-
Welcome to the WDWMAGIC.COM Forums!
Please take a look around, and feel free to sign up and join the community.
News Disney plans to accelerate Parks investment to $60 billion over 10 years
- Thread starter CaptainAmerica
- Start date
erasure fan1
Well-Known Member
It's really not. Rewind is a fun ride for sure. But as an overall experience, Everest is a much better ride. The theming alone puts it over the top in my opinion.
Tha Realest
Well-Known Member
Ten years from now which one will hold up better? The one with timeless theming or the one using characters from the breakout MCU Phase 2 hit of 2014?
DisneyHead123
Well-Known Member
That’s an interesting point, and will probably help. That said, D+ still feels so niche to me compared to the broad-based offerings on Netflix. If they want to get anywhere in the Netflix ballpark, they’ll need to create soooo much content. Perhaps the plan is not to attempt that - maybe the plan is to remain niche. But if that’s the case, I don’t see how they can raise their prices that much more.
BrianLo
Well-Known Member
I have a few thoughts I wanted to also add to the pile.
First of all this does add a measurable intent to spend. Whether it comes to be we don't have a time machine to watch play out. But the intent has been consistent and does represent a strategy shift from Iger. No matter how much people want to pretend it doesn't, he has consistently been hawking Parks Investment since his return to Wall Street and this is still uncharacteristic for his prior tenure. This isn't a Blue Sky plan to rile up the fans, it's an SEC filing. It's not a 'marketing gimmick' to move the stock over a couple of days, it's an announced strategic shift for the company.
This also comes a year earlier than I thought it was going to. The fact the announcement is being made now does actually lead way for the company to start getting looser and approving things next fiscal year. I really thought D+ was going to take FY'24 out of commission for the company until it was 'turned around'. But they seem content on forging ahead. This is good news for actual projects 'potentially' being budgeted and approved in the coming months.
On the topic of DCL, I think there is a real likelihood we see some movement in that area first of all. There are a quite long lead time on new ship builds and the entire industry is in a bit of an interesting phase. There is A LOT of ships being built out right now. However, there is a real overlap with all the majors in that the new ship orders were established pre-pandemic and now sort of all just end. I think the ship builders, that function akin to airplane manufacturers, are probably feeling a bit of heat to find orders for the medium term future.
Their future orders are not as full as they would typically be simply because no new orders have really occurred since 2020 through now. A major won't order 'a ship' in 5 years, they order 2 ships in 5/6 years, maybe 2 more in 6/7 years and an option to order 2 more in 8/9 years. Again I'm not talking DCL, I'm talking Carnival, RCL, NCL, Celebrity etc. We're in a weird position that they are not tripping over each other to order new ships like they normally should be. This gives DCL a real sweetheart opportunity as being largely 'not' a cruise line parent company. There is capital none of the other lines have right now they can take advantage of. The same opportunity that Disney had to purchase the Disney Adventure is likely availing itself to the company behind the scenes for new ship orders.
For that reason I really do expect the company to place an order for 2-4 new ships with maybe even an option for a 5th/6th. It's still immaterial to the total pot of money and again we're talking about a new class that won't even really see the light of day until 2028+.
There is real money in the cruise industry right now with massive demand and Disney already has uniquely impressive margins to work against. There are a lot of 'markets' for Disney to tap and throwing a cruise ship into a new region is a far less risky endeavour than a new park.
First of all this does add a measurable intent to spend. Whether it comes to be we don't have a time machine to watch play out. But the intent has been consistent and does represent a strategy shift from Iger. No matter how much people want to pretend it doesn't, he has consistently been hawking Parks Investment since his return to Wall Street and this is still uncharacteristic for his prior tenure. This isn't a Blue Sky plan to rile up the fans, it's an SEC filing. It's not a 'marketing gimmick' to move the stock over a couple of days, it's an announced strategic shift for the company.
This also comes a year earlier than I thought it was going to. The fact the announcement is being made now does actually lead way for the company to start getting looser and approving things next fiscal year. I really thought D+ was going to take FY'24 out of commission for the company until it was 'turned around'. But they seem content on forging ahead. This is good news for actual projects 'potentially' being budgeted and approved in the coming months.
On the topic of DCL, I think there is a real likelihood we see some movement in that area first of all. There are a quite long lead time on new ship builds and the entire industry is in a bit of an interesting phase. There is A LOT of ships being built out right now. However, there is a real overlap with all the majors in that the new ship orders were established pre-pandemic and now sort of all just end. I think the ship builders, that function akin to airplane manufacturers, are probably feeling a bit of heat to find orders for the medium term future.
Their future orders are not as full as they would typically be simply because no new orders have really occurred since 2020 through now. A major won't order 'a ship' in 5 years, they order 2 ships in 5/6 years, maybe 2 more in 6/7 years and an option to order 2 more in 8/9 years. Again I'm not talking DCL, I'm talking Carnival, RCL, NCL, Celebrity etc. We're in a weird position that they are not tripping over each other to order new ships like they normally should be. This gives DCL a real sweetheart opportunity as being largely 'not' a cruise line parent company. There is capital none of the other lines have right now they can take advantage of. The same opportunity that Disney had to purchase the Disney Adventure is likely availing itself to the company behind the scenes for new ship orders.
For that reason I really do expect the company to place an order for 2-4 new ships with maybe even an option for a 5th/6th. It's still immaterial to the total pot of money and again we're talking about a new class that won't even really see the light of day until 2028+.
There is real money in the cruise industry right now with massive demand and Disney already has uniquely impressive margins to work against. There are a lot of 'markets' for Disney to tap and throwing a cruise ship into a new region is a far less risky endeavour than a new park.
JD80
Well-Known Member
Let's not ignore all the hotels, skyliner and a bunch of other stuff.
SweetDuffy101
Well-Known Member
Correct me if im wrong about this, Ive read somewhere that WDC might be on sale not to distant future.
The rumor is, with the announcement of this Mega investment WDC might be separating its parks and resorts and WDI into a different company of its own. If the investment becomes successful.
The rumor is, with the announcement of this Mega investment WDC might be separating its parks and resorts and WDI into a different company of its own. If the investment becomes successful.
Fan speculation fueled by Iger's offhand comments about selling off linear TV stations (but not their content). When it comes to selling off the company, Iger scoffed at it.
Advisable Joseph
Well-Known Member
Are you sure about this code? It has you spending 1/40 of your remaining wealth each quarter, which I don't think you wanted.
WoundedDreamer
Well-Known Member
I think this is unlikely. Disney has 3 giant ships already in the pipeline. While the slide deck alluded to more investment in DCL, I think there's an upward limit to how many ships they can rapidly integrate into their fleet in a short period of time. There will be more investment, but half or more going to DCL stretches believability. They also have to be mindful of market saturation. Disney Cruise Line commands high prices and high margins. The report noted DCL has 98% occupancy rates- which is pretty impressive. They need to make sure they don't allow their pricing power to erode.
The slide deck made very clear that parks are going to get serious investment.
I think your guesses seem pretty much spot on. The international parks are intriguing. I wouldn't be shocked if we see Shanghai Disney Resort's 2nd gate. Say Disney puts up 3 billion and their Chinese partners in Shanghai put up around 4 billion (translating to the rough 40/60 split), that gives the new park a 7 billion dollar budget. That would be generous enough to create a full-day experience without issue. And that's still less than a quarter of your guesstimate budget. That would leave ample room for additional hotel inventory and new attractions at Shanghai Disneyland. The slide deck was very bullish on Shanghai Disney Resort.
It also gives Disneyland Paris's studio park the budget it needs to complete the transformation. The scope of the expansion might expand by decade's end. I doubt a 3rd gate is coming to Paris until the studios park is packed. So that's where the money should go.
And then Hong Kong... SMH. What's tricky there is the government. Something more will get built, but I don't dare guess what.
Yeah, I think the idea of this being a "strategy shift" is exactly the way to interpret this. It's true that things like inflation or recessions might alter the company's 60 billion spending goal up or down. This announcement is not meant to be a prophecy or law. Disney is retaining flexibility and will judge market conditions when they make decisions as time progresses. But what we can say right here and right now is that Iger and Co. are intent on spending big on the parks. They see the parks as one of the major avenues for growth. This is to prepare Wall Street for surging increases in spending in the near term. These are targets.
One other topic addressed extensively in the slide deck was DVC. I'm guessing we're going to see some wild DVC building, particularly in Anaheim. Disney said the new Disneyland Hotel tower was the fastest-selling Disney Vacation Club property ever. And it makes sense too. People would love to own Disneyland points, but all they have available is the tiny DVC wing at the Grand Californian. Obviously, the city zoning places limitations on where timeshares can be built, but I think Disney will try to move ahead with something. An obvious spot would be the Toy Story Lot. Build a new 2000 unit Disney Vacation Club Hotel there. They could link it with some form of transportation. And like that Disney is sitting on a goldmine. Obviously, Anaheim would need something good in return because they'd forgoing that sweet hotel occupancy tax. But I suspect Disney could offer something good in return (like a 5 billion dollar investment in Disneyland haha).
Hmmm... you're right. It was spending 1/40 of remaining wealth instead of 1/40 of initial wealth.
Asking ChatGTP to re-do the calculations based on taking out 1/40 of actual dollars every quarter and then applying a 1% inflation hit (4% annually) didn't work. It refused to calculate all 40 quarters and stopped at 2 years and basically said "and so on..." and then used the 2 year figure, which is very wrong. Stupid AI!
So, off to the spreadsheet.
- Take out $1.5B every quarter.
- And at each quarter apply a 1% hit (i.e. loss of value) from inflation to what's left.
- Then add up all the hits.
Likewise, I did the same calculation for 2013, when Disney was going to sink $30B into park capex, then every quarter it spent, on average, $175M. Then hitting each quarter with 1% inflation, it wound up that Disney spent in the prior year $24B in 2013 dollars in the last decade.
Which is half of the coming decade of $60B depreciated to $48B.
It seems when you apply the same depreciation to two amounts in which one is twice as the other, in the end, the value of one is overall... twice the other.
But this is looking at the 2013 pot from the view of 2013. What's it worth in 2023 dollars?
Well instead of taking a 'hit' each quarter from the point of view of 2013, the fund is gaining in value in the eyes of 2023. So, instead of losing ~$6B in 10 years in 2013 eyes, it gained ~$6 in 2023 eyes. So, that $30B ten years ago is worth $36 in 2023 eyes (accounting for the continuing depletion of that fund by spending it).
So... overall in 2023 dollars:
- the $30B last decade is worth $36B
- the $60B next decade is worth $48B
- A $12B difference.
- Next decade is spending 33% more.
Advisable Joseph
Well-Known Member
Also, why 4% inflation?
NotCalledBob
Well-Known Member
This is how it is being reported in the Financial Times.
I'm not sure these were the headlines from the financial press they would have been hoping for.
www.ft.com
Disney: Iger needs to dream up better ideas than spending more on parks.
Division’s importance has grown amid problems with Disney+, broadcast and cable businesses.
Disney theme parks are supposed to be magical places. Plans to increase spending on the division have given investors an unwelcome dose of reality instead. That explains the lukewarm reception the House of Mouse received after it announced its intention to spend $60bn expanding theme parks, cruise lines and resorts over the next decade. The figure is nearly twice what Disney has spent over the past 10 years.Boss Bob Iger has good reason to double down on his main cash cow. The Disney Parks, Experiences and Products unit accounted for just a third of total group revenue last year but generated two-thirds of operating income. Its importance has grown amid problems elsewhere. The Disney+ streaming service continues to lose money while the broadcast and cable TV network businesses battle falling ad revenue and a shrinking subscriber base
Disney did not update spending plans for other businesses. Assuming spending elsewhere remains the same, annual capex could be around $7bn. The company reported operating cash flow of just $6bn last year, less than half its peak of $14.3bn in 2018. It also has a hefty amount of debt, about $44.5bn at the end of June.
Disney claims a sufficiently strong balance sheet and borrowing capacity to fund its new projects. Rumoured asset sales would lower the leverage ratio. Even so, investors are right to be concerned about its ability to generate free cash flow and restart dividend payments.
The theme park business has healthy operating margins. Historically, it has been able to generate ROICs in the low to mid teens. Analysts at Citi reckon if Disney can achieve a 15 per cent ROIC from the increase in investment, it could add as much as $2.40 in value per share annually. But Disney shares are trading at just two-fifths of their 2021 peaks. Parks are not enough. Iger still need to find fixes in Disney’s other divisions.
I'm not sure these were the headlines from the financial press they would have been hoping for.
Disney: Iger needs to dream up better ideas than spending more on parks | Financial Times
Division’s importance has grown amid problems with Disney+, broadcast and cable businesses
www.ft.com
Disney: Iger needs to dream up better ideas than spending more on parks.
Division’s importance has grown amid problems with Disney+, broadcast and cable businesses.
Disney theme parks are supposed to be magical places. Plans to increase spending on the division have given investors an unwelcome dose of reality instead. That explains the lukewarm reception the House of Mouse received after it announced its intention to spend $60bn expanding theme parks, cruise lines and resorts over the next decade. The figure is nearly twice what Disney has spent over the past 10 years.Boss Bob Iger has good reason to double down on his main cash cow. The Disney Parks, Experiences and Products unit accounted for just a third of total group revenue last year but generated two-thirds of operating income. Its importance has grown amid problems elsewhere. The Disney+ streaming service continues to lose money while the broadcast and cable TV network businesses battle falling ad revenue and a shrinking subscriber base
Disney did not update spending plans for other businesses. Assuming spending elsewhere remains the same, annual capex could be around $7bn. The company reported operating cash flow of just $6bn last year, less than half its peak of $14.3bn in 2018. It also has a hefty amount of debt, about $44.5bn at the end of June.
Disney claims a sufficiently strong balance sheet and borrowing capacity to fund its new projects. Rumoured asset sales would lower the leverage ratio. Even so, investors are right to be concerned about its ability to generate free cash flow and restart dividend payments.
The theme park business has healthy operating margins. Historically, it has been able to generate ROICs in the low to mid teens. Analysts at Citi reckon if Disney can achieve a 15 per cent ROIC from the increase in investment, it could add as much as $2.40 in value per share annually. But Disney shares are trading at just two-fifths of their 2021 peaks. Parks are not enough. Iger still need to find fixes in Disney’s other divisions.
Sirwalterraleigh
Premium Member
That bleep is NEVER happening…
…but it’s good to see we all like our old comfy shoes/blankie…
Next: Brazil in Epcot!!!
Sirwalterraleigh
Premium Member
I guess the board shouldn’t have let Sweater Oligarch reinstall himself if they cared AT ALL about that stuff, huh?
LSLS
Well-Known Member
Whoa, I wasn't replying to the $60 billion number, I replied to the $17 billion number, which again, was broken down by Len way long ago.
RSoxNo1
Well-Known Member
Don't get me wrong, Cosmic Rewind cost a stupid amount of money (the number I saw was $450m). I suspect that a decent portion of Cosmic Rewind's cost was the water work and land prep. The giant warehouse also wasn't cheap and it wouldn't surprise me if somehow that was more expensive than the Everest rock work.
Really?
I know EE's queue line is very authentic looking and mildly interesting,but the Guardians queue is quite spectacular...lots going on in the queue line and 2 pre ride rooms.
Comparing the 2 is like comparing apples to pears, they are very different attractions, but I'd say Guardians has one of the best pre ride sections in all of orlando.
Lol.
Lmao even.
Even if that were true, which it isn't...
I do!
And they're called "ships," not "boats." Calling them boats is disrespectful to the captain and crew.
I would. Most of the business community is very spooked by China right now. I would be shocked if Disney does any meaningful investment there any time soon.