With apple closing some stores now, I wonder how that will effect UO and WDW. If things start to close down again, but the main theme parks remain open...it will be interesting.
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Universal Puts Disney's Reopening on Defensive
- Thread starter WDW Pro
- Start date
With apple closing some stores now, I wonder how that will effect UO and WDW. If things start to close down again, but the main theme parks remain open...it will be interesting.
Hard to say at this point. Disney NEEDS the parks open... people are forgetting just how much money the company is losing every day and how little revenue is coming in.
the.dreamfinder
Well-Known Member
That’s more than twice as many signers than the “Remove Splash Mountain and Replace It With ‘The Princess and the Frog’“ petition got.
I agree, but I also wonder just how much revenue opening now will create. You figure they are not selling any tickets right now so no extra revenue there. They are only opening a tiny amount of rooms, it appears only those rooms that are DVC breakage. The DVC rooms filled by DVC owners do not bring in any money only mitigates the DVC problem. They are going to need a ton of employees to help enforce the rules. I was at Disney Springs fairly soon after they opened the World Of Disney and there must have been 2 employees to every guest. The restaurants are going to be serving a fraction of their normal capacity. None of the extra ticketed events are happening. No dessert parties, tours, etc. I really wonder how much profit will be coming in. I almost wonder if they waited till later if they could have opened to a greater capacity and opened more experiences for more money. Then I see how the numbers in FL are skyrocketing and it really makes me think that they may not get to raise the occupancy significantly until a vaccine is found.
disneygeek90
Well-Known Member
If, by example, they lose 1 million every day they’re closed, but lose 500k every day they open, there’s still value in opening. They likely won’t be make a profit but they’d be at least a little less in the negative.
GoofGoof
Premium Member
On the last earnings call Chapek said they wouldn’t open any park unless they would at least contribute positive cash flows. There are cash sunk costs and some non-cash accounting expenses like depreciation which will happen no matter what they do. As long as the revenue brought in exceeds the added cash costs of staffing the parks and the added variable costs for being open they will open. I’m sure the numbers have been run. I also agree with @icc2515 that it’s not likely that they will make a whole lot of extra cash at first but opening keeps them competitive, keeps their employees working (federal extra unemployment runs out end of July) and solves the DVC dilemma of what to do with all those points.
Sirwalterraleigh
Premium Member
Wait for what? They won’t go and buy some stuff...so they’ll work there or leave and go up the road. Same as always
I think you’re overestimating how much they want to be “open” under the current conditions...
And that is a wrecked economy...that’s a fact in the near to immediate term and no one is going to wish it away.
Disney has little interest in operating their parks in “beta” mode anymore. It used to be a reality they accepted. Nothing about Iger would indicate they have any interest in valuing their guests to the level needed in down times.
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tirian
Well-Known Member
Forget the reopening; I’m more surprised by how many people don’t think Disney changed its mind several times before choosing opening dates. They’re still the last major parks to reopen, and everything depends on a reservation system. They clearly didn’t have the infrastructure in place as quickly as other companies.
I hope they recover quickly, because I’m ready to book both coasts for 2021.
I hope they recover quickly, because I’m ready to book both coasts for 2021.
tirian
Well-Known Member
And five times more than the Splash petition deserved.
tirian
Well-Known Member
IMHO, you’re both right. Theme parks represent about half of Disney’s revenue, but for almost a decade, the company’s business plan has been to charge much, much more for much less.
When a conglomerate is bloated like Bob’s IP Holdings, Inc., they can’t afford to be closed — yet they can only be profitable with constantly crowded theme parks and theaters. No bull market has ever lasted long enough to support that model. We’ve had three bubbles and a recession since 2000. Why’d the Disney Board ever think this was sustainable?
Iger ran 2010–2019 like someone who just got a new job with better pay, but promptly maxed out every credit card.
So yeah, they need the park revenue.
Sirwalterraleigh
Premium Member
Excellent analogyIMHO, you’re both right. Theme parks represent about half of Disney’s revenue, but for almost a decade, the company’s business plan has been to charge much, much more for much less.
When a conglomerate is bloated like Bob’s IP Holdings, Inc., they can’t afford to be closed — yet they can only be profitable with constantly crowded theme parks and theaters. No bull market has ever lasted long enough to support that model. We’ve had three bubbles and a recession since 2000. Why’d the Disney Board ever think this was sustainable?
Iger ran 2010–2019 like someone who just got a new job with better pay, but promptly maxed out every credit card.
So yeah, they need the park revenue.
For all that argued that parks were “underpriced” and bob’s price war was “Normal inflation”...that was never the case. It’s been an unusually long case of bubble economics. Because business is no longer currency based...it’s all speculation and manipulated on a fundamental level in the halls of power to sustain itself. We owe too much money? Make more.
Interest rates will be a problem? Slash them to nothing.
Major banks just got caught laundering money internationally? No sweat...give them a “fine” while they pay themselves for posting “record profits”
It’s really rigged. It’s all talk actually.
So since 2000...the Eisner turmoil and bob “settle” period...Disney had a double dip recession in the early 2s followed by a brief steep price spike, followed by a crash that Bob - to his credit - managed to completely turn in his favor, followed by the most sustained aggressive price hike strategy in parks history...
It’s been a ride. But there is no way for them to keep the chain on the bike from breaking at some point.
Not possible.
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I’m so sick of this narrative. It’s patently false.
The parks were open for 0 days in Disney's fiscal Q3, which ends in June.
The Wall Street Analysts who follow Disney and build out financial models based on their 10Ks and statements have the following range of predictions for the quarter:
Low estimate: loss of $1.20/share
High estimate: profit of $0.18/share
Consensus estimate: loss of $0.58/share
That works out to a loss of $2bn, a gain of $300mil, and a loss of $1bn, respectively.
Disney had $14bn in cash on hand at the end of Q2.
So, yeah, Disney is fine.
Sirwalterraleigh
Premium Member
You are correct...Disney is so large that they never “needed” to open. The speculation I’ve got from the few I know that still work for them or have acquaintances that do and are trusted is that they wrote the year off internally and were fine with not opening at all.
So they don’t “need” to open.
But I’m careful to trust market mechanisms as solid these days. If anything has been proven these last few months it’s stocks/financials have nothing to do with the actual nuts and bolts of business anymore. Doesn’t matter what’s sold and who’s working.
It’s speculation...much more gambling that accounting.
Horizons '83
Well-Known Member
- In the Parks
- No
One big point you're missing here is that that their largest competitor is has been open for 3 weeks now. Right now it may not seem they need to be open, but market share is the driver here, not analyst predictions.
That's been true since the 80s. We go through periods where the numbers make sense when tied to fundamentals and many more periods where they don't.
I would be less skeptical of that argument if Universal was attracting more than 10000 people a day to their non-water parks.
Everyone was so certain that Disney would sell out so many parks and days yesterday and by the end of the day they had sold out their smallest park for 3 days total.
Based on what I've seen here and in, um, other recent events, I'm not sure I'd want to be pinning my hopes on people risking their health to show up for things.
Horizons '83
Well-Known Member
- In the Parks
- No
I agree to a certain degree, but I feel there is/will be pent up demand that being closed won't capture when that time comes.
Another point i'd bring up is by Disney not being open is that their are other ripple that will occur, everything from their food suppliers, merchandising factories, etc. all being closed for 3 to 4 months with no business. Disney is really is own micro-economy.
Sirwalterraleigh
Premium Member
I would venture the last two months of “market growth”...as the world economy is largely shuttered and the Fed is quietly buying junk bonds by the trillions....
...would be a “don’t make sense” example.
Sirwalterraleigh
Premium Member
I’m firmly planted in the center of the northeast megalopolis...where the largest block of wdw always comes from...
And I’ve been warning for months that the people AREN’T coming back anytime too soon. Lost year.
I think I’ve actually underestimated that so far.
I think I have too.