Universal to Invest $1.5 Billion in Orlando Resort

[flynnibus]

I enjoy (and agree) with most of your posts, but I can't help but think of your style as that as similar to a regular caller to a friend's radio talk show. We'll call the dude 'Saul' and my friend would always refer to him as 'the guy who picks wings off of flies' ...

Just don't count your chickens before they hatch...

I'm surprised no one has drawn the analogy yet to 'the Disney decade'.

I'd be more interested in hearing new strategic plans from uni on how they plan on breaking disney's DME cockblock and other transportation roadblocks. I think uni already has a good enough product to compete, they just need to outsmart disney's blocking schemes. I think they need some more junior friendly attractions as well.

I just don't find the dollar number floated as the carrot when it's over such a long period and could represent everything from rides to food to hotels ( which people left out of their 'in progress' dollar counts)

 

[s8film40]

Just don't count your chickens before they hatch...

I'm surprised no one has drawn the analogy yet to 'the Disney decade'.

I'd be more interested in hearing new strategic plans from uni on how they plan on breaking disney's DME cockblock and other transportation roadblocks. I think uni already has a good enough product to compete, they just need to outsmart disney's blocking schemes. I think they need some more junior friendly attractions as well.

I just don't find the dollar number floated as the carrot when it's over such a long period and could represent everything from rides to food to hotels ( which people left out of their 'in progress' dollar counts)

I think the DME element is one thing that may backfire for Disney. For years Disney has worked hard at separating people from their transportation and so far this has worked. For most Disney guests planning to spend a day at Universal the loss of DME the hassle of transferring hotels and transportation from WDW to Universal then Universal to airport is greater than just taking a cab or shuttle to Universal for the day. However if it becomes more appealing and necessary to devote two or more days at Universal as it looks like it will be this all changes quite a bit. A guest who transfers to a Universal hotel now only has to pay for one trip to universal and then one trip to the airport (roughly similar to one day round trip WDW to Universal) versus two days worth of round trip transportation as well as time lost in transportation each day. If Universal were to additionally add their own free airport shuttle this makes it even more appealing to switch hotels. In that scenario a guest would actually spend less on transportation for two days than they would have on one from a WDW hotel. A guest with a rental car could easily stay at a WDW hotel and spend two days at Universal, for a guest relying on DME it's almost a no brainer that transferring hotels is the better option.

 

[AndyMagic]

Just don't count your chickens before they hatch...

I'm surprised no one has drawn the analogy yet to 'the Disney decade'.

I'd be more interested in hearing new strategic plans from uni on how they plan on breaking disney's DME cockblock and other transportation roadblocks. I think uni already has a good enough product to compete, they just need to outsmart disney's blocking schemes. I think they need some more junior friendly attractions as well.

I just don't find the dollar number floated as the carrot when it's over such a long period and could represent everything from rides to food to hotels ( which people left out of their 'in progress' dollar counts)

Comparing this to the Disney Decade isn't really fair since that was essentially a blue sky plan that didn't have concrete funding. Even so, that period at Disney World still brought us some great additions even if it didn't live up to the original plans. In this case, Comcast has essentially allocated the first $900 million already and the remaining $600 million is all but guaranteed according to all the people I've talked to at Comcast. It should also be noted that this estimated $1.5 billion figure is all for Universal Orlando Resort and does not include all the planned investments into the Hollywood and Shanghai properties. I've said this before and I'll say it again, Steve Burke (Executive Vice President of Comcast and CEO of Universal) is a huge believer in the parks division. Add to that, he is known as a risk taker and isn't afraid to spend money to get things right. In addition to the parks division, he also gave NBC and Universal Pictures big cash infusions to invest in daring programming. NBC would have never had the money to produce something like REVOLUTION which is now the number #1 new drama of the season had he not given NBC the needed cash. I've heard this man talk in person and he reminded me of Eisner back in the early 90s.

 

[flynnibus]

Comparing this to the Disney Decade isn't really fair since that was essentially a blue sky plan that didn't have concrete funding

And how does UNI's plan have concrete funding for things 6-10 years out for things they have zero liability for until they actually start working on them? The only way it would be 'concrete' would be to pull the money out of the coffers NOW - which there is no need to since Comcast has such a huge line of revolving credit (over 6 billion) it can use to fund activities. I question how one can call anything 6-10 years out 'concrete' when the cost to walk away from them on a moment's notice is zero and they aren't under way. And if they were underway, why would you take 6-10 years to do it? If its nothing more than plans - it's basically the same as the Disney Decade. And we saw how it only takes one thing in the future (EuroDisney in that case..) to make the ship change course. Disney had just as large a track record of expansion when Eisner did his Disney Decade speech too.. just coming off the opening of DMGM, etc. Don't count'em until they've hatched.

In this case, Comcast has essentially allocated the first $900 million already and the remaining $600 million is all but guaranteed according to all the people I've talked to at Comcast

I'd love to hear a breakdown of that 900 million claim in terms of projects that backs that statement.

And just looking at the last 10-Q, Comcast was already spending nearly 100mil in capital in 6months for theme parks.. so again I question the impact of this number.

 

[Disneyhead'71]

First, it should be pointed out that Universal hasn't said that this is a $1.5B/10 year plan. There hasn't been a peep out of Universal about any of this since they announced Jaws closure. This wasn't supposed to be public knowledge.

 

[AndyMagic]

I'd love to hear a breakdown of that 900 million claim in terms of projects that backs that statement.

And just looking at the last 10-Q, Comcast was already spending nearly 100mil in capital in 6months for theme parks.. so again I question the impact of this number.

I don't think you read my entire post. The $1.5 billion that people are talking about is for Universal Orlando Resort. The $100 million quote you got from the 10-Q was for the entire theme park division.

As for a breakdown.
Transformers - $70 million
Springfield - $15 million
Harry Potter 2.0 - $460 million
Suess Landing E-ticket - $75 million
Cabana Bay Resort - $170 million
FFL Replacement - $55 million
Infrastructure and Ancillary improvements - $55

That brings us to 900 million. Obviously its all just speculation but it is based on what I've heard from some pretty reliable people. In the not to distant future we'll also have to add a water park and the complete renovation of Kidzone (with another E-Ticket going there as well).

 

[HTF]

Not sure why its so hard for a select few to accept this. Why wouldn't the headline resort of NBCUniversal get the largest expansion package funding out of all the resorts either operating or in development. Comcast execs see these resorts as true cash cows and are investing heavily to milk those profits over the next several years if not decades depending on how long they own them.

Universal Money pouring in,

Universal Orlando Expansion 1.5 Billion
Universal Hollywood Evolution Plan 1.6 Billion
Universal Japan Expansion 500 Million
Universal Moscow a 2.8 Billion dollar project in which NBCUniversal could be funding 500 Million
Universal Studios Korea, a joint resort with a total budget of 3.1 Billion dollars

Comcast will be moving forward to expand this section of their company as they have already seen what it could be for them. All you have to do is look at Comcasts last two quarterly breakdowns to understand why they believe this can be a huge asset to them.

 

[maxairmike]

Don't forget that Comcast was originally interested in purchasing Disney in large part for the parks. The CEO loves and believes in the parks almost to a fault.

And now that I think about it some more, I believe they actually started to move towards just buying the P&R division at the later stages of the talks back then. I'd have to go find my copy of Disney War, which I don't have on hand.

 

[HTF]

Don't forget that Comcast was originally interested in purchasing Disney in large part for the parks. The CEO loves and believes in the parks almost to a fault.

And now that I think about it some more, I believe they actually started to move towards just buying the P&R division at the later stages of the talks back then. I'd have to go find my copy of Disney War, which I don't have on hand.

Their are several execs that love the parks. One of them loved the donkey meet and greet and then noticed a huge ugly empty building sitting next to it.

 

[flynnibus]

I don't think you read my entire post. The $1.5 billion that people are talking about is for Universal Orlando Resort. The $100 million quote you got from the 10-Q was for the entire theme park division.

Uhh.. read my post again

And just looking at the last 10-Q, Comcast was already spending nearly 100mil in capital in 6months for theme parks.. so again I question the impact of this number.

I am aware of what the filing was covering and it was reflected in my post.

As for a breakdown.
Transformers - $70 million
Springfield - $15 million
Harry Potter 2.0 - $460 million
Suess Landing E-ticket - $75 million
Cabana Bay Resort - $170 million
FFL Replacement - $55 million
Infrastructure and Ancillary improvements - $55

That brings us to 900 million. Obviously its all just speculation but it is based on what I've heard from some pretty reliable people. In the not to distant future we'll also have to add a water park and the complete renovation of Kidzone (with another E-Ticket going there as well).

I appreciate you listing your previous comment out.. but to close it with 'its all speculation' while your previous comment was authoritative.. I find all of this pretty hard to find convincing. First, the original source of the discussion (Eric's column) doesn't name any specific source and isn't exactly known for his inside connections. You can't find a single consensus number on attractions that are already done.. let alone speculation on future projects.. there is not a peep from Uni itself on any such investment (tho that can be balanced with no announcements on anything as of yet except the hotel ). 15 million for springfield? The relocation of the carnival games? Or is something else in there?

And if numbers of 460-600 million for HP expansion are true.. I'm worried about going too hard in that direction. It's one thing to see your revenue numbers explode.. but you can't expect that to be linear or necessary keep growing at that new explosive rate based purely on that initial performance. So much of the HP success has to be recognized as exploiting an underserved market -- a market that isn't necessarily growing at some new great rate. That's a crazy amount of dollars to sink in one franchise alone. Lets just hope JKRowling revisits the universe

Not sure why its so hard for a select few to accept this. Why wouldn't the headline resort of NBCUniversal get the largest expansion package funding out of all the resorts either operating or in development. Comcast execs see these resorts as true cash cows and are investing heavily to milk those profits over the next several years if not decades depending on how long they own them.

Universal Money pouring in,

Universal Orlando Expansion 1.5 Billion
Universal Hollywood Evolution Plan 1.6 Billion
Universal Japan Expansion 500 Million
Universal Moscow a 2.8 Billion dollar project in which NBCUniversal could be funding 500 Million
Universal Studios Korea, a joint resort with a total budget of 3.1 Billion dollars

Comcast will be moving forward to expand this section of their company as they have already seen what it could be for them. All you have to do is look at Comcasts last two quarterly breakdowns to understand why they believe this can be a huge asset to them.

Why is it hard to swallow? Well by your own numbers.. you are saying they will invest 4.1-7.2 billion in a division that is bringing in roughly 2 billion in revenue per year.. and about 600million in income (rough numbers). When you are saying they are going to invest 7-12 YEARS worth of profits into expansion.. yeah that would raise suspicions. Compare this to Disney investing a billion+ into DCA.. which represents ~6months of operating income for Disney P&R. Add on top of that the investment was to recover a park from underperforming so substantially (hence, lots of headroom) vs investing incrementally in parks that aren't doing too shabby.

Where is the projected growth to justify the ROI on investing that much money into an existing park (so incremental revenue, not new revenue) when the investment is so astronomically high vs your actual income?

So yeah, I have a hard time believing uncited sources, from unproven sources, citing people are going to spend unheard of numbers over an unpredictable time frame.

 

[AndyMagic]

Uhh.. read my post again
15 million for springfield? The relocation of the carnival games? Or is something else in there?

Ummm no? They are adding a "mini-land" to the area around the Simpsons so that it will not longer be located in World Expo. They have already filed permits for the new buildings. $15 million is being conservative and the fact that you had no idea this was even being constructed is reason enough for me to just ignore all of your other rants. The Springfield addition has been known on these boards for months.

 

[AndyMagic]

Uhh.. read my post again


And if numbers of 460-600 million for HP expansion are true.. I'm worried about going too hard in that direction. It's one thing to see your revenue numbers explode.. but you can't expect that to be linear or necessary keep growing at that new explosive rate based purely on that initial performance. So much of the HP success has to be recognized as exploiting an underserved market -- a market that isn't necessarily growing at some new great rate. That's a crazy amount of dollars to sink in one franchise alone. Lets just hope JKRowling revisits the universe

Huh? The $460 million figure I quoted is still less than Carsland which last I checked was far less popular than Harry Potter. The reason it is so high is because they are starting from scratch. Phase 1 cost around $300 million but two attractions were already in place. Hogwarts Express alone involves significant construction in both Islands of Adventure and the Jaws site as well as all the backstage space in between. I don't think the figure is a "crazy amount of money" at all. Also are we forgetting that New Fantasyland cost $425 million! If Disney were building HP 2.0 the figure would probably be $800 million or more.

 

[flynnibus]

Ummm no? They are adding a "mini-land" to the area around the Simpsons so that it will not longer be located in World Expo. They have already filed permits for the new buildings. $15 million is being conservative and the fact that you had no idea this was even being constructed is reason enough for me to just ignore all of your other rants. The Springfield addition has been known on these boards for months.

Convenient excuse for you eh? Its still not clear on what Springfield will be really.. so you might want to check that escape hatch again..

Huh? The $460 million figure I quoted is still less than Carsland which last I checked was far less popular than Harry Potter

Do I need to spell everything out for you line by line? Back to back I've had to requote myself for you. I said '...HP expansion are true.. I'm worried about going too hard in that direction' - meaning the HP franchise, which encompasses the original area and the new one. There is a point when you go 'too far', and invest too much of yourself in a single area.. in terms of both resources and identity. Consider the point of 'diminishing returns' - will UNI have taken it too far?

Peter Pan is an amazing franchise property for TWDC... including several notable characters.. but people would still be legitimate to question plans if they were overbuilding in that direction.

I think there is something to be said for HP being an under represented property in terms of merchandise prior, and throw in the theme park experience and you get this retail explosion. That's fantastic - however, explosions are not sustained things. Once a balance has been reached between availability and the old pent-up demand.. retail will drop to a more sustainable run rate. One has to be careful in differentiating between what is your actual run rate, and short-term situations caused by an alignment of elements that won't persist. Long term investments need to be planned on that actual run rates - not the short term ones.

 

[AndyMagic]

I'm just going to go ahead and stop responding to your posts since they are now bordering on complete incoherence. I wouldn't know where to begin. That said, Springfield expansion isn't something I made up. Not sure how me discussing it is, "an excuse" for anything. It's happening. No escape hatch for me is needed. I'm all for having a devil's advocate around because it spurs discussion but you have taken that role to the extreme.

 

[HTF]

Why is it hard to swallow? Well by your own numbers.. you are saying they will invest 4.1-7.2 billion in a division that is bringing in roughly 2 billion in revenue per year.. and about 600million in income (rough numbers). When you are saying they are going to invest 7-12 YEARS worth of profits into expansion.. yeah that would raise suspicions. Compare this to Disney investing a billion+ into DCA.. which represents ~6months of operating income for Disney P&R. Add on top of that the investment was to recover a park from underperforming so substantially (hence, lots of headroom) vs investing incrementally in parks that aren't doing too shabby.

Where is the projected growth to justify the ROI on investing that much money into an existing park (so incremental revenue, not new revenue) when the investment is so astronomically high vs your actual income?

So yeah, I have a hard time believing uncited sources, from unproven sources, citing people are going to spend unheard of numbers over an unpredictable time frame.

Well it's not hard to understand if you know what your talking about. All of those projects outside of Universal Orlando and Japan are joint ventures. Anytime these major expansions or new projects get funding it comes from multiple investors for multiple parts of these mega resorts. Sorry i kind of figured people took that as common knowledge and should of worded it better so everyone could easily understand. Not sure why you seem to get so angry and go on the offensive every time something positive is said about Universal. Here are some sources about funding, approval, and overall project costs. I hope sources like the LA Times, Orlando Sentinel, or even the National paper in Korea are good enough, but since they don't talk about Disney I doubt they will be. Have a GREAT DAY.

Japan Source
http://latimesblogs.latimes.com/ent...-potter-heads-to-universal-studios-japan.html

Russia
http://articles.orlandosentinel.com...iversal-parks-resorts-theme-park-nbcuniversal
http://rt.com/business/news/moscow-universal-park-plan-967/

Korea
http://www.koreatimes.co.kr/www/news/biz/2011/06/123_88140.html
http://www.investkorea.or.kr/Invest...code=15301&no=608300004&bno=204090012&seq=111

Hollywood
http://www.dailynews.com/news/ci_21647729/nbcuniversals-1-6b-studio-park-expansion-okd-by
http://northhollywood.patch.com/art...uncil-approves-of-universal-expansion-project

 

[AndyMagic]

BGT420, it isn't worth the energy it takes to type out a detailed response when the intended recipient is hell-bent on reading everything with the use of some sort of logic manipulator that he/she found at a certain tea table in Wonderland.

 

[flynnibus]

All of those projects outside of Universal Orlando and Japan are joint ventures

Joint ventures was why I used a RANGE (as the exact split isn't out there..).. that shouldn't need spelling out.

And why quote the 1.6 billion number of the evolution plan for Hollywood - which only a minority portion is theme parks. A TWENTY year master plan for the USH site no less..

Not sure why you seem to get so angry and go on the offensive every time something positive is said about Universal

I think you should do a bit more research before drawing such conclusions.

Like so much of the information in this thread.. lots of convenient gloss overs and lack of credence.

 

[HTF]

Waiting on my boss for dinner so i have time. Always arrive before your boss who is always EARLY. And I did it on my iPad with my index finger.

 

[HTF]

Joint ventures was why I used a RANGE (as the exact split isn't out there..).. that shouldn't need spelling out.

And why quote the 1.6 billion number of the evolution plan for Hollywood - which only a minority portion is theme parks. A TWENTY year master plan for the USH site no less..



I think you should do a bit more research before drawing such conclusions.

Like so much of the information in this thread.. lots of convenient gloss overs and lack of credence.

I will not make this mistake again and your message is loud and clear. Any volunteers out there that can source everything said about Universal on the Internet for me so we don't upset anyone. Again very sorry to have a conversation about positive things like expansion in themeparks on a themepark forum.

 

[bubbles1812]

I will not make this mistake again and your message is loud and clear. Any volunteers out there that can source everything said about Universal on the Internet for me so we don't upset anyone. Again very sorry to have a conversation about positive things like expansion in themeparks on a themepark forum.

Just ignore him. I usually like his posts but most of what he's said here is plain mush. It's fun to speculate! Plus, it's pretty obvious Universal is investing money in infrastructure and rides in a way that Disney is not currently doing at this time... and that they are spending a lot of money, regardless of whether we know the exact exact amount. And it's pretty obvious they have many plans for what is to come, specifically for one resort unlike Disney.