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

[el_super]

This is what frustrates me about DLR vs WDW (and I enjoy both quite a bit).

They've always had to spend more at Disneyland because of the demographics. More repeat visitors (locals) going more and more frequently means that attraction lifespan is generally reduced. They have to keep spending and bringing in new things to keep people coming back.

FWIW though, I doubt they will use even half the space of DisneylandForward for theme park expansion. They are selling it that way in order to get it passed by the city.

 

[Rosso11]

It was one of the reason why I was excited to see Lake Nona as having WDI and other park related things have a heavier presence in Florida would likely help actual development in WDW in a sensible way. It's clear that Imagineers visit DL and "get" what needs to be done there, but then build stuff at WDW that seems like they have never stepped into those parks (e.g. TSL with no shade at all).

This has changed in recent years. Even without Lake Nona WDI has grown significantly in Florida. They are now for the most part running things themselves without much intervention from the west coast. Yes they are still getting some overall direction from the top but Florida is now taking the lead on its own projects.

 

[DisneyDean97]

I can't see how a new park can't be apart of this 60 billion investment in just ten years...
I'm not saying this is going to be WDW's 5th gate, but maybe this includes Shanghai's second park???
Or maybe WDS actually gets more than a frozen land around their new lake, lol

 

[doctornick]

Market is reacting badly to the news.

Well, that does not bode well. We know that Disney is apt to throw out "trial balloons" and then change course if Wall St doesn't like something.

 

[Surferboy567]

In my opinion, this is what needed to happen to help turn things around hoping this means more investments sooner rather then later and less blue sky.

 

[SplashJacket]

Well, that does not bode well. We know that Disney is apt to throw out "trial balloons" and then change course if Wall St doesn't like something.

Whole market is down due to Fed uncertainty.

 

[Marionnette]

Whole market is down due to Fed uncertainty.

Dow is down <1%. DIS is down >3%.

 

[el_super]

Well, that does not bode well. We know that Disney is apt to throw out "trial balloons" and then change course if Wall St doesn't like something.

Yeah...


I wonder if that's the reason they announced this at an investor conference? Maybe they knew the reaction would not go well.

Or maybe this is a big surprise to Iger.

 

[fgmnt]

Probably some pre-cope from me but I don’t understand why you would book an MBA arena to talk about Parks and Resorts, announce intent for a $60B investment over 10 years, and not announce a new gate internationally or massive domestic expansion.

I have a largely normal brain and am not yet burdened with an MBA so that’s probably got me thinking differently than Burbank execs.

 

[flynnibus]

Business wise it's an interesting tactic... some serious chest pumping about their direction for P&R.

Did they believe their 17bil statement for WDW was that well received that they felt amping that up was the good idea for the investor audience?

It's an interesting statement to make in isolation from the other major segments where most of the scrutiny is. P&R have been scrutinized over keeping it running at full steam and growth. Is this a purely a growth building message? Would love to hear the full context of how they are positioning this 'news'.

 

[TheMaxRebo]

Probably some pre-cope from me but I don’t understand why you would book an MBA arena to talk about Parks and Resorts, announce intent for a $60B investment over 10 years, and not announce a new gate internationally or massive domestic expansion.

I have a largely normal brain and am not yet burdened with an MBA so that’s probably got me thinking differently than Burbank execs.

I think the idea is to change how investors look at the stock and shift it from focusing on media and # of streamers and stuff like that but now rather on the returns the Parks are currently delivering and saying they are investing there now so will be more returns/revenue coming in the future

Reaction though probably has concern if that is the best use of $60bn when there still isn't currently a dividend and other elements shareholders/investors look at

 

[LSLS]

When the $17 billion number came out, didn't Len show some numbers that showed that was really not a large increase from what they currently were spending on just general upkeep? Or am I remembering this wrong? It'd be interesting to see if this could be interpreted similarly, or if there is a real possibility of significant expansion for the parks (I definitely think they are going in harder on Cruise lines, and I bet the new island is a part of this).

 

[Disstevefan1]

Disney plans to nearly double its investment in parks and cruises business

Disney's theme parks have been a relative bright spot while the entertainment giant struggles to make a profit on streaming.

www.cnbc.com

Disney, Challenged Elsewhere, Plans to Spend $60 Billion on Parks and Cruises

Amid uncertainty for the company’s film and TV divisions, the investment over the next decade doubles the outlay in the last 10 years.

www.nytimes.com

Here is a NYT link to share with no paywall.

 

[DisneyCane]

Where is @ParentsOf4 to indicate how this compares with current/past spending with some nice graphs?

The graphs need to be inflation adjusted for a true picture.

 

[monothingie]

What we really need is less talking, and more shovels in the ground And sooner, rather than later.

That’s why this is a garbage number. They could have said a gazillion dollars over 10 years and it wouldn’t mean anything different.

 

[TheMaxRebo]

When the $17 billion number came out, didn't Len show some numbers that showed that was really not a large increase from what they currently were spending on just general upkeep? Or am I remembering this wrong? It'd be interesting to see if this could be interpreted similarly, or if there is a real possibility of significant expansion for the parks (I definitely think they are going in harder on Cruise lines, and I bet the new island is a part of this).

Yeah, they looked at inflation and it worked out to bring quite similar to the roughly $10bn spent the prior 10 years

Which did bring us Pandora, Galaxys Edge, Toy Story Land, MMRR, all the Epcot work (incl Guardians and Remy), the Skyliner, the resort work (Gran Destino, DVC towers, etc), and probably stuff I am forgetting

So definitely would cover more expansion at AK, more at DHS, the Beyond Big Thunder, etc .... but probably not that PLUS a 5th gate or anything

 

[doctornick]

Yeah...


I wonder if that's the reason they announced this at an investor conference? Maybe they knew the reaction would not go well.

Or maybe this is a big surprise to Iger.

Well, that's the thing. I feel like announcing this at an investor conference, they expected Wall St to be happy they were investing in their "core business" which has continued to be profitable. IOW, they probably thought this would lead to a stock price increase and viewed as positive - so since the initial reaction is negative, that's less than ideal in terms of whether the company will go through with this plan.

 

[Cliff]

OK,...I criticize Disney HQ and it's board heavily. These people have made a series of REALLY dumb decisions in recent years. But THIS one is the best idea they have had in many years. Parks and Experiences are about the ONLY bright spot in this company today. It makes sense to PUT THE MONEY INTO THE ENGINE THAT ACTUALLY MOVES YOU FORWARD. (sorry for the yelling)

Disney has been dumping billions and billions and BILLIONS into Disney Plus and it has not even given $.01 cent back in return! Even when Disney Plus reaches it's first break-even year...maybe in 2-5 years? (if ever??) How long many more years will it take to recoup and recover the initial tens of billions of dollars that were CARELESSLY dumped into it? Decades?

Parks are not a "bulletproff" business,...but if you treat them reasonably well and take care of their needs,...they provided relatively stable and somewhat trustworthy income.....if you don't NEGLECT them!

Good move Disney. Maybe they hired and outside contractor or analyst to reveal this to them...but never the less, good idea!

Next step? Say goodbye to Josh and pay Joe Rode whatever is necessary to bring him back and put him in Josh's seat. The seat needs a true visionary to oversee the parks

 

[celluloid]

(looks to the Max Factor facade)

Yeah! sure!

 

[lentesta]

When the $17 billion number came out, didn't Len show some numbers that showed that was really not a large increase from what they currently were spending on just general upkeep? Or am I remembering this wrong? It'd be interesting to see if this could be interpreted similarly, or if there is a real possibility of significant expansion for the parks (I definitely think they are going in harder on Cruise lines, and I bet the new island is a part of this).

I did - here's the thread. The amount seems to be a continuation of adding a few lands and attractions every couple of years.

Assuming 4% inflation (ha!), $60B in future money is worth about $50B today.

Disney's already earmarked at least $17B of that for WDW, so we're left with $43B over 10 years.

Searching the last 10 years of Disney annual reports for the phrase "investing activity" related to DPEP, it looks like they're averaging around $3.216B/year in investment.

I'm adjusting that for inflation now. One sec.

EDIT: Okay, adjusting for past inflation and assuming 4% inflation annually going forward:

• DPEP has averaged about $4B/year in investment activity, in 2023 dollars
• $60B over 10 years is worth $50B, or about $5B/year, in 2023 dollars
• So this announcement looks like a 25% increase in DPEP investment

I think that's a good thing.

I could be wrong with these numbers. PM me with your email address and I'll share the spreadsheet I have.