Disney looking to cut theme park capital investment?

[HauntedPirate]

Page 11 of the Annual Report states that they are seeking to reduce theme park capital investment to a level "meaningfully" below $1billion annually. This after investing nearly $1.5 billion in 1997-2001 (allegedly, they don't provide the numbers in this year's report, obviously).

I'm sure this will come as very unwelcome news to many, myself included. I don't see how investing less in the parks is a good thing, except in the eyes of stingy managers who are trying to wring every last drop of "value" from the dollars spent.

Just a bit of my 2 cents.

 

[peter11435]

Well, this may not have any affect on new rides at the existing parks. Since 1997 they have had many new resorts and parks under construction all over the place. Maybe this statement only indicates halting that. Which IMO may be a good thing. Even if they only spend half of what they use, if it is all for new rides, shows, attractions, and stuff like the Small World rehab then I think we will actually be getting more.

 

[PhilosophyMagic]

That sounds bad for us theme park fans... however, it may just mean the already-expected next few years without many new attractions in late stages of developement, since so much was just spent on capital investment recently.

 

[CaptainMichael]

It really isn't that bad. Doesn't Expedition: Everest cost about $100 Million, and that is over a 3 year period. I'm with Peter, this could be a good thing.

 

[Captain Hank]

Keep in mind that we just got/are getting a whole lot of very high budget attractions (M:S, Soarin, EE, total refurb of IASW, etc.). I think it's okay that they're cutting back a little for the next few years. Give us time to enjoy what we have right now. I'm definately not saying that spending any less on theme parks is in any way a good thing, but I don't think it's anywhere near the end of the world.

 

[Rosso11]

Don't get all upset. This is mainly because there are no new parks in the works for the next few years after Hong Kong. The only park that has been officially talked about in public is the main land China park which if does happen wont be until 2010. In the last few years there has been a giant amount of money spent on new parks. Now the full 1 billion dollars will be spent on established parks, which is a good thing.

 

[Disneyland1970]

I'm all for taking care of what they have and holding back on new parks! I hope WDW can get the same treatment that DL is getting right now! A little TLC is needed in many places! :wave:

 

[Thelazer]

Look for smaller parks to be built. Something that is a 1 day or half day event. Something that can be easly dropped into a smaller market, like NYC, Philly, etc.

 

[Thrawn]

Look for smaller parks to be built. Something that is a 1 day or half day event. Something that can be easly dropped into a smaller market, like NYC, Philly, etc.

Ever heard of DisneyQuest? :brick:

What you suggested will never be happening. Especially with the MYW packages meant to draw people to WDW for longer stays.

 

[longfamily]

The budget cut means that there is no plans for expansion for the next year. This is a good thing. Currently, we are happy with the parks. Money is likely only allocated for the refurbishment of existing attractions/shows, until at such time, the new attractions have done their job of bringing in business. At which time, Disney will have recovered from the recent expendetures and the loss of film revenue and we will see more expansion on the drawing board.

 

[doop]

The budget cut means that there is no plans for expansion for the next year. This is a good thing. Currently, we are happy with the parks. Money is likely only allocated for the refurbishment of existing attractions/shows, until at such time, the new attractions have done their job of bringing in business. At which time, Disney will have recovered from the recent expendetures and the loss of film revenue and we will see more expansion on the drawing board.

You serve a good point.

 

[Lynx04]

This comes to be a no brainer, after dumping loads of money into expansion, refurbing, and DL 50th, of course Disney will set back and start cashing in on what they have invested. It makes no sense to keep pooring and not do any cost recovery. Also, this becomes a good time for Disney to evaulate their strategy, a time for them to reflect and see if they have benefited from the decisions they have made.

Like I said in the Indy thread don't expect many new announcements in the next two to four years, unless Disney starts to see a decline in attendence.

 

[Thelazer]

"What you suggested will never be happening. Especially with the MYW packages meant to draw people to WDW for longer stays."

Actually, I have VERY good info on that. A meeting was held with major bank investors at Walt Disney World over the weekend. At this meeting they went over many financial results, upcoming projects, etc. Though many of this info constitute "Forward Looking Statements" and is privileged info. I can assure you one of things that was talked about was smaller one-day parks, dining entrainment, and urban entrainment ideas.

 

[speck76]

Page 11 of the Annual Report states that they are seeking to reduce theme park capital investment to a level "meaningfully" below $1billion annually. This after investing nearly $1.5 billion in 1997-2001 (allegedly, they don't provide the numbers in this year's report, obviously).

I'm sure this will come as very unwelcome news to many, myself included. I don't see how investing less in the parks is a good thing, except in the eyes of stingy managers who are trying to wring every last drop of "value" from the dollars spent.

Just a bit of my 2 cents.

A significant amount of money was previously spent on hotel construction, along with the construction on Wide World of Sports in 1997. Since new hotels are not under construction, and, at least in the Orlando market, they won't be any time soon, this is not a bad thing. The company could spend half of what they were spending, and still add more to the parks, and add "decent" attractions to the parks, without breaking the bank.

A standard, full-service hotel the size of AKL costs about $300million to build......add in all of the theme, the animals, and AKL probably has a price tag around 1/2 of what DAK cost to build......hotels are not cheap.

 

[Mr. Eggz]

Hey Wait!

I have been reading these forums for a while, but this is my first time posting. I felt like I had to clear some things up. The announcement that Disney was decreasing the capitial investment to well below $1B means no more E ticket rides, no shows with more than a few AA figures, only little updates and rehads (see Stitch, Tiki Under New Management, Journey into YOUR Imagination, etc.).

That $1B is for WDW, The Disney Cruise Line and Disneyland (It does not include international projects, they are tracked seperately). It is for all unscheduled maintenance, WDI projects, Creative Entertainment, Special Events, New Marketing, etc. The $1B is used up real fast! It is for everything not built into the Operating Budget. The most expensive projects are big new attractions like Everest (well over $100M). This announcement means layoffs at WDI and no new attractions for several years.

 

[longfamily]

The lay-off concept had not even occured to me. I wonder if some of it could be backlash from the union vote? Just a theory.

More than likely this isn't so. Disney isn't hurting by any means. I think it is a responsible decision to stop expansion for a while. This will give the company the opportunity to save for future projects in years to come.

 

[KevinPage]

You can't jsut keep expanding year after year after year. You have to have periods of settling in and working on your existing products to keep them "up to snuff".

 

[tomm4004]

Capital expenditures vs. depreciation

Domestic parks: 2004 Cap. ex. $719 million; Depre. $710m

2003: Cap. ex. $577; Depre. $681m

There seems to be a correlation between these numbers. As a business novice, I'm assuming that you want to spend the same in cap. ex. as you can write off in depreciation? If you spend $100m on a new ride you get to write off the depreciation every year. Once an attraction runs through it's write-offable life span, then you can no longer do that. Is that right? So it seems to me there's a bookkeeping reason for re-doing rides every few years.

 

[Lee]

I have been reading these forums for a while, but this is my first time posting. I felt like I had to clear some things up. The announcement that Disney was decreasing the capitial investment to well below $1B means no more E ticket rides, no shows with more than a few AA figures, only little updates and rehads (see Stitch, Tiki Under New Management, Journey into YOUR Imagination, etc.).

That $1B is for WDW, The Disney Cruise Line and Disneyland (It does not include international projects, they are tracked seperately). It is for all unscheduled maintenance, WDI projects, Creative Entertainment, Special Events, New Marketing, etc. The $1B is used up real fast! It is for everything not built into the Operating Budget. The most expensive projects are big new attractions like Everest (well over $100M). This announcement means layoffs at WDI and no new attractions for several years.

Ummmm...kinda.

I know for a fact that there will be some major additions to parks in both Anaheim and Florida in the next few years. Don't think that every project in the pipeline just comes to a halt.
As for layoffs at WDI...unfortunately, that is not unusual at all. WDI swells a bit when there are many projects underway (Everest, Mission:Space, Hong Kong, etc.) and then reduces in size when expansion is slow. Everyone at WDI knows this, and most have been through it before.

Reducing capital spending to under $1billion is not a big deal. It's been done before without anyone really noticing.

 

[wdwmagic]

Ummmm...kinda.

As for layoffs at WDI...unfortunately, that is not unusual at all. WDI swells a bit when there are many projects underway (Everest, Mission:Space, Hong Kong, etc.) and then reduces in size when expansion is slow. Everyone at WDI knows this, and most have been through it before.

Reducing capital spending to under $1billion is not a big deal. It's been done before without anyone really noticing.

Its also worth mentioning that WDI isnt anywhere near the same as it was in the past. In the past, if you worked for WDI, you were one of the dreamers and key people in the attractions. Nowadays, almost anyone who has any hand in a themepark attarction is WDI. I think people often think that layoffs at WDI automatically means losing all of the very best (obviously sometimes that does happen, but it isnt as drastic as it would have been in the past).

A lot of work is now also done with non-permanent staff, ie. contractors, who were never on long term contracts in the first place. So it is normal for these people to be let go at some stage.