News Disney plans to accelerate Parks investment to $60 billion over 10 years

[SplashJacket]

What's disingenuous is the slight of hand that Disney is playing on the drive-by media and low-information fans via their Comms and PR consultants to play up this number as something significant.

Not a PR move. A signal to investors of an upcoming massive business strategy shift. Lying/misleading investors is also known as fraud.

People can say whatever they want about their D23 announcements as those aren’t regulated by the federal government, but this isn’t an announcement at a fan event.

 

[monothingie]

Rather than getting new lands, capex is spent (for the most part) tearing down existing lands and attractions, and simply replacing them with something based on an IP. This is not expansion. Instead, this is closing down popular lands and attractions and replacing them with things with more film and retail tie-ins.

Capex doesn't even need to be a physical asset. Development and implementation of extremely popular (sarcasm) guest facing system like Genie+ were all lumped in with Capex. In their SEC statement, it said that the focus was to spend on things that enhance and increase per guest revenue and guest spending. So I wouldn't start picking out the drapes yet for the 5th gate.

 

[monothingie]

Not a PR move. A signal to investors of an upcoming massive business strategy shift. Lying/misleading investors is also known as fraud.

People can say whatever they want about their D23 announcements as those aren’t regulated by the federal government, but this isn’t an announcement at a fan event.

You are confusing spin versus lying. No one is lying, they're just trying to put lipstick on a pig and hope people don't look into the actual numbers as others have done. The dog and pony show with Josh was a 100% PR event.

 

[el_super]

I'm simply pointing out it's not as large a number over where we currently are as is being discussed by some.

An increase is still an increase. Some (Wall St) were expecting it to go back down.

 

[el_super]

You are confusing spin versus lying. No one is lying, they're just trying to put lipstick on a pig and hope people don't look into the actual numbers as others have done. The dog and pony show with Josh was a 100% PR event.

This just seems like a weirdly visceral reaction to what should generally be good news for parks fans.

Wall Street will probably not allow them to spend significantly on the parks.

 

[MisterPenguin]

If they can make another damn Marvel series, they can give us another carousel or something.

Sure thing. We just need everyone riding that carousel to give Disney $12.99 a month for a year to cover its cost!!

 

[monothingie]

This just seems like a weirdly visceral reaction to what should generally be good news for parks fans.

Wall Street will probably not allow them to spend significantly on the parks.

How is it good news that they're spending less than they have over the past 10 years? Not even accounting for record inflation which also has an impact.

 

[SpectreJordan]

Regardless of everyone’s thoughts on whether or not Disney will execute, at the end of the day, this signals a transition away from the less successful media industries (which the parks have been subsidizing) to actually investing in their cash cow.

Instead of wasting billions on mediocre D+ content, they’re actually going to pump that money into the parks, hoping they can actually grow them. This isn’t a pr move, it’s a monumental business strategy shift that should benefit us parks fans.

It's a good plan especially if the media stuff goes back to becoming "events" again. Invest in the parks as the consistent money makers while the movies become huge bursts of revenue again. The mass amount of "content" is what's diminishing the Disney brand & losing them so much money.

Have one animated movie a year (Disney one year, Pixar the next) that's an event, 2 Marvel movies that feel like events again & like a Star Wars movie every 3 years. Fox can keep making smaller movies, they're fine like that.

They should have 1 event show on Disney+ a quarter too. Something like 2 Marvel shows, a Star Wars show & then something actually original like a Stranger Things.

 

[CaptainAmerica]

capex as a percentage of revenue is a common metric across multiple industries.

I'm not saying it's faulty financial analysis, I'm saying it's not visually relevant to theme park fans whose primary concern is experiencing cool new stuff, not calculating CAGRs and discounted cash flows.

If Disney opened a new theme park, literally a brand new gate, every 5 years, "capex as a percentage of revenue" would look like this:

Do you think that's an accurate visual representation of how the lay parks fan should think about parks investment in the scenario I described?

Again, this visualization is what it would look like if Disney continually invested in their parks and opened a new gate every X number of years.

 

[CaptainAmerica]

How is it good news that they're spending less than they have over the past 10 years?

They're not, that's bullcrap.

 

[SplashJacket]

You are confusing spin versus lying. No one is lying, they're just trying to put lipstick on a pig and hope people don't look into the actual numbers as others have done. The dog and pony show with Josh was a 100% PR event.

Here’s a better question. Was the last ten years of investment not an insane level of investment? The parks need less investment now than they did the last ten year since a lot of the necessary infrastructure upgrades have been taken care of. We should see spend allocated to new projects be proportionally higher. I would be happy with equal spend compared to the last decade adjusted for inflation. From a raw numbers standpoint, they’re doing more than that.

Over the last ten years, we had two galaxy’s edge (one larger investment due to all the readjusting), Avengers Campus, new Toontowns, two MMRRs, Ratatouille, development of 3 cruise ships, a new resort (Shanghai), Guardians, Tron, construction of another cruise ship, TSL in Hollywood Studios and Hong Kong, Mystic Point, Iron Man, ant man retheme, 15 Epcot shows, WDS 2.0 beginning, etc. etc. It’s insane. I don’t see how continuing their rate of expansion over the past decade is a bad thing, but they’re literally planing on doing even more. I guess you’d rather them come out and announce they believe investment into the parks will no longer warrant a ROI, so might as stop building. That’s not what they did.

Investors don’t want to hear embellished investments, they want embellished earning potential.

 

[ToTBellHop]

Sure thing. We just need everyone riding that carousel to give Disney $12.99 a month for a year to cover its cost!!

Thanks but I have Hulu+Carousel so it’s all bundled for just $84.99 per month. The carousel has commercials, of course.

 

[lazyboy97o]

Here’s a better question. Was the last ten years of investment not an insane level of investment? The parks need less investment now than they did the last ten year since a lot of the necessary infrastructure upgrades have been taken care of. We should see spend allocated to new projects be proportionally higher. I would be happy with equal spend compared to the last decade adjusted for inflation. From a raw numbers standpoint, they’re doing more than that.

Over the last ten years, we had two galaxy’s edge (one larger investment due to all the readjusting), Avengers Campus, new Toontowns, two MMRRs, Ratatouille, development of 3 cruise ships, a new resort (Shanghai), Guardians, Tron, construction of another cruise ship, TSL in Hollywood Studios and Hong Kong, Mystic Point, Iron Man, ant man retheme, 15 Epcot shows, WDS 2.0 beginning, etc. etc. It’s insane. I don’t see how continuing their rate of expansion over the past decade is a bad thing, but they’re literally planing on doing even more. I guess you’d rather them come out and announce they believe investment into the parks will no longer warrant a ROI, so might as stop building. That’s not what they did.

Investors don’t want to hear embellished investments, they want embellished earning potential.

People don’t view it as insane because all of the parks still lack adequate capacity. For what they spent it should have resulted in more changes to the guest experience and the root causes of that serious problem have not been addressed.

 

[monothingie]

Here’s a better question. Was the last ten years of investment not an insane level of investment? The parks need less investment now than they did the last ten year since a lot of the necessary infrastructure upgrades have been taken care of. We should see spend allocated to new projects be proportionally higher. I would be happy with equal spend compared to the last decade adjusted for inflation. From a raw numbers standpoint, they’re doing more than that.

Take Shanghai out and let me know how the other parks, especially Florida fared on that fighting for the remaining scraps for the past 10 years.

Over the last ten years, we had two galaxy’s edge (one larger investment due to all the readjusting), Avengers Campus, new Toontowns, two MMRRs, Ratatouille, development of 3 cruise ships, a new resort (Shanghai), Guardians, Tron, construction of another cruise ship, TSL in Hollywood Studios and Hong Kong, Mystic Point, Iron Man, ant man retheme, 15 Epcot shows, WDS 2.0 beginning, etc. etc. It’s insane. I don’t see how continuing their rate of expansion over the past decade is a bad thing, but they’re literally planing on doing even more. I guess you’d rather them come out and announce they believe investment into the parks will no longer warrant a ROI, so might as stop building. That’s not what they did.

Investors don’t want to hear embellished investments, they want embellished earning potential.

Disney has not expanded! As @ParentsOf4 has explained, they've replaced existing for what they perceive as being better drivers of guest revenue. How much did G+ cost them? How many hotels did they build? How much money was blown on failure, SW Hotel, Harmonious, Enchantment, EPCOT spine and redevelopment?

 

[el_super]

Take Shanghai out and let me know how the other parks, especially Florida fared on that fighting for the remaining scraps for the past 10 years.

This has come up a couple times. Why would they not want to invest in Florida if the return was guaranteed? What is going on in Florida that makes it signiciantly different from every other Disney property?

Disney has not expanded! As @ParentsOf4 has explained, they've replaced existing for what they perceive as being better drivers of guest revenue. How much did G+ cost them? How many hotels did they build? How much money was blown on failure, SW Hotel, Harmonious, Enchantment, EPCOT spine and redevelopment?

They are still increasing revenue. Expansion doesn't have to be in pure capacity numbers. If something drives higher ticket prices, the company comes out ahead. From the latest results, that seems to be what is happening.

The fact that they have spent so much and failed, and still have a desire to spend more, is a testament to their will.

 

[MisterPenguin]

If you have a penny and I gave you two pennies, your net worth increased by 200%!!

If you have a hundred pennies and I gave you two pennies, your net worth increased by only 2%.

When looking at changes in numbers and comparing one number to another there are different ways to look at the changes:

• The absolute change
• The percent change
• The rate of change of the absolute and percent changes.

It's good to have all those numbers at once for a good picture of what's happening rather than focusing on only one.


WRT to Disney's capex, the absolute value tells us how much change we can expect. The relative value in percentage can tell us how expansive this investment is and whether Disney could do much more, or is overextending itself.

 

[flynnibus]

Disney is going to double CapEx spending in the parks division means nothing. That is in dollars but due to inflation, prices will more than double. So a 100% increase in spending has to be cut by more than half, or spending will actually decrease.

if you read their presentation - you would see they position their moves as a multiplier on ROI and their history of return from such spending.

 

[LSLS]

An increase is still an increase. Some (Wall St) were expecting it to go back down.

I'll say it again, I agree, it is a good thing. I feel like you are taking me saying to temper expectation (AKA, that there are new parks coming) as me saying this is not good. It is good as a plan.

 

[flynnibus]

How is it good news that they're spending less than they have over the past 10 years? Not even accounting for record inflation which also has an impact.

You keep dropping words to make your statement true - but it's still disingenuous.

spending less BY PERCENTAGE OF REVENUE (if you follow Parentof4's math)

Not spending less.

Again, new G+ revenue did not make Rise of the Resistance any less of a major investment - but under the PERCENTAGE OF REVENUE metric - it is. That's why you don't use the wrong metrics in the wrong places.

 

[monothingie]

This has come up a couple times. Why would they not want to invest in Florida if the return was guaranteed? What is going on in Florida that makes it signiciantly different from every other Disney property?

Shanghai and the Chinese market was/is seen by Bob Iger as the site with the greatest "opportunity". (For his Ego or for profit or for both) Even though Florida has been the neglected cash cow which prints money for the rest of the company. Florida under Iger has always been last in terms of new investments that are guest facing.