As everyone knows, Tom Staggs was named Disney's Chief Operating Officer (COO) earlier today. As COO, Staggs becomes the frontrunner to replace Bob Iger when he steps down as CEO in 2018. (Conspicuously absent from the announcement was the title of president, which would have cemented Staggs as Iger's successor.)
The question is: Why Staggs?
Surely there are many reasons but since this is a WDW fansite, I'd like to comment on only one: Parks & Resorts (P&R) financial performance.
Staggs improved P&R's operational margin while his predecessor, current Disney CFO Jay Rasulo, did not.
Some background is needed to give this statement context.
For decades, Disney's P&R segment remained highly profitable following a business model of quality and expansion. However, CEO Michael Eisner wasn't satisfied with this performance and appointed the up-and-coming Paul Pressler president of Disneyland Resort (DLR).
Pure and simple, Pressler was a train wreck.
Successfully running a theme park requires understanding operations. It requires understanding the theme park market. It requires long-term planning and patience.
Pressler lacked all of these. Allegedly, Pressler was a numbers guy who thought he could sit at his desk, pour over spreadsheets, and make major decisions without stepping inside a theme park.
Fans of DLR hated Pressler. There was a near-universal opinion that he single-handedly ruined the resort.
But Pressler was an Eisner favorite. Rather than accept what was happening, Eisner promoted Pressler to head of P&R at the beginning of fiscal year 1999.
After peaking at
23.8% in fiscal year 2000, P&R margin began to spiral downward:
22.6% in 2001,
18.1% in 2002, and
14.9% in 2003. P&R was devastated by 9/11 and Pressler had no idea what to do. He left Disney late in 2002 for The Gap where, by all accounts, he was a disaster there too.
Rasulo succeeded Pressler as head of P&R in September 2002 (i.e. the beginning of fiscal year 2003). He remained until the first quarter of fiscal year 2010, effectively controlling budgets for 8 years. During Rasulo's 8 years, P&R margin averaged
14.5%. By his last year, P&R margin was at a Disney all-time low of
12.2%.
After Rasulo and Staggs swapped jobs and Staggs became P&R Chairman in 2010, P&R's margin began to improve, climbing at least 1% each year, finishing at a respectable
17.6% in fiscal year 2014. In the quarterly results announced earlier this week, P&R margin jumped to
20.6%, a number P&R hasn't seen since 2001.
Rasulo's years as head of P&R marked that segment's low point.
In just 4 years, Staggs appears to have fixed the financial woes Rasulo couldn't fix in 8 years.
This is not a question of whether we like
how margins were improved. This is a matter of Staggs meeting Iger's financial objectives.
Staggs delivered. Rasulo did not.
And since I promised a graph ...
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