Spirited News & Observations II -- NGE/Baxter

[marni1971]

I have said WDW will be getting investment and even wdw74 agrees with me now. Disney knows what the competition is doing now so that makes it easier to respond strategically. Which they have always done, continue to do and will do in the future.

Jungle Cruise. Diamond Horseshoe. Riverboat. Iasw. Pan. SGE. SM. TTA. CoP. Wishes. Spectro. SSE. UOE. JII. Showcase. RoE. Most of DHS. EE. Kali. Dino.

Fix the foundations before adding roof tiles.

 

[PhotoDave219]

Can't argue. Well, could, but its not worth it.

I think the point is that DHS has very few attractions with repeatability from a regular park guest POV.

 

[marni1971]

I think the point is that DHS has very few attractions with repeatability from a regular park guest POV.

I agree. I wouldn't call visiting once every year or two regular though.

 

[Genie of the Lamp]

As a Flyers fan, I say Death to Pittsburgh & I've never seen a girl dive as much as Cindy Crosby.

And I say death to Philly and Cleveland. Although I like the pittsburgh joke reference they use in the muppetvision 3d show. Btw, most haters spell it as Sindey not Cindy. Your just jealous cause he's the best hockey player in the league now and that he's not on your team. Ill end the off topic rambling here. Pens win cup all the way!

 

[dupac]

I could keep up with the economic analysis talk, but the hockey goes over my head. Talk math to me, baby.

 

[MichWolv]

Why the exclusive focus on cash flow and/or operating metrics? My concern from a financial perspective is that they're sitting on a depreciation bomb that will continue to dilute earnings long after the Potter surge has died down.

Depreciation can't be a "bomb" because the cash is already spent. Depreciation can dilute earnings...sure, but it can't actually blow up the company. Rather, the company would get blown up when it tried to buy the capital assets and didn't have the cash to do it.

But as for the question of "why the exclusive focus", I was responding to SirOinks posts, not suggesting what one should be looking at. I'm no investing expert, but I wouldn't tell anybody to focus "exclusively" on anything. That said, so far as I can tell, operating income after depreciation/amortization looks to be going up as well, as does the bottom line (the real one).

 

[PhotoDave219]

And I say death to Philly and Cleveland. Although I like the pittsburgh joke reference they use in the muppetvision 3d show. Btw, most haters spell it as Sindey not Cindy. Your just jealous cause he's the best hockey player in the league now and that he's not on your team. Ill end the off topic rambling here. Pens win cup all the way!

His Dive in OT vs the Isles was complete crap.... Shouldn't have been a Penalty. Isles should have taken that series.

 

[PhotoDave219]

I agree. I wouldn't call visiting once every year or two regular though.

True. I really don't want to see the stats on my AP this year.....

However there are few rides/shows at DHS that keep me coming back. Muppets, GMR.... Indy. Everything else I cannot ride due to prior injuries OR is not interesting to me anymore.

However, I am in the .1% of daily attendance So management really does not give a flying crap about what I think.

 

[Tim_4]

Depreciation can't be a "bomb" because the cash is already spent. Depreciation can dilute earnings...sure, but it can't actually blow up the company. Rather, the company would get blown up when it tried to buy the capital assets and didn't have the cash to do it.

But as for the question of "why the exclusive focus", I was responding to SirOinks posts, not suggesting what one should be looking at. I'm no investing expert, but I wouldn't tell anybody to focus "exclusively" on anything. That said, so far as I can tell, operating income after depreciation/amortization looks to be going up as well, as does the bottom line (the real one).

I don't disagree. The question is longevity. We all agree that Potter drove revenue in the short term. My argument is that the costs to depreciate and operate the expansion will continue and eventually outweigh the incremental revenue, which will continue to decline as the new car smell wears out.

 

[MichWolv]

Your last paragraph is my main point. The cash has been spent but the expense has not been incurred. The investment must continue to AT LEAST cover the depreciation, . This is why Disney builds slowly. You spread out service dates so the giant depreciation bubble doesn't pop all at once, but oozes slowly.

Your logic is truly dizzying...and that isn't a good thing. The investment has already been made....that's why there will be depreciation. Having depreciation means you spent money in the past, it doesn't say anything about whether you will or should spend money in the future. If Uni spent $400 million building Potter-land, and believes that what it built will last 20 years, there will be $20 million per year in depreciation expense whether Uni spends a lot in the future, or a little. In order to show profits, that means that the capital expenditure must bring in $20 million/per year more in income than would have been there without it.

The "giant depreciation bubble" you speak of is merely a fixed cost. Like all other fixed costs, if the fixed cost is higher than the income it produces, that would be bad. This applies to Potter, Avatar, New Fantasyland, and everything else. If what you are suggesting is that you don't believe Potter will continue to bring in enough income to cover the investment, that's fine. Obviously, the majority view around here is that it will. Indeed, it probably already has covered a huge part of its capital costs given the attendance bump and food and merch sales.

 

[MichWolv]

Hmmm...I missed those...
Reckon I was too dizzy and disorientated from all the accounting mumbo-jumbo flying around...

Some of the folks spouting the mumbo-jumbo are disoriented as well.

 

[MichWolv]

I don't disagree. The question is longevity. We all agree that Potter drove revenue in the short term. My argument is that the costs to depreciate and operate the expansion will continue and eventually outweigh the incremental revenue, which will continue to decline as the new car smell wears out.

The accounting-wonk in me forces me to say that there no "costs to depreciate". It's just "depreciation". If they are using straight-line depreciation (likely, but I haven't checked), and if revenue falls (possible, although by no means assured), it is possible that at some point, the depreciation expense will be more than the incremental income generated in a particular period.

 

[Tim_4]

Your logic is truly dizzying...and that isn't a good thing. The investment has already been made....that's why there will be depreciation. Having depreciation means you spent money in the past, it doesn't say anything about whether you will or should spend money in the future. If Uni spent $400 million building Potter-land, and believes that what it built will last 20 years, there will be $20 million per year in depreciation expense whether Uni spends a lot in the future, or a little. In order to show profits, that means that the capital expenditure must bring in $20 million/per year more in income than would have been there without it.

The "giant depreciation bubble" you speak of is merely a fixed cost. Like all other fixed costs, if the fixed cost is higher than the income it produces, that would be bad. This applies to Potter, Avatar, New Fantasyland, and everything else. If what you are suggesting is that you don't believe Potter will continue to bring in enough income to cover the investment, that's fine. Obviously, the majority view around here is that it will. Indeed, it probably already has covered a huge part of its capital costs given the attendance bump and food and merch sales.

That's exactly what I'm saying. Incremental revenue is CURRENTLY beating fixed costs because we're still in the "new toy" phase, which I don't believe to be sustainable. Potter's success is largely driven by hype and nothing anywhere will ever have the hype that Potter had at its peak. They've already gotten all the growth they were ever going to get from phase one, which is why they need phase two.

 

[Tim_4]

The accounting-wonk in me forces me to say that there no "costs to depreciate". It's just "depreciation". If they are using straight-line depreciation (likely, but I haven't checked), and if revenue falls (possible, although by no means assured), it is possible that at some point, the depreciation expense will be more than the incremental income generated in a particular period.

The revenue HAS fallen. It's still well above pre-Potter but nowhere near the initial Potter craze.

 

[ChevisMickey]

As a Pittsburgher... and a Pens fan... I approve of this message.

 

[Soarin' Over Pgh]

LOL

I like direction this thread is going into. Better than numbers nonsense.

 

[MichWolv]

Let's Go Red Wings!!

 

[Soarin' Over Pgh]

I can see the Consol Center from my office... they need to build a giant penguin statue on top of it. Or near it.


I'm loving that Octopus!

Even if it is for the red wings

 

[fillerup]

This thread causes me to remember that just yesterday, hanging out at Epcot between Starship sets, I was gazing across the lagoon and seeing a beautiful orange and pink sunset reflect off of Spaceship Earth.

Under those magical circumstances, I couldn't help but wonder to myself if the building had been fully depreciated yet.

 

[ChevisMickey]

This thread causes me to remember that just yesterday, hanging out at Epcot between Starship sets, I was gazing across the lagoon and seeing a beautiful orange and pink sunset reflect off of Spaceship Earth.

Under those magical circumstances, I couldn't help but wonder to myself if the building had been fully depreciated yet.

Not sure about the building, but the wand must have been repoed!