A Spirited Perfect Ten

[CaptainAmerica]

Yes, the way Disney has been operating for about the last decade, they've been trying to improve gross margins primarily through higher prices, quality reductions, and lower investments. However, it wasn't always like that.

Before messing up The Gap, former Parks & Resort Chairman Paul Pressler broke the Parks & Resorts financial miracle that Walt Disney created.

My definition of "financial miracle": High Quality + High Capex + Reasonable Prices = Excellent Gross Margin.

Walt Disney created a business model that succeeded for decades; a business model that no one else believed in until Walt Disney simply went out and did it.

I'll try to explain it all tonight. It probably will take me a couple of hours to write up.

I'll be interested to see what you come up with. The main problem with your definition of "financial miracle" is that the only metric you care about is gross margin. Parks is an extremely capital-intensive enterprise as I'm sure you're aware, and ignoring depreciation (as gross margin does), is a terrible mistake. Walt didn't have 60 years of assets (and piles and piles of refurbs and improvements on those assets) on his balance sheet, depreciating and eating away at his bottom line.

 

[Rodan75]

Is there a front runner for P&R? I'm assuming it is not someone who is actually in P&R today, esp with Meg leaving/gone.

 

[ParentsOf4]

So...Staggs being named COO is a good thing?

I did not saying Staggs being named COO is a good thing for WDW. I am suggesting that Staggs delivered on improving Parks & Resorts profitability, specifically gross margin, something Rasulo was never able to do when he was head of Parks & Resorts.

From a business leadership perspective, Staggs demonstrated operational success.

 

[ford91exploder]

I'll be interested to see what you come up with. The main problem with your definition of "financial miracle" is that the only metric you care about is gross margin. Parks is an extremely capital-intensive enterprise as I'm sure you're aware, and ignoring depreciation (as gross margin does), is a terrible mistake. Walt didn't have 60 years of assets (and piles and piles of refurbs and improvements on those assets) on his balance sheet, depreciating and eating away at his bottom line.

Walt and Roy perhaps more Roy than any other realized that a quality product sold for a reasonable premium will beat out lesser quality products and provide a larger margin, We are constantly redesigning our products to increase MARGIN however we are doing that by reducing failure rates (lower support and warranty costs) so LIFECYCLE cost goes DOWN resulting in happier customers and better MARGINS.

 

[ParentsOf4]

I'll be interested to see what you come up with. The main problem with your definition of "financial miracle" is that the only metric you care about is gross margin. Parks is an extremely capital-intensive enterprise as I'm sure you're aware, and ignoring depreciation (as gross margin does), is a terrible mistake. Walt didn't have 60 years of assets (and piles and piles of refurbs and improvements on those assets) on his balance sheet, depreciating and eating away at his bottom line.

Depreciation is included in gross margin.

In 1971, depreciation was 9.7% of domestic Parks & Resorts revenue.

In 2014, that number is 9.1%.

I have a meeting I have to run off to. I promise more later.

 

[lebeau]

Walt and Roy perhaps more Roy than any other realized that a quality product sold for a reasonable premium will beat out lesser quality products and provide a larger margin, We are constantly redesigning our products to increase MARGIN however we are doing that by reducing failure rates (lower support and warranty costs) so LIFECYCLE cost goes DOWN resulting in happier customers and better MARGINS.

Roy never gets enough credit.

 

[Donald Razorduck]

I don't think they're affiliated with Six Flags...but it is impressive for a company whose market share is a modicum of Disney's.

Europa is owned by Mack and Mack built that ride, I'm sure they'll market it. I love the fact that the ride can spin. Also watching the new Puss and Boots coaster at UNI Singapore as it's a suspended coaster but with new unique trains as well.

 

[CaptainAmerica]

Depreciation is included in gross margin.

On what planet? Is TWDC unique in this regard?

GM = Sales - COS
GM% = (Sales - COS) / Sales

 

[ford91exploder]

Roy never gets enough credit.

Roy SHOULD get much of the credit for the success of TWDC as he designed the financial models which served TWDC so well until Eisner's 'Strategic Planning Group' and Weatherman came to be.

 

[ford91exploder]

On what planet? Is TWDC unique in this regard?

GM = Sales - COS
GM% = (Sales - COS) / Sales

Because depreciation is usually accounted for in COS as it refers to plant and equipment

 

[CaptainAmerica]

Because depreciation is usually accounted for in COS as it refers to plant and equipment

Yeah, for a manufacturer. Depreciation is absolutely not included in cost of sales for either a service or retail model.

 

[Donald Razorduck]

Fellow KI season pass holder. I don't understand why everyone within driving distance of Mason doesn't have a pass. A KI season pass gives you more bang for your buck than anything you will currently find in Orlando. It may not be the best park in the world. But it's an incredible deal.

While y'all compare Cedar Fair and Six Flags, one of the best themed parks outside of the Disney and UNI umbrella is Silver Dollar City. It happens to be in my back yard basically and I hold passes. As they plan to add more thrill rides soon it will only get better. Dollywood is it's sister park and they once shared the name. Dolly has more coasters but the ones SDC has are very solid. SDC has stayed much closer to it's theme as Dolly has drifted away from one unifying theme. Only park I van think of that has a no surcharge cave tour, and a wood coaster that inverts all the while I can attend a church service on Sunday Morning in a Log church. Here's the new addition for 2015:

Authentic, period props include a steam fire wagon and 1880s bell for bell tower:

 

[bhg469]

One reason why things were so much better in those early 'net fan community days: not having to read every idiot's opinion of Disney making Mike Ovitz its Numero Dos on the Twitter.

Do you think the community will restrain itself or wildly speculate?

Twitter lifestylers are always at 11. They speculate wildly or not at all.

 

[BrerJon]

Walt and Roy perhaps more Roy than any other realized that a quality product sold for a reasonable premium will beat out lesser quality products and provide a larger margin, We are constantly redesigning our products to increase MARGIN however we are doing that by reducing failure rates (lower support and warranty costs) so LIFECYCLE cost goes DOWN resulting in happier customers and better MARGINS.

It's a lesson Apple has learned recently too. For years they were high quality at above premium prices, but in recent years they've introduced ranges with less ridiculous margins, aimed at a more cost conscious consumer like the iPad Mini and iPhone 5C, and have found a way to bring high quality products which don't cost that much more than their competitors to the market. Lo and behold they're now breaking records for company profits all over the place.

 

[GoofGoof]

Yeah, for a manufacturer. Depreciation is absolutely not included in cost of sales for either a service or retail model.

You are correct. GM does not include depreciation. I think @ParentsOf4 was really talking about Segment Operating Income which is GM + SG&A + depreciation. The company generally talks about Segment Operating Income in their MD&A.

 

[ford91exploder]

It's a lesson Apple has learned recently too. For years they were high quality at above premium prices, but in recent years they've introduced ranges with less ridiculous margins, aimed at a more cost conscious consumer like the iPad Mini and iPhone 5C, and have found a way to bring high quality products which don't cost that much more than their competitors to the market. Lo and behold they're now breaking records for company profits all over the place.

And their premium products like the Macbook Pro are at a reasonable premium over mass market products with similar specs (but less robust construction) which also helps greatly.

 

[lebeau]

Twitter lifestylers are always at 11. They speculate wildly or not at all.

I have seen the former. Never the latter.

Do you know how many times I have been told that Staggs was just announced as Iger's replacement in the last hour?

 

[the.dreamfinder]

Twitter lifestylers are always at 11. They speculate wildly or not at all.

But, you have to admit they get it right... sometimes.
Andy Castro (@21royalstreet)
2/5/15, 1:50 PM



BREAKING: Jeep Rasulo cut from "Cars 3"

 

[flynnibus]

So the real question is.. who was @CaptainAmerica before jan28? Anyone buying he's a new member?

 

[CaptainAmerica]

So the real question is.. who was @CaptainAmerica before jan28? Anyone buying he's a new member?

Very longtime lurker but I've paid attention and I know the players and the "sides" of the issues. Pixie Dusters and lifestylers and "Spirit" and refillable mugs and pool hopping and all that. I held off for a loooong time creating an account because I'm a member of a different (non-Disney) message board community and it's much easier only trying to keep up with one. Ended up creating one because I'd use this site for updates on #HatWatch and you can't click on images or attachments without being logged in.