The Spirited Seventh Heaven ...

[ParentsOf4]

Nice graph. This makes sense. They probably did delay major construction on Carsland some.

The red bars should be growing following the blue bars up. Times are good. Reinvest. How much of the 2014 Capex is China and/or Paris? They put the finishing touches on Mine Train and broke ground on Avatar in 2014, but other than that is there anything Domestic going on? Paris got Rat ride and there's the whole park in China being built.

Through the first 3 quarters of FY2014, Disney recorded $1056M international and $809M domestic capital expenditures (capex).

Most of international capex is at Shanghai.

However, 57% of that Shanghai money is being reimbursed by the Shanghai Shendi Group elsewhere on the books, so it's not really being paid for by corporate Disney.

Disney is not reimbursed immediately for the 57% spent in Shanghai. Further reimbursements for capex spent this year will follow in future fiscal years. Capex that is ultimately paid by corporate Disney might actually be down (again) in FY2014. (Capex was way down in FY2013.)

Before anyone tries to defend Disney for spending $809M domestically, please remember my earlier posts regarding what Rasulo called "maintenance capital". Rasulo reported that Disney spends well over a billion annually just to keep its facilities from degrading.

Depreciation tells even more.

Disney uses the straight-line method to depreciate capex. This means that the cost of a capital investment is divided by X and then equally recorded as a cost over X number of years.

At Disney, the costs of buildings and attractions are spread out over 25-to-40 years. For example, Disney might still be depreciating aspects of Epcot, opened in 1982. However, it's doing so at 1982 prices. Building Epcot today would cost several times what it did in 1982.

I mention this because, for the first 3 quarters of FY2014, Disney spent $809M in domestic capex but depreciated $832M domestically, despite most of what's being depreciated having been built in 2001 (DCA) or before at much lower costs due to inflation.

The numbers suggest what we all already know: WDW is getting old and Disney is not re-investing in it.

 

[Nemo14]

Thank you @ParentsOf4 for sharing your wealth of information in posts that are clear and understandable to even those of us who are not privy to all the statistics. I always look forward to reading your posts!

 

[Magenta Panther]

A alot of people would be puzzled why anyone over the age of 12 would want to go to Disney World.

Even more people might wonder why anyone of any age would want to see The Incredible Hulk in a Disney theme park.

 

[Jim Possible]

Disney is specifically not using "Marvel" for Big Hero 6 though, which I find interesting.

Probably because the film has very, very little to do with the source material aside from a few character names.

 

[Mike S]

Even more people might wonder why anyone of any age would want to see The Incredible Hulk in a Disney theme park.

Yeah Hulk doesn't seem like a good fit outside of Universal. The Guardians however I think could fit quite nicely.

 

[WDWFigment]

I've said many times that my issue with podcasts is that they tend to give a level of legitimacy to folks who shouldn't have more than ... well, how you put it ... informal conversations among friends. It's the same with self-publishing. Just because every/any one can put out a book, doesn't mean that every/any one can write.

I guess it's like @jakeman's new pal @flynnibus says when I criticize Twitter: it's not the medium, it's who's using it and how they are using it.

Part of what you describe as the problem (I think?), I see as the beauty. I don't want people who have real 'legitimacy' (whatever that is these days) on social media. To me, that means a script and a careful narrative because they want to target their "fans" in some careful and often dubious way. I want the ones who are real. I know rough does not equal real, but it seems to me these venues are more conducive to real than most legacy ones. I like real, even if it means some content that doesn't interest me.

 

[Nemo14]

Part of what you describe as the problem (I think?), I see as the beauty. I don't want people who have real 'legitimacy' (whatever that is these days) on social media. To me, that means a script and a careful narrative because they want to target their "fans" in some careful and often dubious way. I want the ones who are real. I know rough does not equal real, but it seems to me these venues are more conducive to real than most legacy ones. I like real, even if it means some content that doesn't interest me.

I understand your point, and we don't have to look too far past the Disney Blog to understand that. But, just as in here and in any forum for that matter, there are a lot of "experts" out there who frankly aren't, it's important to take several large grains of salt with you when listening to any podcast.

 

[PeterAlt]

Through the first 3 quarters of FY2014, Disney recorded $1056M international and $809M domestic capital expenditures (capex).

Most of international capex is at Shanghai.

However, 57% of that Shanghai money is being reimbursed by the Shanghai Shendi Group elsewhere on the books, so it's not really being paid for by corporate Disney.

Disney is not reimbursed immediately for the 57% spent in Shanghai. Further reimbursements for capex spent this year will follow in future fiscal years. Capex that is ultimately paid by corporate Disney might actually be down (again) in FY2014. (Capex was way down in FY2013.)

Before anyone tries to defend Disney for spending $809M domestically, please remember my earlier posts regarding what Rasulo called "maintenance capital". Rasulo reported that Disney spends well over a billion annually just to keep its facilities from degrading.

Depreciation tells even more.

Disney uses the straight-line method to depreciate capex. This means that the cost of a capital investment is divided by X and then equally recorded as a cost over X number of years.

At Disney, the costs of buildings and attractions are spread out over 25-to-40 years. For example, Disney might still be depreciating aspects of Epcot, opened in 1982. However, it's doing so at 1982 prices. Building Epcot today would cost several times what it did in 1982.

I mention this because, for the first 3 quarters of FY2014, Disney spent $809M in domestic capex but depreciated $832M domestically, despite most of what's being depreciated having been built in 2001 (DCA) or before at much lower costs due to inflation.

The numbers suggest what we all already know: WDW is getting old and Disney is not re-investing in it.

I'm gonna need a tissue after reading that! What ever happened to the Big Beautiful Tomorrow? Oh, that was yesterday...

 

[dhall]

Would be identical. They have sorta plans to redo RnRC in Paris to a Marvel theme (likely Spidey).

It makes some sense -- it's an off-the-shelf ride and it's not like they broke the budget with the props.

 

[GoofGoof]

Through the first 3 quarters of FY2014, Disney recorded $1056M international and $809M domestic capital expenditures (capex).

Most of international capex is at Shanghai.

However, 57% of that Shanghai money is being reimbursed by the Shanghai Shendi Group elsewhere on the books, so it's not really being paid for by corporate Disney.

Disney is not reimbursed immediately for the 57% spent in Shanghai. Further reimbursements for capex spent this year will follow in future fiscal years. Capex that is ultimately paid by corporate Disney might actually be down (again) in FY2014. (Capex was way down in FY2013.)

Before anyone tries to defend Disney for spending $809M domestically, please remember my earlier posts regarding what Rasulo called "maintenance capital". Rasulo reported that Disney spends well over a billion annually just to keep its facilities from degrading.

Depreciation tells even more.

Disney uses the straight-line method to depreciate capex. This means that the cost of a capital investment is divided by X and then equally recorded as a cost over X number of years.

At Disney, the costs of buildings and attractions are spread out over 25-to-40 years. For example, Disney might still be depreciating aspects of Epcot, opened in 1982. However, it's doing so at 1982 prices. Building Epcot today would cost several times what it did in 1982.

I mention this because, for the first 3 quarters of FY2014, Disney spent $809M in domestic capex but depreciated $832M domestically, despite most of what's being depreciated having been built in 2001 (DCA) or before at much lower costs due to inflation.

The numbers suggest what we all already know: WDW is getting old and Disney is not re-investing in it.

The billion dollars annual in upkeep Capex is a pretty telling number. You are right about age. The airlines seem to go through this cycle with their fleet of planes. When they are shiny and new everything is fine, but as time goes on it costs more and more to upkeep the fleet and newer competitors come along with the newest aircraft. Your planes are supposed to last 20+ years so you can't just scrap them and buy the newest models out there so the competition wins out. With the airlines they eventually go bankrupt, get out from under their debt and order a bunch of new planes and start the whole cycle over again. You can't exactly do that with a theme park.

One thing that stands out to me is that they need to add new attractions, but it can't just be through expansion. They have to do some of it through replacement of existing attractions or the billion dollars a year of upkeep will become 2 billion or 3 billion. Replacing older rides that are expensive to maintain makes sense from a business prospective, but the nostalgia factor makes it difficult to do.

At least Universal has the excuse of lack of space. What will be interesting to see is what happens to the Universal Florida parks as they approach 30 or 40 years old like large portions of WDW are now and the infrastucture needs to start being replaced. Right now Universal is the low cost carrier with the shiny new planes but some day they will be long in the tooth too. WDW is the aging airline that needs to think about a process of rebuilding. I think we starting seeing some of this with the recent Poly work and some work at MK in the last few years. As the original structures approach 50 years old they may need more work and/or replacing. It's a balancing act between upkeep and adding new things.

 

[RSoxNo1]

That sounds lovely............but makes no sense.

Did you get that from a stockholders brief?

Wow. That's really stretching it!

Seriously, why can't people understand obvious sarcasm.

 

[CDavid]

Seriously, why can't people understand obvious sarcasm.

Because there are a few (notorious) posters on the board occasionally who would actually take such a position.

 

[GoofGoof]

Through the first 3 quarters of FY2014, Disney recorded $1056M international and $809M domestic capital expenditures (capex).

Most of international capex is at Shanghai.

However, 57% of that Shanghai money is being reimbursed by the Shanghai Shendi Group elsewhere on the books, so it's not really being paid for by corporate Disney.

Disney is not reimbursed immediately for the 57% spent in Shanghai. Further reimbursements for capex spent this year will follow in future fiscal years. Capex that is ultimately paid by corporate Disney might actually be down (again) in FY2014. (Capex was way down in FY2013.)

Before anyone tries to defend Disney for spending $809M domestically, please remember my earlier posts regarding what Rasulo called "maintenance capital". Rasulo reported that Disney spends well over a billion annually just to keep its facilities from degrading.

Depreciation tells even more.

Disney uses the straight-line method to depreciate capex. This means that the cost of a capital investment is divided by X and then equally recorded as a cost over X number of years.

At Disney, the costs of buildings and attractions are spread out over 25-to-40 years. For example, Disney might still be depreciating aspects of Epcot, opened in 1982. However, it's doing so at 1982 prices. Building Epcot today would cost several times what it did in 1982.

I mention this because, for the first 3 quarters of FY2014, Disney spent $809M in domestic capex but depreciated $832M domestically, despite most of what's being depreciated having been built in 2001 (DCA) or before at much lower costs due to inflation.

The numbers suggest what we all already know: WDW is getting old and Disney is not re-investing in it.

On a seperate point, 57% of Shanghai is coming back plus a few hundred million spent on DVC build out which will come back as soon as the points are sold. In reality the money spent in 2014 that isn't being recovered is very small. 2015 will likely be the same. I know they talked about ramping down capital spending after the 2011 and 2012 fiscal years but this is a pretty steep ramp down. IF they really announce StarWars in both CA and FL next year I assume the capital spending won't ramp up until 2016 or 2017 anyway. I guess there will be a lot of money left over for stock buybacks again next year

 

[RSoxNo1]

Because there are a few (notorious) posters on the board occasionally who would actually take such a position.

You're right, I fall into that category.

 

[GoofGoof]

Seriously, why can't people understand obvious sarcasm.

I assumed you were being sarcastic.

Of course WDW does seem to be staying competitive with Universal over the past few years despite an obvious imbalance of new attractions. I don't for one minute believe NextGen has anything to do with it, but I could see someone in Disney management trying to make that connection...most likely someone trying to keep their job

 

[71jason]

Yeah Hulk doesn't seem like a good fit outside of Universal. The Guardians however I think could fit quite nicely.

The movie with

Spoiler

a semen joke and the line "The green is my friend." And tons and tons of violence.

Yeah, a seamless fit into Magic Kingdom...

 

[Mike S]

The movie with

Spoiler

a semen joke and the line "The green is my friend." And tons and tons of violence.

Yeah, a seamless fit into Magic Kingdom...

Almost forgot lol. Then again they are putting Avatar in Animal Kingdom so clearly they can think of ways to avoid things that would be questionable in a theme park geared to families. Also Alien in the Great Movie Ride.

 

[71jason]

Almost forgot lol. Then again they are putting Avatar in Animal Kingdom so clearly they can think of ways to avoid things that would be questionable in a theme park geared to families. Also Alien in the Great Movie Ride.

I think GotG has a lot of heart, which people remember, and why they tend to gloss over it being the raunchiest and arguably most violent Marvel movie yet.

ETA - I think you know my thoughts on Avatar, lol

 

[ParentsOf4]

On a seperate point, 57% of Shanghai is coming back plus a few hundred million spent on DVC build out which will come back as soon as the points are sold. In reality the money spent in 2014 that isn't being recovered is very small. 2015 will likely be the same. I know they talked about ramping down capital spending after the 2011 and 2012 fiscal years but this is a pretty steep ramp down. IF they really announce StarWars in both CA and FL next year I assume the capital spending won't ramp up until 2016 or 2017 anyway. I guess there will be a lot of money left over for stock buybacks again next year

Since you mentioned both domestic capital spending and stock buybacks, let me give you what I consider to be the most incredible indictment of Iger's administration.

Since Iger took charge in 2005, Disney has spent $11.1B on domestic capital investments.

Over the same period, Disney has spent $38.3B on stock buybacks.

Seriously, is anyone willing to suggest that Iger and his minions couldn't find a way to spare a couple of billion to fix WDW?

 

[Mike S]

I think GotG has a lot of heart, which people remember, and why they tend to gloss over it being the raunchiest and arguably most violent Marvel movie yet.

ETA - I think you know my thoughts on Avatar, lol

No wonder people enjoyed it so much