Y'all should ...

[Pixiedustmaker]

Per your own post: Avatar is something they can absorb in their normal ongoing capital expenditure profile. Meaning it's not large enough to make any extra plans to borrow money for it. Carsland would be a similar sized project. Combined they would cost at most $1 billion. If spread over a period of 5 or 6 years they could both be done. Since Avatar seems to be on hold (both the movies and the section of AK) it would make sense to me to move forward with DHS first (with a proven product that you already built once) and spend the extra time to finalize the Avatarland plans.

In terms of the ongoing capex in the parks, I assume Rasulo is talking about the approximate $1 billion a year they plan to spend on domestic parks, perhaps for both upkeep and some small new attractions. Rasulo was a little vague, saying that they haven't hit the $2 billion mark, per year, yet, but that they will slightly ramp up spending. This "small" amount of ramp up would, be Avatarland. Would they also skimp back on ride refurbishments/upgrades? Probably, if this is the budget they will cannibalize to build Carsland/Avatarland.

But certainly, doing *both* Avatarland and Carsland would eat up too much of the ongoing domestic capex. They could probably swing it if they did:

2-3 years Avatarland
1-2 years upkeep ride refurbishments, study of Avatarland/need for Carsland
3 years Carsland.
Back to capex for up keep, other domestic capex.

You're looking, realistically, at Carsland coming six years after they break ground for Avatarland, maybe around 2019, about what I think would be the earliest.

But you also should figure in non-park spending and foreign investments. Should Shanghai do very poorly, the money for Carsland will evaporate.

Also, Rasulo isn't 100% certain it will be so easy to pull off Avatarland this way, as he says "we feel", which is always an ambiguous term.

"You know, Avatar is coming for Walt Disney World. That is something that we feel like we absorb in our normal ongoing capital expenditure profile. That is going to come on in 2015, 2016 and we will be investing against it. But we are not going to go back in the foreseeable future to what we saw in 2011 and 2012. Nowhere near that."

 

[Pixiedustmaker]

I don't see too many concerned analysts. I follow the stock pretty closely and most have raised their price targets and seem pretty happy with the projects already complete and those in the pipeline. Stock is soaring.

I would most certainly *not* invest in Disney now, and if I did I would dollar average given the volatility. And I don't like the P:E ratio.

DIS's 52-week range is: 28.19 - 53.39

Avengers helped, as well as spending in the theme parks. But high profile failures, have hit Disney before, and if Shanghai tanks, or you have a string of big box office failures, the stock could plummet. Any of this could make institutionals pull DIS out of their funds for an indeterminate time.

 

[GoofGoof]

2-3 years Avatarland
1-2 years upkeep ride refurbishments, study of Avatarland/need for Carsland
3 years Carsland.
Back to capex for up keep, other domestic capex.

Now we are pretty much saying the same thing. They may want to spread the capex for Carsland and Avatar over 5 or 6 years. I agree with that. That absorbs $200M to $300M a year for the combined projects. Where we differ is on the order. There is no reason they can't flip Carsland ahead of Avatar. 3 year of Carsland puts them in Q1 of 2016 for completion with the heavy costs coming in the first 2 years. Avatar continues to be developed on paper and they break ground in 2015 with a projected opening in 2018. Carsland is proven technology and design so they would be much less likely to have issues with budget overruns and no differences with Cameron. This also gives them some time to see if the Avatar sequels even get made.

 

[GoofGoof]

I would most certainly *not* invest in Disney now, and if I did I would dollar average given the volatility. And I don't like the P:E ratio.

DIS's 52-week range is: 28.19 - 53.39

Avengers helped, as well as spending in the theme parks. But high profile failures, have hit Disney before, and if Shanghai tanks, or you have a string of big box office failures, the stock could plummet. Any of this could make institutionals pull DIS out of their funds for an indeterminate time.

I am not trying to give anyone advice on what stocks to buy or not buy. I was just pointing out that most analysts seem to be pretty high on the stock right now. Disney should not be feeling pressure to cut costs or curb spending due to poor stock performance since the stock is doing well.

 

[ParentsOf4]

Building a Carsland, in addition to Avatarland and Shanghai, could worry some analysts/institutionals who would forsee a longer, and less certain, return on investment. So, yes, people could get upset if they see too much construction—even construction of attractions/lands that would be popular as it would take a while for the company to earn back a profit on the investment.

Sadly, most analysts & institutional investors don't have a clue how to run or grow a business. Their idea of long-term planning is figuring out the size of their annual bonuses. The following from the 1984 Disney annual report is telling:

Indeed, a major question in analysts' minds was why Disney had chosen to grow the theme-park segment as aggressively as it had. The initial cost estimate of Disney World/EPCOT Center had been $600 million; six years later, the cost had risen to $1.9 billion. One analyst commented, "The increment to the theme parks' operating earnings from Disney's ... investment probably did not exceed $80 million before taxes. After charging itself with taxes, Disney is left with about $45 million. That represents less than a 4 percent return on EPCOT. If Disney had invested in Treasury Bills it could have done better."

If it were up to these analysts, the only thing we’d have today is DL, the Magic Kingdom, and a bunch of DVCs. TWDC would be a $5B company rather than a $41B company.

 

[Pixiedustmaker]

Now we are pretty much saying the same thing. They may want to spread the capex for Carsland and Avatar over 5 or 6 years. I agree with that. That absorbs $200M to $300M a year for the combined projects. Where we differ is on the order. There is no reason they can't flip Carsland ahead of Avatar. 3 year of Carsland puts them in Q1 of 2016 for completion with the heavy costs coming in the first 2 years. Avatar continues to be developed on paper and they break ground in 2015 with a projected opening in 2018. Carsland is proven technology and design so they would be much less likely to have issues with budget overruns and no differences with Cameron. This also gives them some time to see if the Avatar sequels even get made.

I am guesstimating between 7 and 8 years for Carsland to be built *after* they start construction of Avatarland. So, if they start Avatarland in 2013, then maybe 2021 for Carsland to open, if they decided to do this. They may not be able to tuck Avatarland's budget into their $1-2 billion baseline domestic park spending if the economy sours, or something like that.

Here's a couple good reasons why Avatarland might not be "switched" under this scenario: Avatar 2, 3 and James Cameron. Do you think Cameron will wait half a decade while Carsland is being built?

 

[Longhairbear]

Thanks to the Spirit that started this thread. I've been away for a week onboard the Disney Wonder. I was hoping the Spirit was onboard also as there were many Disney/Pixar execs. onboard. Lasseter, and Jay Ward were the top names giving presentations. Lasseter was first speaking of his career, and Pixar. He brought his wife onstage, and she is one intelligent lady. The Lasseters got off the ship in San Francisco.
Jay Ward gave a presentation on Carsland, and how it was planned and built, with lots of never seen footage, and photos. As it so happened, we were sitting next to Jay Ward, and his family to watch "Toy Story Musical". Jay and his wife later came into the Cadillac Lounge, and sat near us. About 5 others joined them, and of course we listened in on the conversation. Unfortunately nothing was said about anything to do with WDW, or DLR. However my point of this post is that both Lasseter, and Ward were publicizing Carsland.
While DCA, and Pixar was in the mix, it was Carsland that was the focus of a lot of the presentations. Take from that what you will.

 

[flynnibus]

Disney is slow - but not 8 years to build a land they know they are building. An idea may hang around like that but not once they are 'go'

 

[Taylor]

Oh I usually try to do this but I forgot, thanks lee for the update

 

[ParentsOf4]

I am guesstimating between 7 and 8 years for Carsland to be built *after* they start construction of Avatarland. So, if they start Avatarland in 2013, then maybe 2021 for Carsland to open, if they decided to do this. They may not be able to tuck Avatarland's budget into their $1-2 billion baseline domestic park spending if the economy sours, or something like that.

Here's a couple good reasons why Avatarland might not be "switched" under this scenario: Avatar 2, 3 and James Cameron. Do you think Cameron will wait half a decade while Carsland is being built?

The saddest thing is it used to take Disney less time to build entire theme parks than it now takes them to build a single land. Even the Magic Kingdom took only 4 1/2 years and that was starting with nothing but swampland.

 

[Pixiedustmaker]

Sadly, most analysts & institutional investors don't have a clue how to run or grow a business. Their idea of long-term planning is figuring out the size of their annual bonuses. The following from the 1984 Disney annual report is telling:

If it were up to these analysts, the only thing we’d have today is DL, the Magic Kingdom, and a bunch of DVCs. TWDC would be a $5B company rather than a $41B company.

Yeah, but then after Epcot corporate raiders almost bought out the company to sell off all of the different pieces, theme parks, movies . . . Eisner actually did a good thing by keeping the company together. Just the reality of being a publicly traded company.

 

[John]

I would most certainly *not* invest in Disney now, and if I did I would dollar average given the volatility. And I don't like the P:E ratio.

DIS's 52-week range is: 28.19 - 53.39

Avengers helped, as well as spending in the theme parks. But high profile failures, have hit Disney before, and if Shanghai tanks, or you have a string of big box office failures, the stock could plummet. Any of this could make institutionals pull DIS out of their funds for an indeterminate time.

No way Shanghi tanks.....China has more money then they know what to do with.....infact I think it will be a HUGE hit!

 

[Pixiedustmaker]

The saddest thing is it used to take Disney less time to build entire theme parks than it now takes them to build a single land. Even the Magic Kingdom took only 4 1/2 years and that was starting with nothing but swampland.

It took only 3 years, or so, to build Carsland. If they had the money, they could have had construction crews at the same time tearing down the rest of DCA and building something else. You have to do stuff sequentially, i.e. you can't paint rockwork until the rockwork is up.

 

[Pixiedustmaker]

No way Shanghi tanks.....China has more money then they know what to do with.....infact I think it will be a HUGE hit!

I thought Hong Kong residents had more money/interest in western-inspired parks, than the mainland Chinese. Hope that the Chinese never wake-up and support a revolution for democracy because Shanghai Disneyland would have a problem then, might even be "claimed" by a new government.

 

[GoofGoof]

I am guesstimating between 7 and 8 years for Carsland to be built *after* they start construction of Avatarland. So, if they start Avatarland in 2013, then maybe 2021 for Carsland to open, if they decided to do this. They may not be able to tuck Avatarland's budget into their $1-2 billion baseline domestic park spending if the economy sours, or something like that.

Here's a couple good reasons why Avatarland might not be "switched" under this scenario: Avatar 2, 3 and James Cameron. Do you think Cameron will wait half a decade while Carsland is being built?

Why would it take 7 or 8 years to build a clone of something that was built in half that time originally? If they broke ground on Carsland now they should be able to complete it by the end of 2015 or first half of 2016. The entire DCA expansion (which was far more than just Carsland) was 5 years from announcement to grand opening. The actual Carsland section didn't break ground until around 2009 so basically 3 years. Cameron has his hands full with the sequels anyway. At the end of the day I am hoping we find all this out sooner than later. The earnings release in November 8th so hopefully they will give an update on what has been decided.

 

[menamechris]

I am guesstimating between 7 and 8 years for Carsland to be built *after* they start construction of Avatarland. So, if they start Avatarland in 2013, then maybe 2021 for Carsland to open, if they decided to do this. They may not be able to tuck Avatarland's budget into their $1-2 billion baseline domestic park spending if the economy sours, or something like that.

Here's a couple good reasons why Avatarland might not be "switched" under this scenario: Avatar 2, 3 and James Cameron. Do you think Cameron will wait half a decade while Carsland is being built?

7 or 8 years for a clone? Really?

Also, the future Avatar's have apparently been stalled. So Disney now knows they have a lot of time to work with. Either James Cameron has lost interest in the concept - or there are financial backing issues, I would assume. Either way - it sounds like it will be a long time before there could be a buzz over Avatar again. Surely, Disney recognizes this....

 

[John]

I thought Hong Kong residents had more money/interest in western-inspired parks, than the mainland Chinese. Hope that the Chinese never wake-up and support a revolution for democracy because Shanghai Disneyland would have a problem then, might even be "claimed" by a new government.

As we know we are not supposed to be political here....but in context of Disney I think that it is appropriate.
First the chances of a revolution is about the same as the reincarnation of Walt......

Second, I am surprised Disney would even contemplate going into China for those reasons (human rights) we have mentioned. Shows that its all about the $$$$$

 

[Cosmic Commando]

Executives lie to shareholders all the time.

Yes, I don't want to look up the articles, but it has been several years now where Iger has told Wall St. that discounts at WDW would be ramping down. Then, every year, the same old discounts show up. Executives tell investors what they want to hear, and then do what they think needs to be done.

 

[Lee]

In terms of the ongoing capex in the parks, I assume Rasulo is talking about the approximate $1 billion a year they plan to spend on domestic parks, perhaps for both upkeep and some small new attractions. Rasulo was a little vague, saying that they haven't hit the $2 billion mark, per year, yet, but that they will slightly ramp up spending. This "small" amount of ramp up would, be Avatarland. Would they also skimp back on ride refurbishments/upgrades? Probably, if this is the budget they will cannibalize to build Carsland/Avatarland.

But certainly, doing *both* Avatarland and Carsland would eat up too much of the ongoing domestic capex. They could probably swing it if they did:

2-3 years Avatarland
1-2 years upkeep ride refurbishments, study of Avatarland/need for Carsland
3 years Carsland.
Back to capex for up keep, other domestic capex.

You're looking, realistically, at Carsland coming six years after they break ground for Avatarland, maybe around 2019, about what I think would be the earliest.

But you also should figure in non-park spending and foreign investments. Should Shanghai do very poorly, the money for Carsland will evaporate.

Also, Rasulo isn't 100% certain it will be so easy to pull off Avatarland this way, as he says "we feel", which is always an ambiguous term.

"You know, Avatar is coming for Walt Disney World. That is something that we feel like we absorb in our normal ongoing capital expenditure profile. That is going to come on in 2015, 2016 and we will be investing against it. But we are not going to go back in the foreseeable future to what we saw in 2011 and 2012. Nowhere near that."

You're putting WAY too much faith in what Jay said. Never a good idea.

Let me lay it out here...
Avatar is barely moving. They haven't even finalized the attraction menu for it yet. It may happen....it may be postponed...or it may vanish. (Cameron doesn't care about the timeframe, he only cares that he gets what he wants attraction/quality-wise if it ever happens.)

Regardless, they are currently looking at major expansion at DHS NOW. Not in five ir six years. Far sooner. Like potentially breaking ground in a matter of months.

Assuming Avatar happens within the next year or two, both projects will be under way at the same time. Yes, simultaneously with Shanghai and Mr. Stark's thing at DL. And another new ship or two isn't far away either.

 

[Taylor]

You're putting WAY too much faith in what Jay said. Never a good idea.

Let me lay it out here...
Avatar is barely moving. They haven't even finalized the attraction menu for it yet. It may happen....it may be postponed...or it may vanish. (Cameron doesn't care about the timeframe, he only cares that he gets what he wants attraction/quality-wise if it ever happens.)

Regardless, they are currently looking at major expansion at DHS NOW. Not in five ir six years. Far sooner. Like potentially breaking ground in a matter of months.

Assuming Avatar happens within the next year or two, both projects will be under way at the same time. Yes, simultaneously with Shanghai and Mr. Stark's thing at DL. And another new ship or two isn't far away either.

So are they going at UNI pace on this one?