Incorporated: 1994
NAIC: 483111 Deep Sea Freight Transportation; 541990 All Other Professional, Scientific, and Technical Services; 551112 Offices of Other Holding Companies
SIC: 4412 Deep Sea Foreign Transportation of Freight; 7389 Business Services Nec; 6719 Holding Companies Nec
Odyssey Marine Exploration, Inc., is a commercial salvage company that searches for and retrieves valuable artifacts from shipwrecks. The company focuses on deep-water projects, looking for shipwrecks at depths between 1,000 and 6,000 feet, using an array of high-technology equipment such as side scan sonar and remotely operated vehicles. Odyssey operates two vessels, the 240-foot Ocean Alert and the 251-foot Odyssey Explorer, which deploys Zeus and Zeus II, the company's remotely operated vehicles that perform all recovery work. In addition to its shipwreck exploration and recovery business, the company maintains a themed attractions group that develops interactive attractions and exhibits featuring Odyssey's shipwreck projects and the artifacts collected from the shipwrecks. Odyssey's major accomplishments include discovering the H.M.S. Sussex, an English warship that sank near the Strait of Gibraltar in 1694 and the S.S. Republic, a Civil War-era steamship that sank off the coast of Georgia in 1865. In 2007, the company discovered what was believed to be the richest find of sunken treasure ever, a shipwreck roughly 100 miles west of Gibraltar. Odyssey chooses not to divulge the exact location or the name of the ship, operating the project under the code name "Black Swan."
Origins
"It was a hobby that got out of control," John Morris explained. Morris was giving an interview, published in the July 30, 2006, edition of the Tampa Tribune, describing his preoccupation for finding sunken treasure. For the previous 20 years, he and his partner Greg Stemm had searched the world's oceans, looking for shipwrecks and the valuables contained inside, pursuing a passion that became a business. In 1986, the pair formed Seahawk Deep Ocean Technology, Inc. (SDOT), a company based in Tampa, Florida, that was organized as a blind pool, a start-up venture that sells stock in a public offering without specifying how the investors' money will be spent. The partners focused their treasure-hunting efforts in deep water, looking for ships that rested at depths of 1,000 feet or more where low light and oxygen levels preserved artifacts and scavengers were unlikely to follow. They used an old, 275-foot barge that originally serviced offshore oil-drilling rigs in the Gulf of Mexico, renamed it the Seahawk Retriever, and outfitted the vessel with living quarters, winches, cranes, and an array of equipment to search the depths below. An adventure awaited, one that presented a great deal of financial risk to Morris, Stemm, and SDOT's backers, a reality understood by Stemm. "Let's see," he said mockingly in a September 17, 2007, interview with Fortune. "You have no experience, and you're going to buy a research vessel to look for shipwrecks. Oh, sure, I'll invest in that."
The founders' lack of experience in deep-sea exploration and salvaging made their adventure all that more of a gamble. Morris, before boarding the Seahawk Retriever, made his living in real estate and construction. Stemm, who had once worked as Bob Hope's press agent, could only point to a stint running a dinner cruise in Jamaica for his maritime experience. Despite their inexperience, Morris and Stemm made an historic discovery three years after they founded SDOT, one that confirmed the two as specialists in combining treasure hunting and marine archaeology. Their research efforts focused on a route taken by a 28-ship convoy of Spanish galleons in 1622. At the time, Spain ruled and pillaged North, Central, and South America, enriching its empire with the wealth of conquered civilizations such as the Aztecs and the Incas. All of the treasure made its way to Cuba, where the spoils of the empire's aggression were cataloged and warehoused before being loaded into galleons bound for Spain. The 28-ship fleet Morris and Stemm were interested in ran into a hurricane near the Dry Tortugas, a string of small islands in the Straits of Florida, where nine of the galleons sank. In April 1989, Morris and Stemm, using sonar equipment developed by the U.S. military, found one of the galleons 20 miles south of the Dry Tortugas, 1,500 feet below the water's surface, the first intact Spanish colonial galleon to be discovered in deep water. Morris and Stemm enlisted the help of "Merlin," a van-sized, $1.8 million remotely operated vehicle (ROV) that retrieved 26 gold bars, 3,000 pearls, and thousands of pieces of pottery, jewelry, and other artifacts valued at $4.7 million.
The Dry Tortugas discovery was both a blessing and a curse. SDOT secured its first source of revenue (although the company lost nearly $2 million in 1990) and Morris and Stemm made the leap from amateurs to professionals, but the discovery also attracted the attention of the U.S. Securities and Exchange Commission (SEC). The SEC launched an investigation into SDOT in March 1991, its interest piqued by possible charges of insider selling and overstating the value of artifacts. The investigation dragged on, crimping SDOT's efforts to raise capital and forcing Morris and Stemm to sever their ties to the company in 1994. They took the SEC to court, and, after spending more than $1 million in legal fees, they prevailed against the regulatory body, a victory they celebrated by starting another Tampa-based marine exploration and salvage company, Odyssey Marine Exploration, Inc.
A Fresh Start with Odyssey in 1994
Morris and Stemm lost none of their enthusiasm for making treasure hunting a viable business. Odyssey, formed in 1994 and taken public in 1997 as an over-the-counter stock, became their new corporate vehicle. As with SDOT, the founders focused their efforts in deep waters, looking for shipwrecks at depths between 1,000 feet and 6,000 feet. During its first years in business, nearly its first decade, Odyssey used chartered vessels to conduct its exploration activities. Weekly meetings of researchers, each assigned to different parts of the world, served as the starting point for the company's exploration activities. Old maps, ship logs, and archives around the world were studied, providing leads that were discussed at the weekly gatherings. To become an active company project, the prospective shipwreck needed to meet criteria established by Morris, Stemm, and the experts they consulted. The shipwreck had to be in deep water and research into the vessel had to indicate it was carrying cargo of sufficient value to pay for the high costs of recovery. Further, the research related to the shipwreck had to provide strong evidence of where the vessel sank, revealing navigational information that an Odyssey crew could use to minimize its search area. The fourth criterion related to legal issues, which were varied and often vague as to the owner of sunken vessels. Odyssey required issues related to ownership of the shipwreck and its cargo to be resolved before recovery activities commenced. Generally, it was easier to secure title to shipwrecks resting in international waters.
Odyssey pursued numerous exploration projects during its first decade in business, but two shipwrecks stood out from the rest, the H.M.S. Sussex and the S.S. Republic. The Sussex was an 80-gun English warship that last set sail in 1694, when it led a fleet of Royal Navy vessels to the Mediterranean to fight the French in the War of the League of Augsburg. The Sussex never joined the fray, however, stopped short by a violent storm near the Strait of Gibraltar that sent the warship and 12 of its contingent to the ocean floor. Morris and Stemm became deeply interested in the demise of the Sussex in 1995, when an anonymous researcher approached them with a 300-year-old letter written by a French diplomat that referred to a second purpose for the journey. The Sussex, the letter indicated, was on a secret mission to ensure the Duke of Savoy remained a British ally, carrying cargo meant to thwart attempts of bribery by the French. Below decks, the Sussex held what was believed to be ten tons of gold and silver coins, perhaps the richest sunken treasure in history. Morris and Stemm needed no further inducement, beginning the lengthy, costly, and arduous search for the Sussex, a process that involved years of research in British archives and four expeditions that scrutinized 400 square miles of the Mediterranean.
The process of discovery occurred in stages--during the late 1990s the exploration effort was only known to the public as "Cambridge"--but as the investigation found critical clues, such as a cannonball in 2001, Odyssey began to make preparations for the move from the search phase to the recovery phase of the Sussex project. In 2002, the company signed a 20-year contract with the British government that gave Odyssey exclusive rights to the Sussex shipwreck and its cargo. According to the terms of the agreement, which Morris and Stemm hoped would be a template for accords with other countries, Odyssey was given the right to recoup costs (the company had spent $4 million on the project by 2002) and to profit from the sale of gold and silver recovered from the shipwreck, granted 80 percent of the first $45 million, half of the excess to $500 million, and 40 percent of the remainder. The agreement also called for Odyssey to submit a project plan detailing the equipment, personnel, and methodologies to be used at the site, which was approved in 2004. Odyssey began formal exploration activities in December 2005, but work was halted in the first half of 2006 at the request of the Spanish Ministry of Foreign Affairs after the regional government of Andalucía questioned Odyssey's claim to the Sussex, not the last time the company's efforts were stymied by the intervention of Spanish authorities.
Discovery of the S.S. Republic in 2003
As progress stalled with the Sussex project, work related to the S.S. Republic moved forward in a far more gratifying fashion. The Republic, a side-wheel steamship, left New York in 1865 bound for New Orleans, carrying $400,000 (1865 value) in gold to help rebuild the South after the Civil War. The steamer sank off the coast of Georgia, the victim of a hurricane. While it searched for the Sussex, Odyssey searched for the Republic, scouring the deep waters beyond the Georgia coastline during the latter half of the 1990s and into the 21st century. The search efforts gained a valuable tool when the company purchased its first ship, a coastal search vessel named Odyssey, in 2002, which located the shipwreck in August 2003 100 miles off the Georgia coast at a depth of nearly 1,700 feet. Odyssey, which sold the Odyssey in 2006, purchased the Odyssey Explorer the same month it discovered the Republic, giving it a state-of-the-art, 251-foot, deep-ocean ship that became the home of another new addition, Odyssey's version of SDOT's Merlin, "Zeus," a 2,500-meter rated, 200-horsepower ROV that used a claw and suction device to pick up artifacts from the ocean floor. Zeus and the Odyssey Explorer were sent to the Republic site in October 2003, where, one by one, the submersible robot began collecting the coins that became Odyssey's first meaningful source of revenue. The coins were released for sale in 2004, enabling Odyssey to generate $17.6 million in revenue, a major improvement over the $74,000 generated in revenue in 2003. By the end of 2006, the company had sold $33 million worth of coins from the Republic and had a large inventory stashed away in a secret location in Florida to add to its coffers for years to come. "It might take us 20 years to sell all the coins from the Republic," Stemm said in his September 17, 2007, interview with Fortune.
Black Swan in 2007
For Morris and Stemm, the search was on for richer treasure after the success of the Republic and while they navigated through the bureaucracy related to the Sussex. In 2007, the pair made perhaps the richest discovery in history, a shipwreck the company only referred to as "Black Swan," a code name taken from a book written by Nassim Nicholas Taleb titled, The Black Swan: The Impact of the Highly Improbable. News of the discovery first surfaced in mid-May 2007, when it was learned Odyssey had located a shipwreck in international waters 100 miles west of Gibraltar at a depth of 3,600 feet. "Our research suggests that there were a number of colonial period shipwrecks that were lost in the area where this site is located," Morris said in an interview published in the May 19, 2007, edition of the Guardian, "so we are being very cautious about speculating as to the possible identity of the shipwreck." Odyssey, which had purchased the 240-foot Ocean Alert and "Zeus II" in June 2006, had already been excavating at the site when Morris gave his interview, using both its vessels to retrieve the treasure below. In April, the company loaded silver and gold coins taken from the shipwreck into a Gulfstream G-V and transported the haul from Gibraltar to Tampa. The following month the company chartered a Boeing 757 to carry an even bigger load, more than 500,000 coins that weighed roughly 17 tons. Estimates of the value of the cargo at the Black Swan site were in the neighborhood of $500 million.
Morris and Stemm had found another fortune, but as with the Sussex, capitalizing on the full monetary value of the Black Swan shipwreck required further work. When news of the find became public, Spanish authorities intervened again, filing a claim in the U.S. District Court in Tampa at the end of May 2007, a legal ploy intended to force Odyssey to disclose details about the project. In July, when the Ocean Alert was leaving the Port of Gibraltar, armed members of the Guardia Civil boarded the vessel, seized the hard drive belonging to an Odyssey attorney, and forced the vessel to dock in the Spanish port of Algeciras, leaving the Odyssey Explorer essentially blockaded at the Port of Gibraltar.
Odyssey's claim to the Sussex and the Black Swan shipwreck remained in limbo as the company plotted its future course. The revenue to be realized from the two shipwrecks represented a needed boost to the company's declining financial stature. After reaching $17.6 million in 2004, revenues slid to $5 million by 2006. Odyssey's other source of revenue, its themed attractions segment, also was in abeyance. The company, through a subsidiary named Odyssey Marine Entertainment, Inc., opened "Odyssey's Shipwreck & Treasure Adventure" in New Orleans in August 2005, but the exhibit closed within hours of its grand opening because of the impending presence of Hurricane Katrina. The company reopened the attraction in February 2006 and closed it again in September 2006 because of anemic market conditions in the beleaguered city. Morris and Stemm hoped to open the attraction in another location in 2007. On a more optimistic note, the company had thousands of shipwrecks to search for while the legal issues with the Sussex and Black Swan were sorted out. The United Nations Educational, Scientific and Cultural Organization (UNESCO) estimated there were three million shipwrecks in the world, 3,000 of which Odyssey believed to be possible candidates for recovery. "There's billions of dollars scattered on the ocean floor--that's a fact," Stemm said in his September 17, 2007, interview with Fortune. "And we have the technology to find it," he declared, before adding, "The business model is very simple. The execution is complex."
Principal Subsidiaries
Odyssey Marine Entertainment, Inc.
Principal Competitors
Subsea Resources Ltd.; Sovereign Exploration Associates International Inc.; Admiralty Holding Company.
Further Reading
Arango, Tim, "Curse of the Black Swan," Fortune, September 17, 2007, p. 45.
Berkmoes, Ryan Ver, "A Dream of Riches," American Medical News, May 11, 1990, p. 25.
Holmes, Bob, "Mutiny over the Bounty," New Scientist, July 19, 2003, p. 10.
Kennedy, Maev, "Treacherous Seas, a Mystery Wreck, and a $500M Haul of Treasure," Guardian, May 19, 2007, p. 3.
Morgan, Philip, "Odyssey Marine Exploration Appoints Chief Executive Officer," Tampa Tribune, April 13, 2002.
"Odyssey Marine Exploration CEO--Interview," CEO Wire, August 18, 2003.
"Odyssey's Shipwreck & Treasure Adventure to Open Feb. 15 in New Orleans," New Orleans CityBusiness, January 17, 2006.
Penix, Matthew, "Odyssey Marine Exploration Pulls Shipwreck Attraction from French Quarter," New Orleans CityBusiness, August 4, 2006.
"Rescuing a Sunken Treasure Hunter," Florida Trend, October 1991, p. 77.
Rodgers, Will, "Picking Up the Pieces," Tampa Tribune, July 30, 2006.
------, "Tampa, Fla., Deep-Sea Salvagers See Golden Jackpot," Tampa Tribune, October 14, 2003.
"Spain Seizes U.S. Ship in Shipwrecked Treasure Dispute," Xinhua News Agency, July 12, 2007.
Tippett, Karen, "Insiders Sold As Seahawk Rose," Business Journal Serving Greater Tampa Bay, January 10, 1992, p. 1.
------, "Lack of Money Sinking Seahawk," Business Journal Serving Greater Tampa Bay, December 13, 1991, p. 1.
"The Treasure and the Tale," Sarasota Herald Tribune, November 17, 2002, p. F2.
Tremlett, Giles, "Financial: Treasure Hunt: Deep Sea Divers Opt for NASDAQ Flotation," Guardian, July 16, 2007, p. 25.
— Jeffrey L. Covell
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