Disney looking to cut theme park capital investment?

[fw1987]

Thank you for the link. Please click on it and check the historic records from July 1998. You will find that the stock split was a tiny bit over $100.

Ummmmm, I think you missed my point. If you noticed I said split adjusted. So for you to say the stock was over $100 and is now around $29, that is simply a wrong comparison.

If you want to say the stock was $100, then on that basis the price today would be $58 (again, adjusting for the split). You can't compare a pre-split price to a post split price. The stock is down 40%, not the 70% you suggested.

However, not something for Eisner to crow about.

 

[Yen_Sid1]

Thank you for the link. Please click on it and check the historic records from July 1998. You will find that the stock split was a tiny bit over $100.

Ummmmm, I think you missed my point. If you noticed I said split adjusted. So for you to say the stock was over $100 and is now around $29, that is simply a wrong comparison.

If you want to say the stock was $100, then on that basis the price today would be $58 (again, adjusting for the split). You can't compare a pre-split price to a post split price. The stock is down 40%, not the 70% you suggested.

However, not something for Eisner to crow about.

Actually, there was a 3-way split when it was at 120, then the stock price went to 40 a share, at one time the stock was down about 70%, but now the stock is at 28, it is only down about 30% from its highest level.

 

[Mr. Eggz]

From the 2004 Disney Annual Report (under Costs and Expenses, not Capital Ex): Higher marketing costs were driven by the opening of Mission: SPACE at EPCOT, Disney's Pop Century Resort at Walt Disney World, and by The Twilight Zone Tower of Terror and the 50th anniversary celebration at Disneyland.

Sorry, but I just don't get your argument that new TV ads are capital exs. I think I understand the difference. Patch a roof or sweep the floor - costs and expenses; build a completely new roof - capital ex.

They are lumping everthing together (Costs AND Expenses). At the end of the year it all comes down to how much did you spend. That's all Wall Street investors care about. But if you are a consumer, who cares deaply about how Disney spends money on the parks, its worth it to dig deaper.

There will be no new major attactions post Everest for at least two years, probably much longer. Anything you've heard rumers about will take much longer to design and build, and right now they are on hold because there is no funding. That is the significance of the statement in the report which started this thread.

 

[tomm4004]

In the language of the report, "costs" are opperating costs. "Expenses" are captial expenses.

Isn't the term 'capital expenditures' not 'capital expenses'?

So when it says: "Cost and expenses, which consist principally of labor, costs of merchandise, food and beverages sold, depreciation, repairs and maintenance, entertainment, marketing and sales expense, increased 21 % or $1.2 billion compared to fiscal 2003" - included in those figures are capital expenditures?

I guess here's what I want to know: Disney's costs and expenses for 2004 were $26.7 billion. Is capital expenditure included in this figure?

By the way, regarding the hurricane damges - wouldn't Disney have insurance to cover this?

 

[Mr. Eggz]

Isn't the term 'capital expenditures' not 'capital expenses'?

So when it says: "Cost and expenses, which consist principally of labor, costs of merchandise, food and beverages sold, depreciation, repairs and maintenance, entertainment, marketing and sales expense, increased 21 % or $1.2 billion compared to fiscal 2003" - included in those figures are capital expenditures?

I guess here's what I want to know: Disney's costs and expenses for 2004 were $26.7 billion. Is capital expenditure included in this figure?

By the way, regarding the hurricane damges - wouldn't Disney have insurance to cover this?

Yes, I belive the 26.7 billion figure includes capital expenditures. (Where I work, we say capital expenses).

Insurance covers some things not others. The policy only goes so far. this past year was unprecidented and some capital projects took on additional costs due to the Hurricains. Tom Staggs released a statement about it in September and it was mentioned in the fourth qtr 2004 report.

 

[Indy95]

Has Disney made some mistakes with investments? Sure they have. Again, they have such a challenge each day with each park they operate, that there are going to be bad days and good days.

Then Disney's California Adventure was one hell of a bad day. You said that Disney gave "ample thought to this decision," and I'm just pointing out that Disney doesn't exactly have a perfect record when it comes to "thinking."

My point is this: Disney expanded too much during the 80's trying to reach too broad a market, when the investments would have been put to better use elsewhere.

Really? In what areas? Disneyland Paris wasn't built until 1992. Hollywood and Miramax didn't come on board until the early 90s. The Disney Store was a good investment (until they got lazy with it). Disney Studios was a good investment. ABC wasn't bought until 1995. So what did they do in the 80s that was so bad?

I personally believe that you should continue to find ways to perfect what you do while you grow moderately. Not try to take the industry by the throat just because you have the capital to do so.

The ironic thing is that Disney COULD HAVE taken the industry by the throat, and almost did, until they got conservative and lazy. Maybe this is why you should't try this at home.

 

[Disneyland1970]

What I can't undersatnd is how people keep saying park business is down?? The 8 or 9 times I went last year the parks were always busy. Just a view from a guest, not knowing figures or head counts, but to me business is good. If it is down ,it's because of the crappy condition of the rides and parks! The 9/11 excuse is no longer valid. With the low exchange rate of the US Dollar, the european travel to the parks must be up. Hell it's even a good deal from Mexico right now.

I just renewed my PAP's for the sum of $1200+. Now don't get me wrong, I get my $$$ worth out of these suckers, but I want a good product for my dollar spent.I would get more of a deal if ALL OF THE RIDES AND ATTRACTIONS WERE OPEN!!! There is no refund because WOL is closed 9 months out of the year. Or the Seacabs are no longer working? That is money that is saved by TWDC at my expense. The constant shortening of the park hours. I hate having to fight my way out after Wishes. I feel that is wrong and a safety violation. When Main Street is packed like that, Disney is just asking for a SERIOUS accident, every night. Keep the park open another hour, and be safe, We all payed to be there right??? Whats the rush to get us out... oh yeah $$$$$ saved.

The parks, both left(getting better) and right coast, are in sad shape. Look at the money being poured in to DL just so it can be presentable for its 50th. Where did all the $$$ money saved go to during the 10 years prior. Where is it good budgeting to let equipment fail (BTMRR in DL) instead of fixing or just proper maintenance. I'm not sure if the cut is good or bad?? If the money lost is for new rides so be it, as long as they start taking care of the stuff they have with the remainder. To me if your car runs good, but needs paint, its cheaper for a paint job then to buy a new one.

What bucket does the Eisner bonus come out of?? I'm sure it is not the one on the downward slide! Maybe he would be a nice guy and donate it for a new ride or hotel or something?

When does that idiot pick up his last check? He has pimped Disney out long enough!

 

[marni1971]

Really? In what areas? Disneyland Paris wasn't built until 1992. So what did they do in the 80s that was so bad?

The contract for DLP was signed March 24th 1987 - with most of the money being spent in the late 80`s. DLP opened April 12th 1992. TWDC signed away TDL to TOLC in 1979, and after it opened in 1983 were only receiving 10% of admissions and 5% of guest spending. And will continue to do until 2024(I`m sure I wrote this very recently!) The reason they shyed away from Tokyo? EPCOT Center - the best and worst single thing Walt Disney productions had done until then. Initial budgets in 1979 were $600 million. By opening day the cost was $1.2 BILLION - in 1982 figures. This singlehandedly almost brought the company down, almost led to the hostile takeover, and eventually led to Eisner, Wells and Katzenburg joining.

The ironic thing is that Disney COULD HAVE taken the industry by the throat, and almost did, until they got conservative and lazy. Maybe this is why you should't try this at home

Soooo true... I hurts just thinking about what may have been!

 

[tomm4004]

Yes, I belive the 26.7 billion figure includes capital expenditures. (Where I work, we say capital expenses).

I asked my brother who has his own business and took business. He said that capital expenditures are NOT included in costs and expenses (aka operating expenses). Anything that becomes an asset or can be depreciation is a cap. ex.
I said "who says," and he said, "the government says."

TV commercials are not an asset, cannot be depreciated, and thus are not a cap. ex. Same with regular maintenance.

 

[Lynx04]

Disney has added enough new rides over the past three years to make an impact for the next 5 years or so. Most people don't vist Disney once a year. Also, like I said earlier, these next few years Disney can analyze the parks and create the strategy needed to make what ever improvements are needed.

I remember a couple months ago there was a discussion about the future of WOL. I think during the next few years the fate of the pavilion will be determine because Disney will analyze how Soarin affects the crowd levels in the park. Soarin may even out the crowd levels in Future World, unlike now where most are over on the east side. Building too much at once can shoot yourself in the foot if you don't plan correctly.

 

[peter11435]

There will be no new major attactions post Everest for at least two years, probably much longer. Anything you've heard rumers about will take much longer to design and build, and right now they are on hold because there is no funding. That is the significance of the statement in the report which started this thread.

I’m sorry but that's such a stupid comment. Of course there will be no new major attraction for at least two years. Anything major will take about three years to build so they would obviously not open for at least two years after the opening of Everest. And I don't know what world you live in, but I would hardly call $700-$800 million "no funding." For the last time that number does not include maintenance, marketing, etc. That number is only new construction. While you are correct that it includes costs for new shows and other entertainment, those take up a relatively small amount of that budget. While I wish they had cut the budget, I understand that this will not directly affect new attractions.

 

[Lynx04]

Guess what! Jaydarkknight joined up at D-Troops.com and started a thread about Indiana Jones again. He changed his screen name to something like JayIce.

Yeah, he invaded Disneyforever.com as well.

He is Jayhurricane25 over there talking about.......

You guessed it, Indy.

I bet he still won't get the answer he is looking for. He would probably hump Harrison Ford's leg if he met him.

 

[marni1971]

He`s already banned overthere...

Grizz said he`ll keep that thread open. He just didn`t mention kicking him off!

Ahh.. youth of today, leaders of tomorrow.

 

[Lynx04]

He`s already banned overthere...

Grizz said he`ll keep that thread open. He just didn`t mention kicking him off!

Ahh.. youth of today, leaders of tomorrow.

No this not about D-Troops, he is actually on Disneyforever's forum.


I guess he isn't getting the answer he wants. Somebody should give the kid Eisners emal address, let Jay bug the hell out of him about IJA.

Hey maybe I should'nt even started this topic because you guys are'nt seeming to agree with me at all on this possible rumor idea. I think it still might happen if they change the theming and track layout. Plus change the vechicle into a newer version. The Indy Stunt Show is getting old and when LMA opens boy watch out because it might gain popularity big time!!!!! So keep that in mind. The Epic Stunt Spectacular cannot last forever,it's going to have to leave sooner or later. <!--emo&-->

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[HennieBogan1966]

Well Indy, though I may not have exact dates for investments, and expansion, what I .am referring to during the 80's is the time during which Michael Eisner, (this according to his fan club, if you get my meaning) singlehandedly saved the company. Now I know, he came on board in 84, but he is largely credited with ALL the positive success the company experienced during the mid/late 80's and into the 90s. And I speak of the company as a whole, not just theme park operation. Now, I'm not going to start an arguement with you over this, as I know what happens to ME on here when I do. So, I'll let you lob your attacks toward me, and not respond.

Brian

 

[Mr. Eggz]

I asked my brother who has his own business and took business. He said that capital expenditures are NOT included in costs and expenses (aka operating expenses). Anything that becomes an asset or can be depreciation is a cap. ex.
I said "who says," and he said, "the government says."

TV commercials are not an asset, cannot be depreciated, and thus are not a cap. ex. Same with regular maintenance.

You're right. I’m sorry, the TV Commercial was a bad example. I am sorry. My fault. But, there are other marketing expenses that are considered capital expenses. Marketing for example is paying for the Castle Overlay. So were the Epcot/2000 wand, and the big hat in front of the Chinese Theater.

On the maintenance issue, though I will have to refer you to my previous posts. I specifically said non-routine maintenance. Any maintenance that improves the value of a facility is a "Capital Improvement" and therefore a Capital Expenditure, because, as you point out, it is an improvement to a facility which can be depreciated.

I know that Capital Improvements (which fall under the domain of the maintenance department) are the single largest capital expense because Tony Baxter, a Senior VP from WDI said so. Back in 2000 (or maybe 1999 I'm not sure) when Disneyland opened Tarzan’s Treehouse, Baxter, who was in charge of Disneyland at the time, explained at a Disneyana convention that the WDI was competing with Maintenance for capital funds and maintenance always received more funds than WDI. So, they decided to combine the effort. Disneyland’s Swiss Family Treehouse need massive capital improvements and would go down for a rehab for 9 Months. Baxter suggested that WDI become involved and the two departments work together to use the capital funds to create a new Treehouse. Later they did something similar with Disneyland’s Autopia. Right now they are doing the same thing with Space Mtn. at Disneyland. They took maintenance capital funds and combined them with WDI capital funds to spend money in a smart way. How could they do this if maintenance did not have capital funds?
:animwink:

 

[Mr. Eggz]

I’m sorry but that's such a stupid comment. Of course there will be no new major attraction for at least two years. Anything major will take about three years to build so they would obviously not open for at least two years after the opening of Everest. And I don't know what world you live in, but I would hardly call $700-$800 million "no funding." For the last time that number does not include maintenance, marketing, etc. That number is only new construction. While you are correct that it includes costs for new shows and other entertainment, those take up a relatively small amount of that budget. While I wish they had cut the budget, I understand that this will not directly affect new attractions.

Have I done something to offend you?

 

[Mr. Eggz]

Okay, I won’t make a habit out of posting three times in a row. I promise. But I have apologies to make. I made some assumptions based on incomplete info.

1. Special Event Costs do not come out of Capital. I was wrong. Everyone, who told me I was wrong, was right.
2. Most marketing costs do not come out of Capital (i.e. TV Spots). Some do (i.e. Castle Overlays).

I was correct about Creative Entertainment. All Creative Entertainment costs count as Capital Expenditures. Just to be clear, I’m not talking about Entertainment Ops in the parks. I’m talking about the Creative Entertainment Dept that develops the parades and shows.

I was told from reliable sources (in addition to the statement made by Tony Baxter at the convention) that the largest piece of the Capital pie goes to the Maintenance department. This is true. Any rehab that improves the value of an asset is a Capital Improvement and falls under Capital Expenditures (i.e. Astro Orbiter). This includes ride vehicle rehabs at Central Shops, Back of House facility improvements, everything. Just to be clear, I’m not talking about the Custodial Department, but the Maintenance Department.

I’m sorry about the bad info. I learned something through this. Hope some of you did too.

 

[marni1971]

No this not about D-Troops, he is actually on Disneyforever's forum.

He was at D-Troops... under the name JayIce25. I say was since he is now a) banned and b) his thread `Indiana Jones Adventure` has now been closed. Deja vu!

 

[marni1971]

Marketing for example is paying for the..... Epcot/2000 wand, and the big hat in front of the Chinese Theater.

Cut their budget!!! :lol: