Not have a park they let rot for 25+ years that’s entirely dependent on meat market festivals with food booths and 80’s bands?
I was shocked when they reopened Epcot. Shocked. You can look at my post history where I incorrectly predicted Epcot would remain closed for the next year. Bringing that park back online was utter madness. It is in terrible shape, and COVID has nerfed the nightlife and other cool experiences. The glue holding Epcot afloat vanished. Right now Epcot is only cannibalizing the other parks.
Disney is straight up using quantum math to claim this operation is profitable. It is not. We all see the deserted theme parks and lack of guest spending. Yet, there's many Disney spinsters trying to tell us that what we see isn't really what we see. They're good at that. Look at the failed opening of Galaxy's Edge and the continued online bickering over "how bad it did."
Despite other "insiders" (not a dig at Steve *at all* cause I have my own "alternative" connects claiming the same) saying attendance is not in the hundreds," I mean... we see what these parks look like. You can certainly pull the entire day's chart and find that a few thousand ppl wandered thru the gates. They don't stay long. By 4pm every park is lucky to still have a thousand in park. On most days. its rotten luck!
They got hotel occupancy in the teens yet their transit system is getting worked like the 4th of July every day because of COVID ops. By Disney's own math alone -- baking transportation costs into room rates -- they really screwed this.
A couple businesses that might be helping Walt Disney World right now...
Annual Passes) From Disney’s Annual Report:
Deferred revenue primarily relates to non-refundable consideration received in advance for (i) licensing contracts and theme park vacation packages, tickets and annual passes and (ii) the deferral of advertising revenues due to ratings shortfalls. The increase in the deferred revenue balance at September 28, 2019 was primarily due to the receipt of additional prepaid park admissions, advances on certain licensing arrangements and non-refundable travel deposits, as well as the acquisition of TFCF and consolidation of Hulu (see Note 4).
Basically, when we buy tickets from Disney, they don’t count the money immediately as revenue. Instead, it goes into a bank account where it is saved. Then, as Disney keeps the park open, quarter by quarter more of the deferred revenue is unlocked or counted as revenue. When Walt Disney World closed, it likely was no longer able to recognize passholder revenue. But with the reopening, Walt Disney World could start taking money from the pot again. No one even needs to show up and Disney still could make revenue. The deferred revenue wouldn’t be huge, but it could be a hundred million+. Does anyone know how large Florida’s annual passholder business is? Items like total APs and average ticket price of APs would be helpful.
DVC) Disney doesn’t care if DVC rooms are booked. Disney should still be able to charge DVC members their management fees with or without occupancy. As long as Disney is maintaining and operating the resort, Disney should receive its check. Reopening right now might be a no brainer. DVC members with access to contracts would know for sure.
Variable Profit) Disney could be making money and losing it at the same time. Some costs are fixed (like security, depreciation, maintenance, etc). Other costs are variable (like cast member salaries, electricity, etc.). Disney might be making a variable profit, or in other words, they are covering the costs of staying open. Another way of thinking about this is figuring out the way to lose the least amount of money possible. This is a profit but not an actual profit like we would think of intuitively. Disney might also be cash flow positive (profit before accounting for depreciation). That would be good news on the liquidity front and is plausible (depreciation per quarter will be $500+ million).
NBA) Hopefully WDW is being well compensated!
It all does seem suspect though. If Walt Disney World is making an operating profit I will be impressed. It just seems hard to believe. So to boil it down, Walt Disney World is:
1) Making a variable profit. This means it’s making more money than it would by staying closed.
2) Walt Disney World is cash flow positive. This means Disney World is making enough money to pay its immediate bills, but not enough to offset previous investments. This would be great, because Disney would be able to save liquidity.
3) It makes a real operating profit. That would be crazy good news. This will be a stretch IMO.
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