Many point to the Frank Wells' death in 1994 as the beginning of the 'bad' Michael Eisner years. From a show perspective at the theme parks, there is some merit to this.
Insiders recall a time when (heaven forbid) they were being required to justify budgets. It's also the time when places like Main Street USA were transformed from experiences in and of themselves into shopping malls.
Even during these years, Eisner continued to invest in Disney's Parks & Resorts (P&R) segment.
Budgets tend to be evaluated from an expense vs. revenue perspective. How much is being spent vs. how much is being brought in? Expenses tend to be divided into operating expense (the cost of day-to-day operations) and capital expense (improvements). Disney often refers to capex as "investing activities".
Investing activities include theme park improvements that are easily recognizable such as Cars Land, New Fantasyland, and Pandora.
It also includes required upgrades to P&R's tremendous physical assets, what Disney CFO Jay Rasulo refers to as "FF&E and maintenance capital" (FF&E = "Furniture, Fixtures, and Equipment"). Rasulo said that this "FF&E and maintenance capital" budget back in 2006 was "about $1 billion [...] being an ongoing level without special projects added to it".
In 2011, Rasulo said that the capex budget was even higher (without specifying a number) due additional projects needing more "maintenance capital". With inflation, it seems the current capex budget "without special projects" is at least $1.5 billion. In other words, if corporate Disney did not add to any of its theme parks, it still would spend about $1.5 billion annually just to keep its facilities current.
This number is important to remember when looking at P&R's investing activities in order to recognize exactly how much is being spent to
improve the theme parks (at least the kinds of improvements that can be advertised as such to potential buyers).
In 2013, Disney's Domestic P&R investing activities were $1.14 billion, while its International activities were $970 million. Remove the "FF&E and maintenance capital" expenditures and the money committed to Shanghai Disneyland, and it's apparent that very little is left for improvements at Disney's numerous other existing theme parks throughout the rest of the world.
All of this was just to give you an idea of how Disney can spend $2.2 billion annually in P&R capex and yet we see very little added at WDW.
Now we have to put this in historical perspective.
In 2013, Disney's P&R segment took in $14.1 billion. That $2.2 billion in capex represents 15.0% of P&R revenue. 15.0% sounds like a lot but, hopefully as I've shown above, Disney can spend 15% and yet fans see little added to WDW.
From 1994 to 2005 (supposedly Eisner's 'bad' years), Disney
averaged 24.5% P&R investing, including the very lean years of 2002 and 2003, when the vacation industry collapsed.
Last year, Comcast spent 26% on its Theme Parks investments.
During his 8 full years as Disney CEO, Bob Iger has averaged just 14.1%. His best year of investment was 23.1% in 2011 (think Cars Land and cruise ships),
which is below Eisner's average during his 'bad' years.
Let's put Eisner's 24.5% average into terms we can understand today. The difference between 24.5% and Iger's 15.0% in 2013 is $1.3 billion annually. Just imagine what could be built with an
extra $1.3 billion invested every year.
When it comes to Disney's Parks & Resorts, anyone who thinks Iger is an improvement over Eisner even in Eisner's worst years should pay closer attention to the numbers.
