NYT: "Universal....Takes Aim at Disney"

[menamechris]

Are they selling the WDW?

No one else would want it. After the initial purchase, the amount it would take to get the property up to standards worth buying it for would be out of any logical purchaser's price point..

 

[Jim Handy]

Are they selling the WDW?

Nah. I don't think they will now. For multiple reasons.

 

[ParentsOf4]

The theme parks takes insane amount of money to make money tho..
Which is lower risk.. sit back and collect royalties.. or spend billions to get 10% return...

The parks represent a huge capital cost and monsterous operational cost. They have to spend crazy money to make that revenue. That's why it is attractive to some to let someone else spend that crazy amount of recurring money.. and just take a percentage of the profits as licensing and royalties.

Theme park and resort revenue was $2.9 Billion for 1Q2012, up 10% from 1Q last year. Profits were $222 Million, up 53% from last year. Theme parks continue to provide a strong positive cash flow for the Walt Disney Company.

My guess is that WDW is worth about $30 to $50 Billion as an asset. Selling an asset as valuable as WDW might make sense if Disney needed to raise capital. However, I believe Disney has an excellent balance sheet. Conversely, selling WDW would "cheapen" the Disney brand, Walt Disney World being intimately associated with the Walt Disney Company, potentially causing significant financial damage to the entire brand. Then there's the question of who would buy WDW. It only make sense if it was in that company's best interest. Very few corporations could afford that sort of deal. Can you imagine "Walt Disney World brought to you by Exxon Mobil"?

So if Disney were to sell WDW, who would buy it any why would it make sense for them to want to buy it?

 

[the.dreamfinder]

Theme park and resort revenue was $2.9 Billion for 1Q2012, up 10% from 1Q last year. Profits were $222 Million, up 53% from last year. Theme parks continue to provide a strong positive cash flow for the Walt Disney Company.

My guess is that WDW is worth about $30 to $50 Billion as an asset. Selling an asset as valuable as WDW might make sense if Disney needed to raise capital. However, I believe Disney has an excellent balance sheet. Conversely, selling WDW would "cheapen" the Disney brand, Walt Disney World being intimately associated with the Walt Disney Company, potentially causing significant financial damage to the entire brand. Then there's the question of who would buy WDW. It only make sense if it was in that company's best interest. Very few corporations could afford that sort of deal. Can you imagine "Walt Disney World brought to you by Exxon Mobil"?

So if Disney were to sell WDW, who would buy it any why would it make sense for them to want to buy it?

If you take a look, TWDC has roughly 72 billion dollars worth of assets(real estate, IP, etc.). I would imagine that 30 billion is a very high estimate for WDW, it's probably closer to 10 to 15 billion as an asset. Probably would be worth 20 billion on the market. At that price point, even with its flaws which would mean massive management restructuring and renovations that should have been done years ago (cough ... Jungle Cruise ... cough), it's a pretty good long term investment.
Insiders, do you know of a ballpark figure for the price of the US parks when they were courting investors last summer?

 

[Lee]

Insiders, do you know of a ballpark figure for the price of the US parks when they were courting investors last summer?

Last year, somewhere in the high 20's would have gotten it done. No potential buyers thought it was worth that, what with all the extra costs that would be incurred after the purchase.

 

[WDW1974]

I know I've missed a lot of this thread ... apparently my thread on WDW fans for kiddie fountains pee'd a lot of folks off. Understandable with DCA 2.0 debutting ... and my minions even picked me up all sorts of goodies this morning while I slept!

But I did want to drop in after reading the post about what WDW would fetch in a potential sale ... that number is so ludicrously high to be beyond belief. Disney P&R as a whole is likely valued around $20-25 billion (that's everything they own at every resort around the world and the four ships. I was told last year that they'd be lucky to get that.

I don't know what's up with a potential sale of all/parts of the unit, but one can't help but wonder why some assets (in FLA and France for instance) are not being invested in, while others (in CA and Asia) are. ... Also, strange choice for a Jim Hunt's replacement, which seems to have gone missed on this forum.

 

[WDW1974]

I've been lurking for a while, but it's time to come out the woodwork and pipe up again. Two weeks ago, some of my friends came to Orlando and wanted to see Potter. I haven't been to Universal since I got into the HP premiere for free with someone, and I'm probably one of the few locals without a dirt-cheap AP to the place. I prefer my AP to Sea World and Busch Gardens, and I get into Disney for free. This time I had to pay for IOA. Simply put, the park wasn't worth $95.

Now before anyone says that we should have purchased multi-day tickets, there is NOTHING at Universal Studios that interested any of us. The Simpsons? Twister? No thanks. My friends only wanted to ride the Forbidden Journey, and I looked forward to another go.

Potter exceeded everyone's expectations, even though it's clearly not Disney. Yes, the show building is visible throughout the entire park, including directly in front the main entrance. You don't have to look for it; it's just there. All of Universal has this problem; you can see Spiderman's building from across the lagoon, too. It's gracious to call the Potter stores "small"; they're tiny. Dragon Challenge is an inferior redressing of Dueling Dragons, and Flight of the Hippograff is the Barnstormer.

BUT the Forbidden Journey attraction is easily, hands down, unquestionably the most technologically advanced, impressive thrill ride on earth. Disney doesn't have anything that comes close to it. I hesitate to call it the "best" ride overall in Orlando because I prefer the experiences Disney offers with fully realized environments like the HM, POTC, and Splash. FJ definitely had noticeable budget cuts that Disney wouldn't have allowed: you can see the show building ceilings, the screen edges, and the theatrical lighting, especially in the Whomping Willow and Dementors segments. The mirrors used in the loading area look cheap. Yet the moment you enter the observatory and make your way out of Hogwarts, the attraction is a series of Wow moments. I normally don't care for Universal's style of attractions where the ride keeps yelling, "Watch out!" For example, Spiderman has never impressed me because I feel like I'm just watching a 3-D movie on a shaking chair. Potter is different. The attraction blends technology and a storyline so well, I can confidently call it the closest thing to classic Disney on the east coast since Tower of Terror opened.

So why didn't we feel like we got our money's worth? Because the rest of IOA is a dressed-up Six Flags. The entrance has impressive facades, but the interiors are unfinished. Painting ductwork black doesn't make it go away. Marvel Super Hero Island and Toon Lagoon look like Six Flags, with painted flats, rusted buildings, peeling paint, plain queues, and carnival games. Hulk and Spiderman are good rides, but aren't fully realized environments. Jurassic Park River Adventure is a joke. I wouldn't call the dinosaurs animatronics; they're pretty much robots that barely move. And Seuss Landing would be better if it had a fresh coat of paint. I can't think of anything at WDW, Sea World, or Busch Gardens that looks as bad as Seuss Landing. Lost Continent features impressive, DAK-style facades that house two shows and the same carny games as Toon Lagoon.

The food was awful. We didn't eat at Mythos because we wanted the full WWOHP experience. This decision was a mistake. To be fair, Butterbeer is indeed delicious and surprisingly inexpensive. But the food itself was overpriced by theme park standards and disappointing. My fish and chips were greasy and my friend's shepherd's pie tasted like Taco Bell with mashed potatoes on top.

That's why we didn't feel like we received our money's worth. Universal needs to improve its overall product. Yes, they have WWOHP, and yes, FJ is an incredible ride. But IOA is not worth $95 after tax. We finished everything by 2:00 and spent the rest of the day re-riding three attractions (FJ, Hulk, Dragon). Just like DAK isn't worth the price of a one-day admission, IOA isn't either. Universal offers reasonably priced multi-day tickets and wants to compete with Disney as destination resort; yet Disney has the MK and Epcot to justify multi-day passes, and Universal doesn't. If Universal wants to price itself like Disney, it needs to overhaul its entire property. I would have paid $45 just to enter WWOHP, or $65 for IOA. At $95 plus $15 parking and nasty food, I won't be visiting Universal again for a long time.

Nice to see Tirian around these parts again ... you must have noticed I asked about you yesterday in a post!

But I gotta disagree -- strongly -- with your conclusion. First, I'll say that anyone who pays for a one day ticket to any O-town theme park is just nuts. It makes no sense. Ever. You make friends with people and get in for free before you ever buy a one-day ticket.

I'm sorry that nothing at UNI interested you enough to go, but for me there is plenty to fill a day just there. And that's not counting the Despicable Me attraction, new parade and new lagoon show.

Your done by 2 p.m. deal sounds like a lot of Disney addicts who get dragged by their kids to IOA and shake and cry all the way back to their room at Pop Century where the MAGIC envelops them.

I just think your criticism was a bit much. Soarin you can see the entire building (and unlike SPidey, you have a filthy film -- and not in the good way). The coasters are terrific (although less so after Manta opened and I went to BGW!). Seuss Landing is wonderful, although it may need a paint job as I haven't been there in 13 months.

Not going to Mythos was a big mistake too on the dining end.

I'm sorry you didn't enjoy IOA. But to be honest I doubt I would for $95. But I wouldn't enjoy any WDW park for that either.
\
And I hope you're gonna stick around instead of hiding in the shadows.

 

[WDW1974]

They are not. They are still focused on DL.

Hmmmm. Why does Disney feel the need to compete with Potter in DL but not WDW?

Assuming this isn't rhetorical, it is a question I wonder about.

A friend spent a few hours at DCA today with an Imagineer who is working on one of the MAJOR projects for DL ... ya know, the ones that Iger and Rasulo and Staggs are acting like they don't exist.

Said friend said said Imagineer was quite upfront in saying that management basically feels it doesn't have to do ''much of anything'' in Florida due to the guests. I really don't know whether it is true or just a nice talking point to deal with the frustration of a decade plus of great proposals for WDW being constantly shot down. But it's what I have heard.

 

[jumblue]

They are not. They are still focused on DL.

Hmmmm. Why does Disney feel the need to compete with Potter in DL but not WDW?

Oooh! Oooh! I know! I know!
But I shouldn't answer, so as not to look like I'm trying to hog all the good stuff....

I'm guessing because it would be pretty embarrassing to be beat at the game your company invented on your original home field (which happens to be the Suits' and bean-counters' backyard)...

 

[WDW1974]

Correct. They are turning their attention to the rest of the Disneyland resort.

As I said in an earlier post, outside of a potential Avatar attraction and some re-working of DTD, nothing of note is headed to WDW that isn't a DVC project.

Oooh! Oooh! I know! I know!
But I shouldn't answer, so as not to look like I'm trying to hog all the good stuff....

Nothing to add ... I just gave you your 100th 'like' here ... like it matters!
But assuming it does, then you owe me a country fatty dinner at the Cracker Barrel!

 

[WDW1974]

Apparently the fact that WDW isn't Disney's favorite asset was a shock to these folks. It would be best not to reveal that answer today anyway.

Asset? no ... ATM? You betcha ...

OK, I admit it, having just sat through torrential downpour #3 of the day, I am thinking of heading to Alaska to shack up with my beloved S.

 

[WDW1974]

Bleh, potentially. They could have just kept doing mediocre refurbs (see BTMRR) and NextGen if they didn't care at all.

Did I miss something?

I sorta thought that was exactly what they were doing.

 

[WDW1974]

Nah...I think a better model for us would be the Double Dumbo complete with the cutting edge playground or perhaps we could learn how to apply a large mural from Beauty and the Beast restaurant. Maybe the high quality Soarin' film with the scratches or maybe the Nemo carnival dark ride at Epcot. Really I think we should all take a field trip to Journey into Your Imagination and take some detailed notes on how to design and build a dark ride.

Sarcasm is an art ... so leave it to a creative ...

 

[WDW1974]

No one else would want it. After the initial purchase, the amount it would take to get the property up to standards worth buying it for would be out of any logical purchaser's price point..

I am convinced in basic infrastructure alone, you are talking a few billion dollars.
Then update and modernize the four parks and that's a few billion more.

Yeah, who has those kind of pockets and would be willing ... it sure limits you.

 

[MichWolv]

If you take a look, TWDC has roughly 72 billion dollars worth of assets(real estate, IP, etc.). I would imagine that 30 billion is a very high estimate for WDW, it's probably closer to 10 to 15 billion as an asset. Probably would be worth 20 billion on the market. At that price point, even with its flaws which would mean massive management restructuring and renovations that should have been done years ago (cough ... Jungle Cruise ... cough), it's a pretty good long term investment.
Insiders, do you know of a ballpark figure for the price of the US parks when they were courting investors last summer?

The $72 billion you state as WDC total assets is the book value of the assets only. Book value is determined based on accounting standards and often represents cost paid for assets many years ago. Thus, book value and fair value needn't be close. WDC market cap (share price times number of shares outstanding) is around $84 billion today. Book assets at March 31 were $75 billion. And the market cap takes into account the liabilities of the company as well, which total about $35 billion of book value. Thus, market cap is somewhere around 2.1 times net book value as of the end of the March 31 quarter.

My point is not that I have any idea what the parks are worth. Instead, I just note that using book value of assets to assess what they might be worth is likely to leave you way off.

 

[tirian]

Nice to see Tirian around these parts again ... you must have noticed I asked about you yesterday in a post!

But I gotta disagree -- strongly -- with your conclusion. First, I'll say that anyone who pays for a one day ticket to any O-town theme park is just nuts. It makes no sense. Ever. You make friends with people and get in for free before you ever buy a one-day ticket.

I'm sorry that nothing at UNI interested you enough to go, but for me there is plenty to fill a day just there. And that's not counting the Despicable Me attraction, new parade and new lagoon show.

Your done by 2 p.m. deal sounds like a lot of Disney addicts who get dragged by their kids to IOA and shake and cry all the way back to their room at Pop Century where the MAGIC envelops them.

I just think your criticism was a bit much. Soarin you can see the entire building (and unlike SPidey, you have a filthy film -- and not in the good way). The coasters are terrific (although less so after Manta opened and I went to BGW!). Seuss Landing is wonderful, although it may need a paint job as I haven't been there in 13 months.

Not going to Mythos was a big mistake too on the dining end.

I'm sorry you didn't enjoy IOA. But to be honest I doubt I would for $95. But I wouldn't enjoy any WDW park for that either.
\
And I hope you're gonna stick around instead of hiding in the shadows.

There aren't enough attractions in IOA to last past the 2:00 mark, but hey, DAK has the same problem (and so does Hollywood-MGM-Pixar Studios for repeat visitors).

I will respectfully disagree with you regarding the price point because many Disney guests visit Universal specifically for Potter, which means they're spending $95, which also means they're not getting their money's worth from Universal IMHO. You and I both know that Disney has lost guests for a day now; even guests staying on property are walking through the lobbies wearing HP merch.

But yeah, I usually get in for free. This was just a one-time deal. I've been to Mythos plenty of times in the past and wanted the HP food this time.

And don't you ever compare me to those Pixie Dust Addicts.

BTW, I've gotta point out that Forbidden Journey is still the most amazing attraction to be unveiled since ToT. I haven't been to Carsland yet, but judging from the video, there's no way it comes anywhere close to FJ. I give huge credit to WhyLightbulb and others who helped create WWOHP.

 

[tirian]

That's too bad that you missed the chance to hop on the Mummy and MIB, IMO 2 of the best of attractions across both parks. :-(

-Bjorn

Many people here missed that I've been to Universal many times in the past. This was just the first time I've had to PAY for it.

 

[Bolna]

Many people here missed that I've been to Universal many times in the past. This was just the first time I've had to PAY for it.

But that might be the difference between you and those people at the WDW resort carrying the Harry Potter bags. Someone who pays for their first ever visit there might get more value for their money as everything is new for them and exciting to explore.

 

[Jim Handy]

I'm guessing because it would be pretty embarrassing to be beat at the game your company invented on your original home field (which happens to be the Suits' and bean-counters' backyard)...

Disney still has the tools to compete and could win the game. If they applied the level of showmanship that they have used in DCA to some of the projects that have been on the table in Florida, they'd win.

But they are too comfortable. Too comfortable with spreading WDW's profit to other places and slashing budgets in WDW at the same time.

 

[marni1971]

Assuming this isn't rhetorical, it is a question I wonder about.

A friend spent a few hours at DCA today with an Imagineer who is working on one of the MAJOR projects for DL ... ya know, the ones that Iger and Rasulo and Staggs are acting like they don't exist.

Said friend said said Imagineer was quite upfront in saying that management basically feels it doesn't have to do ''much of anything'' in Florida due to the guests. I really don't know whether it is true or just a nice talking point to deal with the frustration of a decade plus of great proposals for WDW being constantly shot down. But it's what I have heard.

Sadly that sounds just about right.

So which project is he working on? The great one or the amazing one? Or the biggest one?