News Walt Disney Company plans to spend $17 billion at Walt Disney World over the next ten years

[MagicHappens1971]

“I think that gives you a sense of how aggressive we're being in Walt Disney World. And this includes things like the transformation of Epcot.”

I feel like this also could be taken to mean that he was giving an example of the spending in the previous 10 years, as the question asked. It’s kind of hard to tell.

Also what new Star Tours attraction is he talking about?

 

[GoofGoof]

“I think that gives you a sense of how aggressive we're being in Walt Disney World. And this includes things like the transformation of Epcot.”

I feel like this also could be taken to mean that he was giving an example of the spending in the previous 10 years, as the question asked. It’s kind of hard to tell.

Also what new Star Tours attraction is he talking about?

He was just listing stuff going on right now that is confirmed. The Star Tours reference is new scenes being added to the ride.

 

[matt9112]

Turns out Shanghai is not the riskiest place to continue investing in Disney Parks.

Eh an authoritarian government that is on a collision course with your own government? Doesn’t sound like a business environment I would want to be in. Let alone the intellectual property theft. Everyone did business because everyone likes free money….that’s it and that is all.

That’s irrelevant. The point is where it could be invested other than Florida.

Where? They publicly said they don’t want to do regional stuff. On top of that the parks are really the only solid consistent win they have had. (As well as the cruise lines) they could build more boats? Or expand in Disneyland? But I don’t see them spending this money on anything outside the lines.

 

[GoofGoof]

Where? They publicly said they don’t want to do regional stuff. On top of that the parks are really the only solid consistent win they have had. (As well as the cruise lines) they could build more boats? Or expand in Disneyland? But I don’t see them spending this money on anything outside the lines.

They could use some of the money to buy shares back A chunk of the $17B discussed is getting spent at WDW either way because it pays for upkeep and major maintenance. The piece more at risk is the money allocated for additions. Right now Iger and crew are telling everyone who will listen that money is going to be spent as well but it’s certainly possible that if things get worse it doesn’t. In an extreme case where they lose in court maybe they cannot add anything new because the hostile board blocks it. Then the money will be used somewhere else, including maybe share buybacks.

 

[GoofGoof]

Depends on how the construction contract is written.

For example, with cruise ships, Disney pays (I think) 20% when the order is placed, and the balance when the ship is delivered.

It could be that the construction contract for the front of Epcot is similar. It could be that the majority of the cost doesn’t hit Disney’s books until the project is completed.

That makes sense. Either way, there is some money yet to be paid on those projects which is probably why he listed them.

 

[matt9112]

They could use some of the money to buy shares back A chunk of the $17B discussed is getting spent at WDW either way because it pays for upkeep and major maintenance. The piece more at risk is the money allocated for additions. Right now Iger and crew are telling everyone who will listen that money is going to be spent as well but it’s certainly possible that if things get worse it doesn’t. In an extreme case where they lose in court maybe they cannot add anything new because the hostile board blocks it. Then the money will be used somewhere else, including maybe share buybacks.

Stock buybacks ? I would rather they make good decisions that lead to more revenue than artificially pumping up share prices with buy backs. You know run a good business with decent margins that appeals to consumers.

 

[lazyboy97o]

Depends on how the construction contract is written.

For example, with cruise ships, Disney pays (I think) 20% when the order is placed, and the balance when the ship is delivered.

It could be that the construction contract for the front of Epcot is similar. It could be that the majority of the cost doesn’t hit Disney’s books until the project is completed.

Construction is paid over the course of the work based on certain milestones of completion. Disney also buys more base construction materials themselves that in other projects would be purchased by the contractor.

 

[GoofGoof]

Stock buybacks ? I would rather they make good decisions that lead to more revenue than artificially pumping up share prices with buy backs. You know run a good business with decent margins that appeals to consumers.

Yeah for sure. I’m just saying that if the company decides not to spend some of the money allocated to WDW there’s no guarantee it won’t just go to stock buybacks or some other lame thing.

 

[MagicHappens1971]

It’s been a few years since I’ve heard people on here talking about stock buybacks. Has Disney paused doing that since the pandemic?

 

[mkt]

They publicly said they don’t want to do regional stuff.

Did you see where I posted this almost two weeks before Disney made a statement?

 

[MagicHappens1971]

Did you see where I posted this almost two weeks before Disney made a statement?

They didn’t even need to make a statement. I think the writing was on the wall about that, Disney wouldn’t waste the money on that when they have two destinations in the US that bring in millions of people every year (globally of course, but also from all over the country)

The infrastructure expenses alone aren’t worth them building another resort in the US. I’m surprised Universal is trying this regional park approach

 

[mkt]

They didn’t even need to make a statement. I think the writing was on the wall about that, Disney wouldn’t waste the money on that when they have two destinations in the US that bring in millions of people every year (globally of course, but also from all over the country)

The infrastructure expenses alone aren’t worth them building another resort in the US. I’m surprised Universal is trying this regional park approach

I never said another park or WDW/DLR style resort.

A Hilton Head style resort could be done well and for comparably less.

 

[lazyboy97o]

Forgot to add that it’s also not unusual for Disney to not use lump sum construction contracts and just pays the contractors for their time since it’s easier to deal with changes that way.

 

[GoofGoof]

It’s been a few years since I’ve heard people on here talking about stock buybacks. Has Disney paused doing that since the pandemic?

The last time they bought shares back was 5 years ago in June 2018. They stopped paying the dividend in 2020 as well. Last dividend was Dec 2019. They did announce in Feb the dividend will return by the end of the year. No word on share buybacks but I wouldn’t expect any until the streaming business stops bleeding cash.

 

[John park hopper]

Tourism doesn't seem to be hurting

"Florida’s tourism agency Visit Florida estimated a record 37.9 million travelers into the state during the first quarter of 2023, up from a prior single-quarter high of 35.528 million in the first three months of 2022
The first quarter estimates “show that 2023 is on track to continue Florida’s outstanding performance in welcoming visitors,” Visit Florida President and CEO Dana Young said in the release. Visitors from other states continue to drive tourism growth, accounting for more than 91 percent of the first-quarter numbers."

 

[Bender123]

I'd put them at best as the straw that broke the camel's back.

Without the current situation, I'd have bet on Lake Nona being strategically delayed, but not closed.

With as much as the company is hemorrhaging money in areas like D+, ESPN and Star Wars, I doubt the Governor is more than a convenient scape goat for cost cutting.

Look at the other side on if they built it...spending huge on a new white collar campus after the largest layoffs in company history, downsizing an already low end remake of a major themepark, a stock price in free fall, huge loses on D+ and increasing costs on consumers? Dropping $1 Billion on that building would cause an investor revolt and light up consumer demands for why the money isnt being spent on the experiences and entertainment. It comes off as C suite spin, no matter what we want to think about the Florida laws.

 

[MisterPenguin]

With as much as the company is hemorrhaging money in areas like D+, ESPN and Star Wars, I doubt the Governor is more than a convenient scape goat for cost cutting.

Making less money with ESPN is not the same as hemorrhaging money. ESPN is not throwing a net loss. The lessening of profits is due to cord cutting. That's whey ESPN+ exists, which will be the successor to ESPN.

Disney has made big profits from Star Wars. The one movie that wasn't profitable in the theatrical run did not wipe out all the profits from all the other movies, or all the continuing merch sales, or the subscription fees that come from people watching billions of minutes of Star Wars series on D+.

D+ alone in your list is "hemorrhaging" money. But that loss has lessened in the past two quarter and D+ is on the way to being profitable.

 

[GoofGoof]

a stock price in free fall

DIS stock price 11/18/22 $91.80 (when Iger took over)
DIS stock price 5/22/23 $91.82

Where is the free fall? Seems flat to me.

I doubt cancelling the project has much to do with the stock price. Moving the jobs from CA to FL was always being done to cut costs. The billion dollar price tag was offset by $600M of tax credits they won’t get now so the net P&L impact was only going to be about $400M spread over 30+ years of depreciation. It was going to be much cheaper to build that campus (with the tax credits) and pay lower wages long term in FL than find office space in CA and pay higher wages. The company has started layoffs in CA so they have open office space in CA now to keep the jobs there. That’s the real financial incentive. There may be a point in the future where the company runs out of space again in CA but there’s no guarantee they will revisit a move to FL.

The other piece is that the workers didn’t want to relocate. Had the state of FL been working with Disney instead of opposing them they may have still been able to move forward with that project. The state should have been encouraging the company to add those jobs instead of doing the opposite.

 

[mkt]

Even with all these new laws for example it is a factual statement that disney in Florida still has less regulation to deal with than Anaheim. People however don’t want to see that.

When doing business in California, the regulatory environment is expected and you build it into your operating plan.

When doing business in Florida, it's not. Add in an unfriendly government that is clearly acting in bad faith, and you can see there's no way to plan it.

 

[Vegas Disney Fan]

The company has started layoffs in CA so they have open office space in CA now to keep the jobs there. That’s the real financial incentive. There may be a point in the future where the company runs out of space again in CA but there’s no guarantee they will revisit a move to FL.

This was probably 90% of the decision, not much reason to spend a billion dollars creating a couple thousand new desks when you now have several thousand sitting empty in CA.

The other 10% is likely some combination of rising costs in FL, the feud, and employee feedback. It‘s ultimately a financial decision though, if it still made financial sense on paper the feud and feedback wouldn’t be a factor.