Rude Behavior And Temper Outbursts: How Much Is HEAT To Blame?

[ParentsOf4]

Well, they'd have to blow out the park boundaries to add more attractions, otherwise you are going to have more rides in the same acreage and I'm not sure that will help the overcrowding due to increased demand. Oh wait, unless they take some away....

You mean there is no space at Epcot, DHS, and DAK to add attractions?

You mean they completely redid DCA to add capacity and are planning some big changes at DL too, yet with thousands of available acres and complete control over zoning at WDW, they can't touch MK?

Maybe you should compare the ride density at DL with the ride density at MK before you leap to the assumption that they somehow need to "blow out the park boundaries" to add more attractions at MK.

 

[xstech25]

I'm not going to argue that new rides aren't needed, but to say they aren't spending serious money on expansion is not entirely true. Both Avatar and New Fantasyland are in the $500mil range and then theres the whole gentrification of the DTD area. Also I don't see that stopping, there are probably a bunch of teams working on other major projects right now that are going to start moving earth when the others are nearing completion.

 

[EpcoTim]

I'm not going to argue that new rides aren't needed, but to say they aren't spending serious money on expansion is not entirely true. Both Avatar and New Fantasyland are in the $500mil range and then theres the whole gentrification of the DTD area.

This begs the question though......are happy or even content with the new fantasyland expansion? As in you don't think they could have done more (better)?

 

[ParentsOf4]

I'm not going to argue that new rides aren't needed, but to say they aren't spending serious money on expansion is not entirely true. Both Avatar and New Fantasyland are in the $500mil range and then theres the whole gentrification of the DTD area. Also I don't see that stopping, there are probably a bunch of teams working on other major projects right now that are going to start moving earth when the others are nearing completion.

You are "not going to argue that new rides aren't needed" but, it seems, you do want to argue that they are "spending serious money on expansion". Please consider:

From the time that Bob Iger became CEO until the time Pandora finally opens in 2017 (the date specified in Disney's annual report), WDW will have generated over $60 billion in revenue. The 2 projects you mention amount to less than 2% of that revenue.

Meanwhile, under the previous CEO Michael Eisner, Disney built Disney's Hollywood Studios, Disney's Animal Kingdom, Typhoon Lagoon, Blizzard Beach, Wide World of Sports, the entire Downtown Disney including Pleasure Island, over a dozen hotels, and more.

In 2013 and 2014, Universal spent more than 25% of its revenue on capital expenditure projects.

Even Six Flags spends 9% of its annual revenue on capital expenditure projects.

Universal is spending "serious money". When it comes to WDW, Disney is not.

 

[Goofyernmost]

You are "not going to argue that new rides aren't needed" but, it seems, you do want to argue that they are "spending serious money on expansion". Please consider:

From the time that Bob Iger became CEO until the time Pandora finally opens in 2017 (the date specified in Disney's annual report), WDW will have generated over $60 billion in revenue. The 2 projects you mention amount to less than 2% of that revenue.

Meanwhile, under the previous CEO Michael Eisner, Disney built Disney's Hollywood Studios, Disney's Animal Kingdom, Typhoon Lagoon, Blizzard Beach, Wide World of Sports, the entire Downtown Disney including Pleasure Island, over a dozen hotels, and more.

In 2013 and 2014, Universal spent more than 25% of its revenue on capital expenditure projects.

Even Six Flags spends 9% of its annual revenue on capital expenditure projects.

Universal is spending "serious money". When it comes to WDW, Disney is not.

This is a serious question and not an attempted argument against your numbers, but, I'm just curious. You always seem to use percentages to push the point of expenditure vs. revenue. What are the actual numbers (in dollars) that this translates into?

I realize that 2% seems pretty small, in percentage, what is it in actual dollars. The same with Uni or Six Flags? We always seem to hear those percentages, but what are they percentages of? Yes, I know they are percentages of total revenue. I understand, but, what is the actual revenue? In actual dollars spent, what are the differences? Isn't it possible, for example that Six Flags 9% is, in actual dollars, less then Disney's 2%? Isn't that what really counts? If you say that Disney spent 2% of $60,000,000,000.00 that would be $1,200,000,000.00 I guess I'm thinking that since I don't know what revenue either of the others have generated the percentages are meaningless to me. I assume you have those numbers otherwise you couldn't quote the percentage. Could you enlighten me please?

 

[ParentsOf4]

This is a serious question and not an attempted argument against your numbers, but, I'm just curious. You always seem to use percentages to push the point of expenditure vs. revenue. What are the actual numbers (in dollars) that this translates into?

I realize that 2% seems pretty small, in percentage, what is it in actual dollars. The same with Uni or Six Flags? We always seem to hear those percentages, but what are they percentages of? Yes, I know they are percentages of total revenue, I understand, what is the actual revenue? In actual dollars spent, what are the differences? Isn't it possible, for example that Six Flags 9% is, in actual dollars, less then Disney's 2%? Isn't that what really counts? If you say that Disney spent 2% of $60,000,000,000.00 that would be $1,200,000,000.00 I guess I'm thinking that since I don't know what revenue either of the others have generated the percentages are meaningless to me. I assume you have those numbers otherwise you couldn't quote the percentage. Could you enlighten me please?

Please read some of my earlier posts to get an appreciation of why percentages matter to businesses. For example:

http://forums.wdwmagic.com/threads/a-spirited-perfect-ten.894588/page-402#post-6620382

Or:

http://forums.wdwmagic.com/threads/a-spirited-perfect-ten.894588/page-167#post-6538297

On a more personal level, it's somewhat like purchasing a $50K car.

For a person with $1 million in annual income, a $50K car purchase is something they might do for their daughter's Sweet Sixteen birthday.

For a person with $100K in annual income, a $50K car is a stretch; maybe something to buy when the kids are grown and the mortgage is paid for.

For a person with $10K in annual income, a $50K car is an impossible dream.

"But $50K is $50K. Only absolute dollars matter, right?" Hopefully, we understand that thinking is wrong. It matters because percentage of income matters.

When you apply for a home mortgage, the bank typically decides how much to loan you based on a percentage of income. Both might live in a house, but the person making $1 million a year is likely to have a very different house than the person making $100K per year.

In 2014, Six Flags spent $109 million in capital expenditures for all of its amusement parks. For Six Flags, a $20 million investment in a single roller coaster would be a large investment. Six Flags offers one level of service.

For Disney, $20 million would not even come close to paying for (for example) Seven Dwarfs Mine Train. As a simple roller coaster, Seven Dwarfs Mine Train is boring! It's all the bells-and-whistles that Disney adds to Seven Dwarfs Mine Train that make it different. However, all those bell-and-whistles are exactly why it costs Disney so much more than Six Flags to build a roller coaster.

Of course, a Six Flags season pass costs less than a one-day ticket at WDW.

That's the point. We don't expect Six Flags to offer a Disney level of service, nor do we expect Disney to offer a Six Flags level of service. In terms of absolute dollars, Disney must spend considerably more than Six Flags in order to provide the higher level of service expected of Disney and, more importantly, the higher level of service that Disney charges for. Looking at investments as a percentage of Disney's revenue is relevant.

Let's also consider depreciation.

When a company invests in a long-term asset such as a new ride, the cost of that attraction is not recorded immediately against profits. Instead, it is a capital expenditure that is depreciated over time. Disney uses the straight line method of depreciation. In addition, it tends to depreciate its theme parks assets over 25 to 40 years. If, for example, Peter Pan's Flight cost $10 million to build in 1971, Disney might have been recording a corresponding depreciation expense of $250K/year ($10M / 40 years) as recently as 2010.

Similar to home ownership, an attraction such as Peter Pan's Flight has both short-term and long-term maintenance costs. Short-term maintenance includes things like oiling moving parts. These are recorded as operating expenses. Long-term maintenance includes things like replacing the roof. These are recorded as capital expenditures. 40 years later, the cost of replacing the roof on Peter Pan's Flight would be considerably more than what it cost to build back in 1971. It's possible that replacing the roof today would cost more than building the entire attraction cost in 1971. Time takes its toll on most physical assets while inflation comes into play when considering costs.

In 2014, Six Flags recorded $108 million in depreciation, about 9.2% of revenue.

In 2014, Disney's domestic Parks & Resorts (P&R) segment recorded $1.117 billion in depreciation, about 9.1% of revenue.

As you can see, both Six Flags and Disney had similar costs as a percentage of revenue but both had wildly different costs in terms of absolute dollars. Disney's domestic deprecation nearly equaled Six Flags' entire revenue for the year!

To understand how businesses are being operated, percentages often are more important than absolute dollars.

 

[Goofyernmost]

Please read some of my earlier posts to get an appreciation of why percentages matter to businesses. For example:

http://forums.wdwmagic.com/threads/a-spirited-perfect-ten.894588/page-402#post-6620382

Or:

http://forums.wdwmagic.com/threads/a-spirited-perfect-ten.894588/page-167#post-6538297

On a more personal level, it's somewhat like purchasing a $50K car.

For a person with $1 million in annual income, a $50K car purchase is something they might do for their daughter's Sweet Sixteen birthday.

For a person with $100K in annual income, a $50K car is a stretch; maybe something to buy when the kids are grown and the mortgage is paid for.

For a person with $10K in annual income, a $50K car is an impossible dream.

"But $50K is $50K. Only absolute dollars matter, right?" Hopefully, we understand that thinking is wrong. It matters because percentage of income matters.

When you apply for a home mortgage, the bank typically decides how much to loan you based on a percentage of income. Both might live in a house, but the person making $1 million a year is likely to have a very different house than the person making $100K per year.

In 2014, Six Flags spent $109 million in capital expenditures for all of its amusement parks. For Six Flags, a $20 million investment in a single roller coaster would be a large investment. Six Flags offers one level of service.

For Disney, $20 million would not even come close to paying for (for example) Seven Dwarfs Mine Train. As a simple roller coaster, Seven Dwarfs Mine Train is boring! It's all the bells-and-whistles that Disney adds to Seven Dwarfs Mine Train that make it different. However, all those bell-and-whistles are exactly why it costs Disney so much more than Six Flags to build a roller coaster.

Of course, a Six Flags season pass costs less than a one-day ticket at WDW.

That's the point. We don't expect Six Flags to offer a Disney level of service, nor do we expect Disney to offer a Six Flags level of service. In terms of absolute dollars, Disney must spend considerably more than Six Flags in order to provide the higher level of service expected of Disney and, more importantly, the higher level of service that Disney charges for. Looking at investments as a percentage of Disney's revenue is relevant.

Let's also consider depreciation.

When a company invests in a long-term asset such as a new ride, the cost of that attraction is not recorded immediately against profits. Instead, it is a capital expenditure that is depreciated over time. Disney uses the straight line method of depreciation. In addition, it tends to depreciate its theme parks assets over 25 to 40 years. If, for example, Peter Pan's Flight cost $10 million to build in 1971, Disney might have been recording a corresponding depreciation expense of $250K/year ($10M / 40 years) as recently as 2010.

Similar to home ownership, an attraction such as Peter Pan's Flight has both short-term and long-term maintenance costs. Short-term maintenance includes things like oiling moving parts. These are recorded as operating expenses. Long-term maintenance includes things like replacing the roof. These are recorded as capital expenditures. 40 years later, the cost of replacing the roof on Peter Pan's Flight would be considerably more than what it cost to build back in 1971. It's possible that replacing the roof today would cost more than building the entire attraction cost in 1971. Time takes its toll on most physical assets while inflation comes into play when considering costs.

In 2014, Six Flags recorded $108 million in depreciation, about 9.2% of revenue.

In 2014, Disney's domestic Parks & Resorts (P&R) segment recorded $1.117 billion in depreciation, about 9.1% of revenue.

As you can see, both Six Flags and Disney had similar costs as a percentage of revenue but both had wildly different costs in terms of absolute dollars. Disney's domestic deprecation nearly equaled Six Flags' entire revenue for the year!

To understand how businesses are being operated, percentages often are more important than absolute dollars.

Although I am not going to delve into this further, I would like to say this. Yes, 50K is 50K, however, my point was if one doesn't have 50K then they cannot spend it. It really doesn't seem relevant. However, let's say that we use that example and person that only made $10k spent $4k for that car. Along comes someone with $50k and spends that same $4k. Then 10k spent 40% where as 50k spent 8%. It was the same $4k, but, it is misleading to say that the percentage is the key information. If one were to just say example (A) spent 40% of their revenue and cheap old (B) only 8%. On the surface it sounds like A spent tons more then B when it was exactly the same actual cash outlay.

That doesn't say that (B) could not have done better if they wanted too. It just means that just using percentages does not tell the whole story. It does imply that A spent more then B when it really didn't happen that way.

 

[ParentsOf4]

Although I am not going to delve into this further, I would like to say this. Yes, 50K is 50K, however, my point was if one doesn't have 50K then they cannot spend it. It really doesn't seem relevant. However, let's say that we use that example and person that only made $10k spent $4k for that car. Along comes someone with $50k and spends that same $4k. Then 10k spent 40% where as 50k spent 8%. It was the same $4k, but, it is misleading to say that the percentage is the key information. If one were to just say example (A) spent 40% of their revenue and cheap old (B) only 8%. On the surface it sounds like A spent tons more then B when it was exactly the same actual cash outlay.

"if one doesn't have 50K then they cannot spend it"

But Disney does have $50K. In fact, they have a heck of a lot more.

Continuing with the analogy, Disney is neither the person with $50K or $10K you mention. Harking back to my earlier analogy, Disney is the millionaire.

In fact, they are far beyond that millionaire. In 2014 alone, corporate Disney spent over $6.5 billion in stock buybacks. Since Iger became CEO, Disney has spent nearly $50 billion is stock buybacks.

Disney used to invest billions in its domestic theme parks. Now, they invest fractions of that and yet some continue to make excuses for them.

Disney is now a millionaire spending $4K for that car you mention in your analogy.

When it comes to their paying customers (oops, I mean "Guests"), today's corporate Disney is spending like that cheap (oops, I mean frugal) millionaire.

Now once Disney changes its prices to match what Six Flags charges, then I'll be all onboard with Disney.

What's the chance we'll see a $54.99 season pass from WDW?

 

[Arthur Wellesley]

When it comes to their paying customers (oops, I mean "Guests"), today's corporate Disney is spending like that cheap (oops, I mean frugal) millionaire.

And sadly the guests keep eating right out of the palm of Iger's hand, despite what he's feeding them (or lack thereof).

 

[Disneyhead'71]

Guests satisfaction is very important. How it is measured is possibly flawed.

Currently it is measured simply by count. ...and this can be an effective measurement. If there was significant dissatisfaction, people would not return. But they do, therefore satisfaction is high.

The "new" way to vacation at Disney is new. The metric isn't in yet,

Folks may say they LOVE it, and yet, hesitate to start planning the return trip because of the intensive pre-planning that is necessary.

Of course, that would only apply to "casual tourists", because the faithful have 2 fantasy trips in the planning stages that they never intend to take.

Everyone needs a hobby.

 

[betty rose]

The "new" way to vacation at Disney is new. The metric isn't in yet,

Folks may say they LOVE it, and yet, hesitate to start planning the return trip because of the intensive pre-planning that is necessary.

Of course, that would only apply to "casual tourists", because the faithful have 2 fantasy trips in the planning stages that they never intend to take.

Everyone needs a hobby.

I'm always dreaming what I would do, if money were no object...as in a Disney Cruise (never been on one, as RCL is much cheaper), and having a meal at V@A, followed by a 2 week vacation in Disney World, followed by first class tickets to DL, to compare.....Show me the money.....

 

[Goofyernmost]

"if one doesn't have 50K then they cannot spend it"

But Disney does have $50K. In fact, they have a heck of a lot more.

Continuing with the analogy, Disney is neither the person with $50K or $10K you mention. Harking back to my earlier analogy, Disney is the millionaire.

In fact, they are far beyond that millionaire. In 2014 alone, corporate Disney spent over $6.5 billion in stock buybacks. Since Iger became CEO, Disney has spent nearly $50 billion is stock buybacks.

Disney used to invest billions in its domestic theme parks. Now, they invest fractions of that and yet some continue to make excuses for them.

Disney is now a millionaire spending $4K for that car you mention in your analogy.

When it comes to their paying customers (oops, I mean "Guests"), today's corporate Disney is spending like that cheap (oops, I mean frugal) millionaire.

Now once Disney changes its prices to match what Six Flags charges, then I'll be all onboard with Disney.

What's the chance we'll see a $54.99 season pass from WDW?

But you still haven't answered my question. I know all about how much money Disney has. What I want to know is in comparison how much MONEY did they spend compared to the rest? You are responding like I'm trying to defend Disney. I am not! I merely want to know that in any give equal time period, how much actual money did they spend on "improvements" compared to the others. You don't pay for construction with percentages, you know that as well as anyone, you pay for them with real money. That's the question I am asking. If Disney spent 1.2 Billion Dollars then how much did Six Flags spend in Dollars and Universal in Dollars. Random percentages tell you nothing without knowing the revenue it is based on. I'm not trying to determine what part of their billions that they spend percentage wise... how much actual money did they spend. 30% of 10K is a whole lot less then 2% of 1,000,000K. (Yes, I know that is not an accurate or realistic grouping of numbers, but, I don't have any real ones to go by to compare, so they are random to try and illustrate what I'm asking).

You are sticking to the idea that they should be spending more. OK, you are probably right, I'm just trying to get a base line of comparison.