Marvel's Next Step

[maxairmike]

The Universal-Marvel contract isn't as set in stone as Universal fans would like it to be. Disney will either buy it out, or the contract will expire. Universal still hasn't made a move to buy the Florida parks from Blackstone. If they don't by June 12, Blackstone has the right to sell to a third party. Although I don't see many companies lining up to buy the resort, it may end the Universal-Marvel contract. A local news channel claimed that the Marvel license would be in jeopardy by the sale.:dazzle:

1) The contract is for perpetuity for at least the characters currently used by the park. That much is set in stone, no ifs and or buts about it.

2) Any buyout on the part of Disney would likely cost them an exorbitant amount, high enough to make Disney flinch.

3) Universal has a little over a year (if I recall correctly) to decide if they want to buy out Blackstone's stake in the resort (a slightly puzzling move for me, considering how heavily invested they are elsewhere in the industry, but that's another discussion). I do not think Blackstone will walk out on their investment at this point if Universal declines (and likely calls their bluff), and no one else approaches them to take over the stake. They would likely not be opposed to riding out the Harry Potter craze a little longer, though I suppose from an investment point, this looks like the best opportunity to maximize your investment with a high-margin asking price to walk away with a nice profit.

4) If that "local news outlet" was anything but the Sentinel, I would take it with a VERY large grain of salt. And even if it were the Sentinel reporting it, I would still be weary of the report.

 

[lebeau]

Nevermind. Others beat me to it.

 

[lazyboy97o]

Here is the actual contract between Marvel and MCA, former parent company of Universal.
http://www.sec.gov/Archives/edgar/data/1262449/000119312510008732/dex1057.htm

I agree. Does anyone know how the purchase of Marvel by Disney is supposed to affect Universal? (ie. Spiderman the Ride, Hulk coaster, etc, as well as, Marvel characters in the parks.)

It does not affect Universal at all. While the contract seems one sided today, in 1994 it was a good deal for Marvel, which was loosing mind share and money. Just under three years later, on December 27, 1996 Marvel would file for Chapter 11 bankruptcy protection. The deal with MCA guaranteed a steady stream of royalties at a time when Marvel was unsure of their future.

From the contract at VI, I:
As used herein, a “Marvel Related Company” shall mean any entity that is owned in whole by Marvel or (i) in which Marvel (or a company in (iii), (iv) or (v) below) has at least a 25% equity interest, (ii) Marvel (or a company in (iii), (iv) or (v) below) has a significant board representation, (iii) is a parent of Marvel, (iv) is controlled by an entity which (directly or indirectly) controls Marvel, or (v) is an “affiliate” of Marvel as defined in the 1933 Securities Act.

I should probably clarify that I believe the language covered only the Marvel characters Universal wished to use (Spider Man, Hulk, Fantastic 4, and associated villains). Other characters may well be up for grabs.

Yes, other Marvel characters can be used at Walt Disney World, but the intertwining of characters would make it difficult.

From the contract at VI, B, 1, a, 1, i:
East of The Mississippi - any other theme park is limited to using characters not currently being used by MCA at the time such other license is granted. [For purpose of this subsection and subsection iv, a character is “being used by MCA” if (x) it or another character of the same “family” (e.g., any member of THE FANTASTIC FOUR, THE AVENGERS or villains associated with a hero being used) is more than an incidental element of an attraction, is presented as a costumed character, or is more than an incidental element of the theming of a retail store or food facility; and, (y) in addition, if such character or another character from the same “family” is an element in any MCA marketing during the previous year. Any character who is only used as a costume character will not be considered to be “being used by MCA” unless it appears as more than an incidental element in MCA’s marketing.]

i wonder what universal would do if a marvel park was introduced as a world within DHS. Im sure a retheme of marvel superhero island can easily be accompilished. heck, just move the lost continent over.

If they just did it? Universal would sue Disney. If Disney bought out the contract, Universal would get a huge pile of cash, enough to pay for replacing the land and profit.

hat could change. With one half of Universal currently up for sale, my understanding is that could nullify some agreements should Universal Studios refuse to buy back that half of the parks. Potentially, such a decision could cost them Marvel? :shrug:

The original contract was signed by MCA, which no longer exists, and I can see nothing in the contract that suggests anything about ownership of Universal Orlando Resort being an issue.

Are you sure the 'marvel' rule applies to any new content and characters developed by Disney after buying out Marvel?

See above in my last quote of the contract. Marvel could create a new character, but it would have to be totally separate from any of the characters in use at Marvel Super Hero Island.

1. As I have read it, and understand it, Universal has the rights to the characters they have developed attractions for. This is CLEARLY the Hulk, Spider-man, Dr. Doom, Storm. Less clear would be extracting that to include the Fantastic Four and X-Men. IF this is true, then Thor, Capt. America, and Iron Man are all up for grabs, and could very easily be used in a variety of ways at Disney.

Again, see above. Universal has exclusive rights to all members of the used families. Captain America is clearly represented in the Captain America Diner. With Iron Man, The Incredible Hulk, Iron Man 2, Thor and Captain America: The First Avenger all intended to lead into The Avengers, I think Disney might have a hard time arguing that Iron Man and Thor are not part of the Avengers "family" and thus the rights to their use remain with Universal.

I kind of would like to see Disney and Universal go to court over the Marvel characters. It would be interesting to see how they would go about arguing about the characters and canon. Disney would probably argue canon and "families" are whatever they say they are, but Universal would have history and popular culture on their side.

 

[ChrisM]

1) The contract is for perpetuity for at least the characters currently used by the park. That much is set in stone, no ifs and or buts about it.

2) Any buyout on the part of Disney would likely cost them an exorbitant amount, high enough to make Disney flinch.

I had no idea these fora were populated with naught but contract lawyers. Amazing.

Contracts are maintained only insofar as the parties to the contract are interested in maintaining them. Point being, it's silly to get too wrapped up in what an existing contract stipulates as the principals can renegotiate whenever they'd like.

As always, we'll see what happens. Univeral's current ownership upheaval is certainly a development to keep an eye on.

 

[lazyboy97o]

The Universal-Marvel contract isn't as set in stone as Universal fans would like it to be. Disney will either buy it out, or the contract will expire. Universal still hasn't made a move to buy the Florida parks from Blackstone. If they don't by June 12, Blackstone has the right to sell to a third party. Although I don't see many companies lining up to buy the resort, it may end the Universal-Marvel contract. A local news channel claimed that the Marvel license would be in jeopardy by the sale.:dazzle:

It is set in stone and there is no expiration date. Instead of repeating faulty rumors just read the contract itself at the link I provided.

 

[Wilt Dasney]

For anyone interested, the contract is here: http://www.sec.gov/Archives/edgar/data/1262449/000119312510008732/dex1057.htm

For a pretty thorough rundown of which characters are used at IoA, this post is helpful: http://forums.wdwmagic.com/showpost.php?p=4430665&postcount=35

And what really kills this whole discussion (for the time being) is the contractual stipulation that even if some characters weren't being used by Universal, they still couldn't be advertised by another company within 300 miles of Orlando. That means that even if Disney somehow found a property Universal hadn't locked down that they could build an amazing new ride around, they would be forbidden from promoting it not only to locals but to essentially the entire southeastern United States. That provision absolutely destroys any chance of any major Marvel attraction at WDW as long as this contract exists.

Edit: See I'm a bit late with the contract and characters. The marketing stipulation is still worth considering, though.

 

[lazyboy97o]

Contracts are maintained only insofar as the parties to the contract are interested in maintaining them. Point being, it's silly to get too wrapped up in what an existing contract stipulates as the principals can renegotiate whenever they'd like.

The recent resurgence of Marvel has morphed the deal from being good for both parties to being ridiculously favorable to Universal. Why would Universal want to be nice to Disney?

 

[CDavid]

My laypersons understanding of the contract (as posted online) is that Disney does indeed have rights (in WDW, or anywhere, including east of the Mississippi) to any characters Universal either hasn't used, or has used in only an incidental manner. Exactly what constitutes "incidental' use is spelled out in the agreement, as best I recall, and in part this depends on use of the character in promotional materials.

Disney is perfectly free to open an attraction, meet & greet, restaurant, or other experience based on a character (which you may have seen at Universal) which meets the definition of incidental use. However, this could not be a "Marvel" attraction - the use of Marvel in an attraction or 'land' name being reserved for Universal. So, even if Disney used only newly developed, unused, or incidental Marvel characters they still could not develop a "Marvel" land. Actually, Universal would be free to develop an attraction based even on Marvel characters ceveloped since the Disney purchase, though there might be a sticking point in getting Marvel (Disney) approval on how the character is used.

The critical point remains, though, on whethor Disney would really want to open an attraction/experience which is based on characters for which the competition up I-4 already has an established "Marvel" land. I still think Disney moving forward in WDW with pretty much anything Marvel right now is a lawsuit waiting to happen. It will be interesting, perhaps, to first see how things play out with the Blackstone sale.

 

[Wilt Dasney]

Disney is perfectly free to open an attraction, meet & greet, restaurant, or other experience based on a character (which you may have seen at Universal) which meets the definition of incidental use. However, this could not be a "Marvel" attraction - the use of Marvel in an attraction or 'land' name being reserved for Universal. So, even if Disney used only newly developed, unused, or incidental Marvel characters they still could not develop a "Marvel" land.

And they would be forbidden from advertising said attraction, meet & greet, restaurant or other experience anywhere in Florida, Georgia, South Carolina, North Carolina or Alabama, as well as in good chunks of Mississippi, Louisiana, Kentucky, Tennessee, West Virginia or Virginia...which rules out anything at all requiring a significant investment that would be intended to draw visitors to the resort. Anything other than a costumed walk-around is likely ruled out by this provision.

I hate to be a broken record on this point, but I really think it is a hugely significant provision whose import has not been fully appreciated in these discussions.

 

[ChrisM]

The recent resurgence of Marvel has morphed the deal from being good for both parties to being ridiculously favorable to Universal. Why would Universal want to be nice to Disney?

If I was capable of accurately divining other's intentions I'd be currently ruling the world.

There are literally hundreds of possible motivations for the party across the table. Denying the other party opportunity is certainly one of them, but usually in contracts of this nature it's more a focus on individual plans or advantage.

Let me be clear: I'm not expecting any movement on this at any time in the forseeable future. But all sorts of strange things tend to happen when large ownership stakes are up for grabs. And once ownership is settled it can sometimes be hard to predict in what direction the new leadership wants to go.

 

[maxairmike]

If I was capable of accurately divining other's intentions I'd be currently ruling the world.

There are literally hundreds of possible motivations for the party across the table. Denying the other party opportunity is certainly one of them, but usually in contracts of this nature it's more a focus on individual plans or advantage.

Let me be clear: I'm not expecting any movement on this at any time in the forseeable future. But all sorts of strange things tend to happen when large ownership stakes are up for grabs. And once ownership is settled it can sometimes be hard to predict in what direction the new leadership wants to go.

As should already be clear from the language in the contract (and just to be clear, I am not a contract lawyer, I just happen to be a business student and enjoy looking up and reading stuff like that), ownership of Universal Orlando is not a sticking point here. The contract that many are confusing ownership of the resort being a condition of is the Rowling/WB/Potter contract. That is in serious jeopardy with Blackstone's announcement, Marvel is not.

The only way the ownership issue plays a part is if Universal would no longer be able to pay the various royalties and fees to Marvel, or the condition of the land deteriorated to Cedar Point-level themeing (ouch!).

 

[Wilt Dasney]

And they would be forbidden from advertising said attraction, meet & greet, restaurant or other experience anywhere in Florida, Georgia, South Carolina, North Carolina or Alabama, as well as in good chunks of Mississippi, Louisiana, Kentucky, Tennessee, West Virginia or Virginia...which rules out anything at all requiring a significant investment that would be intended to draw visitors to the resort. Anything other than a costumed walk-around is likely ruled out by this provision.

I hate to be a broken record on this point, but I really think it is a hugely significant provision whose import has not been fully appreciated in these discussions.

Sorry to quote myself, but my OCD technical side is demanding the following clarification: A Marvel attraction in WDW could be promoted locally by means of national television buys...i.e., Disney would have to purchase airtime in California just to promote something to locals in Florida. And it couldn't be generic "DisneyParks" crap either, since the contract rules that out. It would have to be an advertisement explicitly built around WDW airing all over the country. Billboards erected in town would be forbidden, as would ads purchased exclusively for the Orlando market.

This would be a very strange approach to marketing a new attraction to say the least, but the contract does allow it. Figured I'd throw it in before anyone called me on it.

 

[maxairmike]

That is another very important, convoluted, and interesting point to consider in all of this. There are a lot of details in the contract concerning merchandise and advertising that make things very difficult for Disney to use Marvel in WDW, even as owners of the characters. I would hate to be on the marketing team tasked with implementing that strategy!

 

[ChrisM]

As should already be clear from the language in the contract (and just to be clear, I am not a contract lawyer, I just happen to be a business student and enjoy looking up and reading stuff like that), ownership of Universal Orlando is not a sticking point here. The contract that many are confusing ownership of the resort being a condition of is the Rowling/WB/Potter contract. That is in serious jeopardy with Blackstone's announcement, Marvel is not.

The only way the ownership issue plays a part is if Universal would no longer be able to pay the various royalties and fees to Marvel, or the condition of the land deteriorated to Cedar Point-level themeing (ouch!).

I wasn't commenting on any possible contract nullification provisions based on ownership movement, but entertaining the idea that with potential new ownership you may see a shuffling of the executive deck and possibly a new vision or new direction for the property. It's not at all an unusual occurance.

In a situation like that, it's simply a question of coming to mutually beneficial terms. A contract is not a law; it's simply an agreement.

Some executives care only for the bottom line. Some blend their ego into their charges and decide their vision is of supreme import. And others sometimes decide that "doing something different" than their predecessor is their stake in the ground, proof that they were there and that they mattered.

 

[lebeau]

Something else to consider: Given all the headaches and entanglements, why would Disney even bother with Marvel in WDW? They have tons of unused properties sitting around that won't involve a law suit or a contract buyout. If they are reluctant to pony up the dough for a Tron attraction which they own completely, why would they walk into the mine field that is a Marvel?

Especially when they can and will open Marvel attractions around the globe with no legal hassles.

Disney has too many other options. Too many properties it could develop in WDW and too many other places to develop Marvel.

 

[menamechris]

Does Universal have to continue to pay licensing fees to Disney for their use of Marvel? Maybe it was as simple a business move as that...

 

[lebeau]

I wasn't commenting on any possible contract nullification provisions based on ownership movement, but entertaining the idea that with potential new ownership you may see a shuffling of the executive deck and possibly a new vision or new direction for the property. It's not at all an unusual occurance.

In a situation like that, it's simply a question of coming to mutually beneficial terms. A contract is not a law; it's simply an agreement.

Some executives care only for the bottom line. Some blend their ego into their charges and decide their vision is of supreme import. And others sometimes decide that "doing something different" than their predecessor is their stake in the ground, proof that they were there and that they mattered.

While what you're saying is true (anything could happen), it's not exactly useful. You can speculate all day about what-ifs that aren't very likely. All that we know for sure is the terms of the present agreement. While those terms could be changed, there isn't currently any reason to expect that to happen.

 

[maxairmike]

Given the money-maker that I'm sure Marvel has become for Universal (probably only overtaken by Potter), that would be like the next Disney CEO coming in and saying "We're getting rid of _____ (being the 2nd most popular/profitable theme) from ______ park." Just to be different.

Yes, executives can do some mighty odd things (Look at Cedar Fair currently, Six Flags under Burke and the hostile takeover by Snyder, etc.), but typically, killing a profit sector of a business is not one of those, at least not directly killing it.

I fully expect Universal to ride out the Marvel contract until either the attractions are practically falling apart and impossible to maintain/they let the area fall apart, or Marvel is no longer providing enough profit. As was stated earlier, the contract is so one-sided for Universal it is ridiculous, and I don't think they can really lose money unless the merchandise isn't selling and butts aren't coming through the turnstiles.

 

[ChrisM]

While what you're saying is true (anything could happen), it's not exactly useful. You can speculate all day about what-ifs that aren't very likely. All that we know for sure is the terms of the present agreement. While those terms could be changed, there isn't currently any reason to expect that to happen.

Oh, I'm sorry. Am I not in the forum devoted to rumors and speculation?

My posts were intended to (A) underscore that a contract is never set in stone and can be nullified or modified by the involved parties and (B) entertain the notion that movement on this issue is conceivable given that a change of ownership in one of the parties is a very real possibility.

Business is always so much more than the black and red, especially when complex legal entaglements are involved.

 

[SOLISIMO]

There has to be more behind Disney buying Marvel then we know. Makes no sense after seeing that contract why they would make the move, but then again to Disney they might be seeing dollar signs somewhere else no where near Florida and probally not even in the US