Maybe we can clear this up

[Mickey is King]

I have noticed many different posts lately about how the budgets of park/resorts and other stuff is broken down for business purposes.

Some posters say it is not broken down to separate bugdets, or that they (for paperwork) are somewhat separate entities (each park from one another/ resort, and so on )
I know I'm not being detailed enough but I don't know how to say it correctly, hopefully you get where I'm at with this.

The REAL/CORRECT answer is out there somewhere, how can we find out for Fact and not opinion. anyone?

This could get complicated to follow (if it even goes anywhere)

Anyone????

I had to edit this in: I'm not looking to start trouble for the sake of watching poeple fight, I really want to know the answer! It seems to be brought up here and there in some threads on the boards

 

[Thrill]

I know I should never assume, but here goes.

Walt Disney World is broken up into numerous divisions: one for each theme park, transportation, resorts, Downtown Disney, ESPN World of Sports and water parks, and promotions. Seeing as I know that the resorts each pay the transportation division for bussing (and boats, in some resorts), I would imagine that each division is given its own budget and operates separately for the most part.

I would still like some clarity though.

 

[Mickey is King]

I know I should never assume, but here goes.

Walt Disney World is broken up into numerous divisions: one for each theme park, transportation, resorts, Downtown Disney, ESPN World of Sports and water parks, and promotions. Seeing as I know that the resorts each pay the transportation division for bussing (and boats, in some resorts), I would imagine that each division is given its own budget and operates separately for the most part.

I would still like some clarity though.

That is EXACTLY how I understand it.
I think some people thought that it ment the parks for example were operated as "one" , business almost never does that, it would be nearly impossible to track income v expenses and all that that entails. Let alone mant. costs, food and drink inventories and so on.
But YES to the fact that it is ALL owned and operated by Disney.


but yes, any "offical" clarification would be nice since I did ask for fact.

 

[powlessfamily4]

They would have to do it that way.... by doing so if one area of the business got itself into financial failure they could file bankruptcy/bankruptcy protection on it without disturbing the cash flow of the models that were successful.

 

[Mickey is King]

They would have to do it that way.... by doing so if one area of the business got itself into financial failure they could file bankruptcy/bankruptcy protection on it without disturbing the cash flow of the models that were successful.

I'm glad you said that, one of the things people couldn't agree on was if EPCOT (which supposedly was almost filing for bankruptcy in 07) could even file for bankruptcy being part of WDW, I feel yes they could. Will it? prob. not.

 

[fosse76]

They would have to do it that way.... by doing so if one area of the business got itself into financial failure they could file bankruptcy/bankruptcy protection on it without disturbing the cash flow of the models that were successful.

Only if it is a separate business can they file bankruptcy. While each of the parks has its own budget, management, expenses, etc., they are ALL under one division of the Company, so no individual park can file bankruptcy. My understanding is that All of the parks and the resorts are under one division, and then boken up into different divisions in THAT division. The resorts, as a division can't file for bankruptcy, since it is under the umbrella of Parks and Resorts. The whole complex, essentially, would have to file for bankruptcy. It's different, however, if the properties aren't fully owned. If there were any joint ownerships between Disney and another company, they could.

 

[Pioneer Hall]

Only if it is a separate business can they file bankruptcy. While each of the parks has its own budget, management, expenses, etc., they are ALL under one division of the Company, so no individual park can file bankruptcy. My understanding is that All of the parks and the resorts are under one division, and then boken up into different divisions in THAT division. The resorts, as a division can't file for bankruptcy, since it is under the umbrella of Parks and Resorts. The whole complex, essentially, would have to file for bankruptcy. It's different, however, if the properties aren't fully owned. If there were any joint ownerships between Disney and another company, they could.

Correct...Disney operates just like many of the larger corporations in the world. To figure out their budgeting is actually pretty simple since it follows the rules of budgeting within an organization with multiple parts. Disney breaks the company in to 5 segments now; Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products, and Interactive Media. The company itself has its senior leadership team and company budget. From here each segment has a management team and is allocated a certain amount of the company budget. From here, it continues to flow down the line and become more diluted.

Since we follow the parks and resorts segment more it is best to use that as an example. The Company allocated X dollars to the P&R segment. From there the management team (Staggs and Co) will build the overall P&R budget by allocating amounts to all the different segments they have (WDW, Disneyland, DVC, etc). Each of these segments has its own operating team as well. When WDW gets their allocated amount it is now time for Crofton and her team to create their budget and allocate money to each of their entities (Parks, Resorts, operations, etc). It continues to work its way down until every entitity has an operating budget that they can use for the rest of the year. I do not know the exact breakdown at the smaller levels in terms of allocation, but I would think that each area with a VP is given their own allocation. This would mean that each park, the resorts as a whole, Downtown Disney, Water Parks, Transportation, etc are given money that they ultimately budget to each of their operating areas (it would then be broken down even further).

I spent a lot of time working on budgets, and when you are dealing with something of this size it gets very complex and items are planned for very specifically. If you were to combine everything for Disney together their would be thousands of line items on the budget. So while a number of people here tend to think that a new resort means less rides that really is not the case. Money can't really just be shuffled around because of how things get put into motion. Disney World doesn't have just one account and check book where they decide who gets what. Everything is a careful and meticulous process.

 

[Pioneer Hall]

I'm glad you said that, one of the things people couldn't agree on was if EPCOT (which supposedly was almost filing for bankruptcy in 07) could even file for bankruptcy being part of WDW, I feel yes they could. Will it? prob. not.

I forgot to mention this in my last post, but I will address it now. Epcot cannot file for bankruptcy on its own. It is not its own company and would fall under WDW (which is a Disney company and would be able to file for bankruptcy).

 

[love disney]

...The Company allocated X dollars to the P&R segment. From there the management team (Staggs and Co) will build the overall P&R budget by allocating amounts to all the different segments they have (WDW, Disneyland, DVC, etc)....When WDW gets their allocated amount it is now time for Crofton and her team to create their budget and allocate money to each of their entities (Parks, Resorts, operations, etc)... It continues to work its way down until every entitity has an operating budget that they can use for the rest of the year...
So while a number of people here tend to think that a new resort means less rides that really is not the case. Money can't really just be shuffled around because of how things get put into motion. Disney World doesn't have just one account and check book where they decide who gets what. Everything is a careful and meticulous process.

Very informative answer, however based on what you said it could be argued that a new resort could potentially mean less rides. Here's what I mean. Say WDW is allocated X dollars from P&R. WDW may decide that as they make their budget instead of giving 1/2 of X to Parks they will instead give 1/4 with the other 1/4 going on top of what Resorts would have gotten so they can build a new resort. Now with that 1/4 X that Parks is no longer getting, they might have invested in a new ride or rides had they received it, one will never know. In a budget this large and complex it is hard to know for certain what would have been/could have been done if one division had received a larger allotment than it did. Therefore one could argue that an additional resort took funding (and new rides) from the Parks, but that doesn't necessarily mean that it is true, whose to say if Parks had gotten a higher allotment that they would have built a new ride rather than just doing more upgrades.

In any case, no matter what some people will be happy, and some people won't be and will always find something bad (myself, while I agree there are things that could be better I focus on all the stuff at WDW I love!).

Thank you again for you very informative answer!

 

[Pepper's Ghost]

Very informative answer, however based on what you said it could be argued that a new resort could potentially mean less rides. Here's what I mean. Say WDW is allocated X dollars from P&R. WDW may decide that as they make their budget instead of giving 1/2 of X to Parks they will instead give 1/4 with the other 1/4 going on top of what Resorts would have gotten so they can build a new resort. Now with that 1/4 X that Parks is no longer getting, they might have invested in a new ride or rides had they received it, one will never know. In a budget this large and complex it is hard to know for certain what would have been/could have been done if one division had received a larger allotment than it did. Therefore one could argue that an additional resort took funding (and new rides) from the Parks, but that doesn't necessarily mean that it is true, whose to say if Parks had gotten a higher allotment that they would have built a new ride rather than just doing more upgrades.

In any case, no matter what some people will be happy, and some people won't be and will always find something bad (myself, while I agree there are things that could be better I focus on all the stuff at WDW I love!).

Thank you again for you very informative answer!

Oye! Budgeting.... I work with 'em almost every day. :hammer: Most if not all of what DisneyInsider said is correct, but your comment is also accurate.

Something to keep in mind though is that there are always separate budgets within each subdivision: an operations budget for day-to-day costs for running the parks (or whatever), and then a capital budget for major projects. The day-to-day ops budget changes very little from year-to-year and from subdivision to subdivision. The capital budget likely changes drastically from year-to-year and subdivision to subdivision. The capital budget is the money allotted for projects like major renovations, new rides, new theme parks, new resorts, etc, etc.

Very large changes to any single subdivision, such as adding a brand new resort or even a large investment for a new ride, are often made at a higher level.... not at the subdivision level. So Disney as an umbrella company may redirect funds to or from the parks and cut the capital budgets elsewhere to fund a major project. And vice versa of course. Budgets are not static for each subdivision each year. They will go up and down based on projected income for the new year, major projects in the works, or other anticipated changes. There's always the possibility that Disney as a corporation decides to make a major investment in a single subdivision without changing the budgets of others. That's probably not likely though. A major project in one subdivision would likely affect the company's ability to work on another at the same time. You likely won't see them build a new park, and then launch a new studio to be built unless major cuts are made in other budgets.

**Sorry, had to edit a couple of times to clarify my comments.

 

[Thrill]

Very informative answer, however based on what you said it could be argued that a new resort could potentially mean less rides. Here's what I mean. Say WDW is allocated X dollars from P&R. WDW may decide that as they make their budget instead of giving 1/2 of X to Parks they will instead give 1/4 with the other 1/4 going on top of what Resorts would have gotten so they can build a new resort. Now with that 1/4 X that Parks is no longer getting, they might have invested in a new ride or rides had they received it, one will never know. In a budget this large and complex it is hard to know for certain what would have been/could have been done if one division had received a larger allotment than it did. Therefore one could argue that an additional resort took funding (and new rides) from the Parks, but that doesn't necessarily mean that it is true, whose to say if Parks had gotten a higher allotment that they would have built a new ride rather than just doing more upgrades.

In any case, no matter what some people will be happy, and some people won't be and will always find something bad (myself, while I agree there are things that could be better I focus on all the stuff at WDW I love!).

Thank you again for you very informative answer!

Well, if management found it necessary, I believe they could try to pitch the new resort to the executives in Burbank to ask for a budget increase so that a new resort doesn't result in cut corners elsewhere on the property. While I don't know that a resort would likely cause the executives to find it necessary to do a significant budget change, if they were planning a massive expansion (like California Adventure's expansion) I would imagine that (if the executives found it a worthy investment) they would put a little bit more money into Walt Disney World. Still, moving 25% of the budget to resorts from parks is a bit steep.

I agree with the second paragraph. While I am a bit critical on here, the problems are less serious than they are on paper. I don't get off of Expedition Everest and say, "Wow, they can't even make a Yeti that requires as much thrust as a commercial airliner work without breaking? That ruined my whole vacation." I know that contradicts my avatar, but I'd rather see TDO take the slower route, adding an E-Ticket (and hopefully refurbishing Dinosaur) before fixing the Yeti, which is seen for all of a second and a half instead of saying, "The Yeti works, are you happy now?" and ignoring the rest of the park, which, even with a fully operational Everest, could use a lot more to do.

 

[dclick4968]

I would assume that these divisions (parks, etc.) are broken down even further into various profit centers (e.g. MK, DHS, etc.). Some of the shared resources (e.g. transportation) is more than likely allocated to each profit center as "burden" based on some complex formula.

 

[Pepper's Ghost]

I would assume that these divisions (parks, etc.) are broken down even further into various profit centers (e.g. MK, DHS, etc.). Some of the shared resources (e.g. transportation) is more than likely allocated to each profit center as "burden" based on some complex formula.

Bingo! You got that right. And they are likely broken down even further than just the park level. I'm sure there are separate budgets for different parts of each park. Magic Kingdom might be down by rides, restaurants, stores, etc. Or perhaps they break down each spoke of the wheel such as Tomorrowland, Adventure Land, etc.

Of course, this is all speculation that I have not verified, but if Disney runs it's company like most other large corporations, it would be along those lines.

 

[Pepper's Ghost]

I did some light digging and Disney's website says that they actually have 7 business units.

• Walt Disney International
• Disney Media Networks and President, ESPN, Inc. and ABC Sports
• Disney Consumer Products Worldwide
• The Walt Disney Studios
• Walt Disney Parks and Resorts
• Disney Media Networks and Disney•ABC Television Group
• Disney Interactive Media Group

 

[Mickey is King]

This is all good stuff. My thanks to those who could break it down in depth a bit.

 

[Pioneer Hall]

Very informative answer, however based on what you said it could be argued that a new resort could potentially mean less rides. Here's what I mean. Say WDW is allocated X dollars from P&R. WDW may decide that as they make their budget instead of giving 1/2 of X to Parks they will instead give 1/4 with the other 1/4 going on top of what Resorts would have gotten so they can build a new resort. Now with that 1/4 X that Parks is no longer getting, they might have invested in a new ride or rides had they received it, one will never know. In a budget this large and complex it is hard to know for certain what would have been/could have been done if one division had received a larger allotment than it did. Therefore one could argue that an additional resort took funding (and new rides) from the Parks, but that doesn't necessarily mean that it is true, whose to say if Parks had gotten a higher allotment that they would have built a new ride rather than just doing more upgrades.

In any case, no matter what some people will be happy, and some people won't be and will always find something bad (myself, while I agree there are things that could be better I focus on all the stuff at WDW I love!).

Thank you again for you very informative answer!

Bring this back to life a little...

You are correct that it could happen that way, but what Pepper's ghost said is also in line. If something large wants to be built (a new resort for example) there is probably a lot more involved. Clearly money going to a new resort will be taken from somewhere else, but it isn't just a competition either. I am sure that like almost anything else, budget presentations are made by each entity in order for them to get what they feel they deserve. If the WDW VP of Resorts thinks that a new resort needs to be built, he probably is speaking with Meg about it before budgeting is decided. Disney is contantly tracking their demands and seeing where money needs to go. The point is that I feel that a lot of people here think that the money sits in a big pool and that when a hotel is built it just depletes that pool so an attraction can be built. You can raise this argument all the way up the ladder and say that a new Disney Channel movie keeps a ride from being built as well. Large expenditures are outlined well in advance and I often feel that a new resort does not have much impact on the in park development.

 

[Pepper's Ghost]

Hey DisneyInsider, I don't disagree with your comments at all. You very well could be correct. I just wanted to add a few things.

Opening a new resort could affect the parks since they are technically part of the same division, but that's not to say that it would. It really depends on the amount of the expenditure. As I mentioned, in large corporations there are typically two completely different and separate budgets for each division. One for regular operations, and another for capital projects. The ops budget is used mostly for day-to-day expenditures, including maintenance and repairs. The capital budget is usually for large scale projects, which sometimes can include repairs depending on the amount of the expenditure. I don't want to get into the details of how each budget works, but typically a company will use $250,000 as the threshhold. So, if a repair will cost more than $250k, it has to go through a vigorous approval process that goes to the board. That might explain why the Yeti has not been repaired yet. Cost of repairs may exceed $250k. Usually when a capital budget is set for a year, that's it. No additions are allowed unless it is reviewed with the board. And before a year is begun, all those capital projects are reviewed and either approved or denied. I don't think that Disney does not want to fix the Yeti, but I bet it's just stuck in the process right now.

I kind of got off track there, but my point is that capital projects often do actually come from the same pool of money. However, Disney may decide to allocate more capital dollars to one of it's subdivisions to push through 2 large projects at the same time. That money does come from somewhere though, whether it's at the expense of other subdivisions, or if it's just an increase in the capital budget due to the expectations of increased revenue. Only true Disney Insiders (pun intended ) would know.

One last point, you said that the VP of Resorts is probably speaking to Meg about a new resort prior to budgeting. That's a gross understatement. These massive corporations have 3 to 5 year capital projections and plans. I'm guessing a new resort is in conversation 5 years or more prior to the budget year when construction begins. The same is probably true for rides or whole Land renovations like what is happening with Fantasyland right now. I'm guessing that's been in discussion for 3+ years. However, large repairs like the Yeti (depending on the cost) are planned from year to year. If repairing the Yeti will cost in the millions, it will be years before it's done simply because it takes that long to make sure enough dollars are allocated. Smaller capital expenditure like $250k-$500k get approval far quicker than those larger ones.

*Whew* I'm out of breath....