The Red Button Option

[Rhinocerous]

They should sell Pixar and not marvel? marvel and fox were big $$$ mistakes imho.

Wait, what? Fox, sure. There's an argument to be made. But Marvel? How was acquiring a property that basically prints money for them a big $$$ mistake?

 

[UNCgolf]

Disney should have sold ABC, ESPN and Pixar about 5 years ago. They could also sell Fox IPs that aren't a good fit. All things they should do before considering selling the parks. IMO.

I think they make more profit from ESPN than anything else in the company, so not sure why they'd want to sell that.

 

[peter11435]

They should sell Pixar and not marvel? marvel and fox were big $$$ mistakes imho.

I’d love to hear why you think Marvel was a mistake? Of Iger’s four largest acquisitions its the one I would say was the most solid.

 

[TrainsOfDisney]

I’d love to hear why you think Marvel was a mistake? Of Iger’s four largest acquisitions its the one I would say was the most solid.

Yeah.... was a knee jerk reply on my part based on the poster I quoted suggesting they should have sold off Pixar.

I don’t think Marvel fits the Disney brand, and I never will. (I don’t dislike marvel, I think Spider-Man is one of the best theme park rides ever built... I think it’s better than Rise even).

But that’s my opinion. It is certainly a good business decision just based on money.

I should have just asked the @jt04 “why sell Pixar???”

 

[WDW Pro]

Just curious, what would happen if SSE wasn't temperature controlled?

For most of the year the attraction would quickly develop mold and mildew, as well as the upper areas of the structure hitting extremely high temperatures during the day. After a week or more, the set pieces and fabrics would be ruined.

They have not maintained the property to standards, from my observation of the Polynesian, Wilderness Lodge, and other common roadways.

I mentioned this about Disneyland months ago and people were up in arms that there absolutely were not bird droppings all over the park. Then another insider on different forums confirmed it.

I was curious as to what makes SSE unique. He didn't say all rides had to be temperature controlled 24/7, just SSE. What about the others?

SSE is the most unique structure on property. Other attractions have specifications as to when and how often they can have air control shut down. For example, the Test Track queue area has its air turned off from approximately 11pm to 5am every night. POTC, however, seldom has its A/C turned off in order to prevent mold development.

My guess is they're all temperature controlled 24/7 because of the potential mold problems (among other things), and he specifically mentioned SSE because it's much larger than most rides and thus costs significantly more -- just like the monthly energy costs to heat/cool a 1,000 square foot home are much smaller than the costs to do so for a 10,000 square foot home.

I use to know the electrical requirements for SSE, but I've forgotten it now. It's something like 320x the electrical requirements of the average residential home.

Just for information. A standard 10,000 sqft home is a volume of 80,000 cft. SSE is 2,350,000 cft.

AC in many buildings and attractions across WDW is turned off overnight

Correct. However, even in those buildings and attractions, the offline time offs usually around 4-5 hours.

What time in the morning do they turn it back on?

Anywhere between 4-6 am depending on the attraction's morning tests.

 

[jt04]

Yeah.... was a knee jerk reply on my part based on the poster I quoted suggesting they should have sold off Pixar.

I don’t think Marvel fits the Disney brand, and I never will. (I don’t dislike marvel, I think Spider-Man is one of the best theme park rides ever built... I think it’s better than Rise even).

But that’s my opinion. It is certainly a good business decision just based on money.

I should have just asked the @jt04 “why sell Pixar???”

Not sure it maintains the quality output without JL. And they could move Pixar's best talent to WDAS.

Everything has to be recalibrated if theater chains fail also.

 

[Animaniac93-98]

Regardless of whether it's true, it's certainly not a goofy rumor. It's very believable that a media CEO wouldn't be interested in managing theme parks. Large corporations sell off parts of the company all the time for various reasons; there's nothing nefarious about it.

Nor would Disney selling off its parks and resorts automatically mean there would be a decline in the quality of the experience.

 

[peter11435]

Nor would Disney selling off its parks and resorts automatically mean there would be a decline in the quality of the experience.

The Disney parks with the highest quality of experience are the ones Disney doesn’t own....

 

[MisterPenguin]

The Disney parks with the highest quality of experience are the ones Disney doesn’t own....

Was that true with EuroDisney?

 

[Sirwalterraleigh]

You would think they would allow an “After 4:00” type of Park Hopper exclusion....maybe someone will have a brain in the next few days.

Possibly...but that’s difficult to fully control. The possibility is that “word” gets out and people start gravitating to certain parks - take a guess - after 4 and denials rise. That’s neither good for Disney nor the customers.

You're forgetting that hte $1.7B/mo are the expenses occurred with a full staff and all attractions running. Expenses during the shutdown and even now are considerably less.

Also, they put a halt on all the capex expenditures (and only recently started to spend to restart the nearly completed projects).

There is a huge cost the minute they start the engine. Don’t fall for the idea that 1/4 attendance = 1/4 cost. Assume 75% or so cost for the first gate click.

This really is the “thing” with Disney continuing to operate. In Anaheim as well.

The parks need mass attendance - plain and simple.

They're still I'm excess of a billion. Utilities, maintenance, landscaping... all of that is massive and essentially locked in place. Spaceship Earth must be temperature controlled 24/7 365. Most attractions must be cycled periodically even when closed. They've hot many square miles of property to maintain every single day.

Correct. Lots of the exhorbinant costs are “baked in”

 

[Sirwalterraleigh]

The Disney parks with the highest quality of experience are the ones Disney doesn’t own....

Kon’Nichiwa⛩

 

[Ravenclaw78]

Was that true with EuroDisney?

I always assumed Disney deliberately let that park deteriorate so that they could buy the full stake in the park for peanuts.

 

[peter11435]

Was that true with EuroDisney?

Well, no. I guess I should have said the parks Disney doesn’t own or operate. They may not have had full ownership of EuroDisney but they did operate the resort and own a significant portion, unlike in Tokyo where they have neither.

 

[Sirwalterraleigh]

Was that true with EuroDisney?

Euro was and is a beautiful park...

It was the “financing experiment”...the Eisner/wells hands on/hands off approach that caused the whole issue there.

 

[lazyboy97o]

That's debatable though. We basically only have two examples of a licensing-only scenario with Disney parks: OLC and EuroDisney. One worked, and one didn't. I'm not convinced that if a global crisis like a pandemic or economic downturn occurred, that Disney would be shielded from it. If park owners were thrust into a financially weak position due to some calamity, Disney would be in the same exact place they were in with DLRP: either accept no licensing fees and offer bailouts, or admit that the whole venture was a failure and take a huge PR and Brand image hit.

But then maybe that's why they decided it was a terrible idea....

Euro Disney was not a licensing only deal. An SCA is a unique corporate structure where the company is operated by a minority partner, in the case of Euro Disney SCA that minority operator was effectively Walt Disney Parks and Resorts (there were all sorts of subsidiaries involved and Euro Disney SCA had to have a flow chart on their investor relations website to try and explain the convoluted mess). It was not similar to Oriental Land Company, is more like the Chinese parks and was a ridiculous scheme to try and not pay for the resort. The Chinese parks were not wholly financed or tied into complicated land acquisition deals like Euro Disney Resort. Instead the local governments paid a significant portion of the up front costs.

 

[Mrtko]

I am usually wrong and probably am this time as well. I just get the feeling Bob Igor is imitating Bruce Willis in the movie the Six Sense. His legacy is dead and he just doesn't know it yet but many of us can see dead people.

 

[el_super]

It was not similar to Oriental Land Company, is more like the Chinese parks and was a ridiculous scheme to try and not pay for the resort.

You're right and I think I miscommunicated the point here: Of the two schemes (you're right to say that EuroDisney wasn't a license only scheme), they used the Euro Disney model for the Chinese parks. If Iger was seriously considering how risky the parks were to own, why would he agree to partial ownership of Shanghai Disneyland?

I guess, even if you want to believe the rumors are true, you can't assign any weight to them, when his actions have proven to be the exact opposite of what's being suggested. Saying he wants to sell the parks means nothing if he doesn't go through with it. Maybe if this rumor became public, we could add a little more weight to it, but it never really did... did it? He has spent lavishly on the parks and of course, he hasn't sold them.

 

[JoeCamel]

QUOTE="lazyboy97o, post: 9354447, member: 62775"] It was not similar to Oriental Land Company, is more like the Chinese parks and was a ridiculous scheme to try and not pay for the resort.

You're right and I think I miscommunicated the point here: Of the two schemes (you're right to say that EuroDisney wasn't a license only scheme), they used the Euro Disney model for the Chinese parks. If Iger was seriously considering how risky the parks were to own, why would he agree to partial ownership of Shanghai Disneyland?

I guess, even if you want to believe the rumors are true, you can't assign any weight to them, when his actions have proven to be the exact opposite of what's being suggested. Saying he wants to sell the parks means nothing if he doesn't go through with it. Maybe if this rumor became public, we could add a little more weight to it, but it never really did... did it? He has spent lavishly on the parks and of course, he hasn't sold them.
[/QUOTE]
OK, I have to say "spent lavishly" was never what I saw for the dead decade in WDW. More like dig deeper for stagnation and a "good enough" mindset.

 

[lazyboy97o]

You're right and I think I miscommunicated the point here: Of the two schemes (you're right to say that EuroDisney wasn't a license only scheme), they used the Euro Disney model for the Chinese parks. If Iger was seriously considering how risky the parks were to own, why would he agree to partial ownership of Shanghai Disneyland?

I guess, even if you want to believe the rumors are true, you can't assign any weight to them, when his actions have proven to be the exact opposite of what's being suggested. Saying he wants to sell the parks means nothing if he doesn't go through with it. Maybe if this rumor became public, we could add a little more weight to it, but it never really did... did it? He has spent lavishly on the parks and of course, he hasn't sold them.

The model isn’t the same. Additions to Disneyland Paris were paid for almost entirely by Disney versus the Chinese parks where they pay less than half.

It aligns completely with Iger’s actions regarding the parks. Years and billions of dollars poured into schemes to try to reduce the need for expensive continual investment. Even the big price tags align with this. Costs have spiraled completely out of control making the return on investment significantly worse.

 

[DDLand]

But I would think, that if Iger was so concerned about owning any share in those parks, that he would have pushed the Shanghai agreement to a model closer to OLC, where the Shendi group would outright own the park, and only contract Disney for licensing and operations. They didn't do that though, and Disney has a co-ownership in the park.

And of course while they were building Shanghai, they ended up spending the money to basically buy out EuroDisney and bring the entire ownership of DLRP under the Disney umbrella. That level of consolidation would seem counter to the idea that Iger was seriously considering selling off the parks.

From a macro level, it also goes counter to Iger's strategy of growing the company so large it would no longer be an acquisition target for the bigger fish in the pond. Those bigger fish would also be the only ones seen as potential buyers of the parks division, so why would they JUST buy the parks, when they could just buy the whole company?

That's why it's a goofy rumor. Even if you want to believe that Iger was serious about selling the parks, there's enough grey area in what serious means, that you can fill it to meet whatever definition you want to believe. It's really no different than the multitude of "Disney is considering building a park in ______" rumors, that are really just more wishful thinking than serious discussion.

You‘re thinking like 2020 (or 2019) Disney. Disney Parks in the mid 2000s were a different story entirely. Let me paint the scene for you...
1) Disneyland Resort: Disneyland had been struggling for years since DCA. Despite additions, the park remained extremely under visited and under loved. Ride quality and maintenance had cratered in both parks. Tourism had slowed to a trickle. Disneyland Park remained a solid operation, but it was stagnate. Disney saw no other path than spending enormous sums of money to fix the resort. And the last time Disney had dolled out significant sums in Anaheim they had got DCA. There were even talks at the time that Disney was contemplating merging DCA into Disneyland:
“An initial idea was to combine Disneyland and California Adventure, creating a massive park that required one ticket. But the investment in infrastructure to transport visitors around that area was prohibitive, so they focused instead on creating a second Disneyland.”

Disneyland was in awful shape. Allowing another company to fix it would be tempting.
2) Walt Disney World: Like Disneyland, Walt Disney World was in trouble. In the late 90s Walt Disney World had reached unbelievable heights of profitability and occupancy. That all changed when a mixture of factors converged to keep Walt Disney World from more growth. A poorly built out park, an economic recession, and 9/11 destroyed Walt Disney World’s momentum. By the mid 2000s Fast Company Alum @AustinC reported that “Inside the company, Disney World became known as a “burning platform.”” The panic was real and palpable within the company.
3) Disneyland Paris: In a struggle echoing Disneyland in Anaheim, Disneyland Paris hobbled along with a lackluster 2nd gate and failing maintenance.
4) Hong Kong Disneyland: The park‘s struggle is well known. It flopped.

So of the ventures Disney was owner of or owned a stake in most were either in desperate need of cash infusions or on a path to stagnation. Other parks and resorts businesses were in better shape. Disney Cruise Line and Disney Vacation Club were rapidly growing divisions that held promise. Beyond that the parks were either dead or dying.

Both analysts and Disney itself wondered if Theme Parks as an industry would survive. WSJ wrote in 2007:
“When Walt Disney created Disneyland in 1955, and the company started the Disney World resort in Orlando, Fla., in 1971 with the first Magic Kingdom park, the parks were powerful brand builders. But it is unclear whether that is still the case in the 21st century, when kids are more interested in the Internet and Disney has more tools to play with, such as the relatively investment-light but popular Disney Channel.”

These anxieties about the future of theme parks also come out in @AustinC ‘s reporting. Fast Company reported:
“In the mid-2000s, however, Disney executives had reason to worry about the future of the business. Disney World, Parks’ crown jewel, seemed to be losing its luster. According to multiple sources, certain key metrics, including guests’ “intent to return,” were dropping; around half of first-time attendees signaled they likely would not come back because of long lines, high ticket costs, and other park pain points. Simultaneously, the stunningly fast adoption of social media and smartphones threatened the relevance of the parks. If Disney wanted these more tech-oriented generations to love it as much as their parents, who had grown up with fewer entertainment alternatives, had, it would have to embrace change now.”
“Inside the company, Disney World became known as a “burning platform.” As the former executive explains, “If we miss out on that next generation of guests, suddenly our burning platform is fully on fire—panic mode.””

This was more than just some irritation with investments. This was foundational. Would theme parks survive in an era of digital consumption? Disney also wrestled with the question of whether making big theme park investments was worth it. You can see these questions reflected in the investments Disney made or considered making. WSJ wrote in 2007:
“Disney's theme-park operation has been hatching plans to expand its reach by building smaller attractions and resorts around the world, rather than just more big parks. As well as stand-alone hotels in cities and beach resorts, that plan is expected to include Disney-branded retail and dining districts, and smaller, more specialized parks that could focus on popular themes such as pirates or princesses.”

LA Times also shared comments from then Disney P&R Chair Jay Rasulo. He hinted at the idea of smaller less significant investments:
“Beyond that, Rasulo’s talk of “niche parks” has sparked curiosity among Disney watchers. Those parks would be higher priced and offer a more intimate experience, Rasulo said during the investors speech.”

Not only Disney viewed theme parks as stagnating. Even Disney’s fan favorite partner Oriental Land Company began exploring new side ventures. OLC invested in several other properties and even worked with imagineering to dream up a new entertainment complex that would not be related to Tokyo Disney Resort. The sentiment in the room was theme parks were an obsolete business.

This is reflected in where Disney was putting its money at the time. Theme park investments were seen as increasingly unattractive to Disney. Rasulo wanted diversification. While we remember the $1.1 Billion investment in DCA, we are slow to remember that it represented only a fraction of total P&R investments in the late 2000s. Disney announced and built two cruise ships to the tune of $900 million each. Aulani was built for another gargantuan sum of $800 million. Disney built out resorts like Grand Californian DVC, DAKL DVC, and BLT for $100s of million. They also worked aggressively to build out Golden Oak, a non theme park project. So at the same time Disney was investing in California Adventure, they invested far more in non theme park projects. Like 3 times+ more. We haven’t even talked about the 1 billion+ (and @marni1971 would say more) that was poured into MyMagic.

Iger was not a fan of theme parks and his investments prove it. As he pursued shortsighted real estate deals selling off Orlando property, his parks languished. Walt Disney World was utterly neglected in the first decade of Iger’s tenure. It was only after Cars Land opened that it dawned on Iger that theme parks were a good business. It was not until 2015 that Disney began taking serious steps to invest in its product.

So did Iger consider selling the parks? I’d absolutely believe so. He was too dumb to see the longterm potential. His early leadership of Parks and Resorts is noteworthy for its mediocrity and poor foresight. His failure to invest in meaningful improvements betrays his ineptness. Though perhaps he really loves theme parks. As Iger once said:
“I go there [Disneyland] and I marvel at how many people are there having the time of their lives. You just get the sense that in a world that can at times feel dark and as sinister as it is, these are people that have escaped all of that. They have spent time and good money, I will say, to provide themselves and their friends, their family, their loved ones, an experience that not only is going to make them feel good, but that they’re going to remember forever.”


Sources:

Disney's $1 Billion Adventure - WSJ

Five-Year Revamp of Its Lagging California-Themed Park

www.wsj.com

https://www.fastcompany.com/3044283/the-messy-business-of-reinventing-happiness

Disney Eyes Hawaii For New Niche Resort - WSJ

www.wsj.com

Is Disney ready to make big thunder?

Some outsiders say the firm's recent fight with Anaheim is a sign it's itching to expand.

www.google.com

Disney sells some of its world

Walt Disney World is selling off chunks of excess land on the fringes of its empire, allowing developers to pursue their own real-estate magic. Disney recently sold 53 acres on Sherberth Road south…

www.orlandosentinel.com