicts with the idea that the wreck is the Mercedes, it says. But even if Spain gets ownership of the wreck, Odyssey says it expects a salvage award from the court, typically up to 90% of the recovery.

Tags: Tampa Bay

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