Where does all the money go?

[DisneyparkFreak]

I just finished reading the Walt Disney Company 2007 EOY financial Report and I am very curious about how the parks budgets work. I assume that WDW is pretty self sufficient and doesn't require much added funds from the Walt Disney Company... So my question is... If the Parks division of the company had 2.8 Billion dollars at the end of the day after the bills were paid and the vast majority of that money came from WDW why are we not seeing capital improvements in terms of new attractions??? or better yet pay raises for the CM's? I can understand that CalAdventure is getting money from Daddy to redo the park, but is WDW getting to do all the work just so CA Adventure reaps all the rewards...

I understand capitalism and return to Stock Holders, and as a stock holder I would like to see the parks that I own a very small piece of have more attractions which would probably help generate more income which in turn increases my investment.

I'm not an accountant, but seriously $2.8 BILLION.... Come On.

 

[tomm4004]

If the Parks division of the company had 2.8 Billion dollars at the end of the day after the bills were paid and the vast majority of that money came from WDW why are we not seeing capital improvements in terms of new attractions??? or better yet pay raises for the CM's?

I don't think that is business philosophy. If you can make $2.8 billion with current CM wages, why raise them? That would just increase expenses and lower profit. That's how business thinks.

We have seen some new attractions - Soarin', Everest, car stunt show, the Nemos. If one big, new attraction draws a crowd, they wait until the novelty wears off before building something new. MK doesn't get a major new attraction (in 20 years) because they probably figure attendance is maxed out anyway.

They're not going to abandon the strategy that got them that $2.8 billion profit in the first place.

By the way, Iger made $28 million including a $14 million bonus while the stock has dropped six bucks.

 

[Lee]

I assume that WDW is pretty self sufficient and doesn't require much added funds from the Walt Disney Company...

Actually, it works the other way. The profits from the Parks and Resorts division are used to prop up other areas of the company that aren't doing as well.

 

[jt04]

So unfortunate

Actually, it works the other way. The profits from the Parks and Resorts division are used to prop up other areas of the company that aren't doing as well.

If only they were run as seperate companies to stand or fall on their own. Imagine what WDW would be if it did not have to subsidize other parts of the Walt Disney Company. So utterly wrong. This, to me, is Eisner's legacy. And if WDW does not start investing (upkeep, new capital, salaries) in itself, the "declining by degrees" will accelerate I am afraid. If I am wrong someone please correct me.

Please get rid of that which does not work in the WDC!

 

[ChrisFL]

If only they were run as seperate companies to stand or fall on their own. Imagine what WDW would be if it did not have to subsidize other parts of the Walt Disney Company. So utterly wrong. This, to me, is Eisner's legacy. And if WDW does not start investing (upkeep, new capital, salaries) in itself, the "declining by degrees" will accelerate I am afraid. If I am wrong someone please correct me.

Please get rid of that which does not work in the WDC!

Why? There's so many great Disney things out there, there's the Disney Channel, Radio Disney, Disney Mobile, Disney movies (forget animation), Adventures by Disney, Disney hotels in other locations, ABC, ESPN, and who can forget Go.com and I can't believe they got rid of those sports teams, The Angels and Ducks were so....magical...:shrug:

But seriously I agree 100%, the moment they dropped animation to focus on the other divisions was the moment it stopped becoming Disney and started to become the Eisner Company. Hopefully we can start to see some changes.

 

[MichWolv]

I just finished reading the Walt Disney Company 2007 EOY financial Report and I am very curious about how the parks budgets work. I assume that WDW is pretty self sufficient and doesn't require much added funds from the Walt Disney Company... So my question is... If the Parks division of the company had 2.8 Billion dollars at the end of the day after the bills were paid and the vast majority of that money came from WDW why are we not seeing capital improvements in terms of new attractions??? or better yet pay raises for the CM's? I can understand that CalAdventure is getting money from Daddy to redo the park, but is WDW getting to do all the work just so CA Adventure reaps all the rewards...

I understand capitalism and return to Stock Holders, and as a stock holder I would like to see the parks that I own a very small piece of have more attractions which would probably help generate more income which in turn increases my investment.

I'm not an accountant, but seriously $2.8 BILLION.... Come On.

You are assuming that extra revenue should lead to extra expenditure, but why? Disney isn't in business to make gross revenue, but to make net income. If they believe that extra expenditures on things like wages and cap ex will lead to even more extra revenue, they'll do it (in the most advantageous way they can come up with), but why spend more on wages if you already think guests are happy as it is. Assume spending another $100million in wages would only get another $99 million in revenue -- no point. So Disney, like other companies, looks for the balance that, long term, will make the most net income.

Think of it on a small scale. It you're looking to buy a car, and you find one that you think is worth $20,000, that's what you'll be willing to pay, whether the car cost $19,000 or $12,000 for Toyota to make.

Oh, and I am an accountant.

 

[jt04]

Why? There's so many great Disney things out there, there's the Disney Channel, Radio Disney, Disney Mobile, Disney movies (forget animation), Adventures by Disney, Disney hotels in other locations, ABC, ESPN, and who can forget Go.com and I can't believe they got rid of those sports teams, The Angels and Ducks were so....magical...:shrug:

But seriously I agree 100%, the moment they dropped animation to focus on the other divisions was the moment it stopped becoming Disney and started to become the Eisner Company. Hopefully we can start to see some changes.

I spend a substantial amount of time at WDW and, to be perfectly frank, they must begin to recapitalize the entire resort or there will be serious problems in a few years. If that means allowing some of the hotel resorts to be "sold off" or managed by other companies so they can concentrate on the parks then that is what they should do. I get the sense that the scope of WDW is too broad for management to keep up with. They are going to have very serious and expensive issues otherwise IMHO.

 

[jt04]

You are assuming that extra revenue should lead to extra expenditure, but why? Disney isn't in business to make gross revenue, but to make net income. If they believe that extra expenditures on things like wages and cap ex will lead to even more extra revenue, they'll do it (in the most advantageous way they can come up with), but why spend more on wages if you already think guests are happy as it is. Assume spending another $100million in wages would only get another $99 million in revenue -- no point. So Disney, like other companies, looks for the balance that, long term, will make the most net income.

Think of it on a small scale. It you're looking to buy a car, and you find one that you think is worth $20,000, that's what you'll be willing to pay, whether the car cost $19,000 or $12,000 for Toyota to make.
Oh, and I am an accountant.

A bit simplistic. If you continue to siphon off money without a view to long term upkeep you could end up with a pile of rust instead of a car. And I am no accountant but I did have a car rust out on me.:lol:

 

[ChrisFL]

But it's clear that Disney doesn't budge on changing things at their parks unless they see attendance dropping or a ton of complaints over a looong period.

 

[jt04]

But it's clear that Disney doesn't budge on changing things at their parks unless they see attendance dropping or a ton of complaints over a looong period.

I see infastructure issues that the average person who does not visit much probably does not see or notice. And I have a feeling most managers are afraid to, or encouraged not to, complain about problems because they are under pressure to meet budgets. It's as if there is a giant game of, "if we don't deal with it the problem does not exist". I see a lot of stuff degrading that will take big money to fix if not dealt with. It's like that old commercial, "you can pay a little now or a lot later". That is why they call it maintenance. I am talking about stuff like monorail cars, sea walls, boat docks, transport boat motors, fencing, roof coverings, train tracks etc. The list is long. Now it could be the strategy is that once it wears out they just bulldoze it like the North wing of the Contemporary or 20,000 Leagues Under the Sea. Could Space Mountain be next?

 

[MythBuster]

Also, they have fund their expansion projects. Hopefully, they don't try to over expand again like they did with the Disney Stores

 

[jt04]

Also, they have fund their expansion projects. Hopefully, they don't try to over expand again like they did with the Disney Stores

To me it is as simple as getting rid of divisions that don't show a profit, and most importatly, investing WDW money at WDW!

 

[jt04]

Oh, and I just heard that Sea World's salt water tanks are leaking into the aquifer. Nice!

 

[KaliSplash]

Mickey's job is to make money. He does this by providing entertainment.
He pays his workers as much as he has to, no more.
As to the maintenance issues, yes, some are dealt with, many don't seem to be as often any more. There are a whole host of things that don't work the way they used to. But millions of people still come. So as long as Mickey is making money, he will keep doing so. When downturns occur, steps are taken.
So much of business today is not simply making money, but making as much money as you are EXPECTED to make. Stock prices rise and fall on whether expectations are met. Not simply on whether we made money. There is increased stockholder demand for continuous growth. That's why the cost of candy bars go up even as the size of the bars go down.
I agree I'm concerned about the trend. But what they are doing now is making them happy, so they'll keep doing it until it doesn't work.

 

[PhotoDave219]

Actually, it works the other way. The profits from the Parks and Resorts division are used to prop up other areas of the company that aren't doing as well.

Are you actually suggesting that this is a company that is expected to milk as much profit out of people as humanly possible? Perish the thought.... :ROFLOL: :ROFLOL: :ROFLOL:

 

[jt04]

Mickey's job is to make money. He does this by providing entertainment.
He pays his workers as much as he has to, no more.
As to the maintenance issues, yes, some are dealt with, many don't seem to be as often any more. There are a whole host of things that don't work the way they used to. But millions of people still come. So as long as Mickey is making money, he will keep doing so. When downturns occur, steps are taken.
So much of business today is not simply making money, but making as much money as you are EXPECTED to make. Stock prices rise and fall on whether expectations are met. Not simply on whether we made money. There is increased stockholder demand for continuous growth. That's why the cost of candy bars go up even as the size of the bars go down.
I agree I'm concerned about the trend. But what they are doing now is making them happy, so they'll keep doing it until it doesn't work.

My concern is that if trends continue large areas of WDW will be sold off to other companies. I could even see some of the parks being sold off. It could be that the only thing Disney ends up owning at WDW is the MK and it's surrounding resorts. I know it's been discussed. So if that is alright with you (as long as the stock price temporarily goes higher) then so be it.

 

[jt04]

^ Oh and Iger made over $27 million last year. More power to him, that is great. (No I am not being sarcastic)

 

[chinitopoop]

disney doesnt need to do anymore at wdw because as it stands its the most visited out of all the disney resorts around the world, so they'll continue doing the minimum, introducing a new ride, show, or parade every now and then and thats it, they know the people will come regardless so as long as they have just a hand full of things they can hype up and promote every year to advertise in commercials and such to keep it fresh (even if that means theyre still advertising 2 or 3 yr old attractions as being "new") then theyre fine with keeping things the same, which is the reason why I think the last 2 parks wdw built really havent seen the kind of growth you'd expect from one of the most visited places on earth, I mean since animal kingdom opened 10 years ago, what did it get? ee and now nemo? (correct me if i'm missing something) .. mgm (I'm gonna be calling it that for a whillle lol) is now getting a little attention, but for the money wdw brings in, mgm should have been brought up to full day park status a long time ago, fact is, wdw doesnt need to do much at all anymore, in the company's eyes wdw is complete, and theyre just trying to bring all the other resorts around the world up to wdw's status...lets not forget that the people in the top offices at disney take home some very hefty salaries too , and to spend more on the parks and employees than is allotted might hit too close to their wallets, and they would probably rather let the parks decay and resemble six flags before they take home smaller pay checks, bottom line is wdw is already at the top of its game as far as disney resorts go, the way the disney company sees it your already getting more than what your paying for, anything else they add from here on out, consider it a bonus (that is til they raise the prices again tho, which will most likely be very soon, mickey might be very cute and loveable but that mouse likes money more than he likes cheese)

 

[MythBuster]

I mean since animal kingdom opened 10 years ago, what did it get? ee and now nemo? (correct me if i'm missing something) ..

You are forgetting the fabulous and expensive carnival area called DinoRama!!

 

[lentesta]

Two possible reasons why WDW isn't getting capital-intensive projects:

1) DCA is, to the tune of $1 billion.

2) They're waiting to see what Universal does with Harry Potter, in order to have an adequate response.