Theme Park Insider

Don't Blame Shanghai for Cuts at Disneyland and Disney World

April 3, 2016, 3:30 PM · Over the past week, Disney fans have been Tweeting with the hashtag #ThanksShanghai — a sarcastic shout-out to Disney's newest theme park, whose cost overruns the fans blame for cut-backs at Disney's American theme parks.

Shanghai Disneyland opens on June 16, but Disney's target for the park was late last year. The delay has inflated the price of construction and has cost Disney its share of six months of income from what might end up becoming the world's most popular theme park. At the same time, fans are seeing cuts at the Walt Disney World and Disneyland Resorts, with fewer entertainment options, reduced capacity at some attractions and reports of cast members seeing reductions in their hours scheduled.

It's easy to put two and two together, and... #ThanksShanghai. But blaming Shanghai Disneyland for operational cuts at Disneyland and Disney World reflects a simplistic conclusion. This just isn't the way that publicly-traded companies run.

To start, one basic rule of accounting is that capital expenditures — money spent on construction, new equipment, and buying land — is accounted differently that money for operations — such as paying employees. If Disney had to pay more than it planned to build Shanghai Disneyland, that's a hit to its capital budget. And no amount of cutting its operational budget will change that.

If Disney wants to offset an unexpected expense in its capital budget, it would need to do that by delaying or canceling another construction project. Now, there's a strong consensus within the analyst community that Disney already did that... by delaying Star Wars Land for nearly two years. Yes, the company was waiting for the start of the new trilogy, and yes, the company's board sent the original plans back to Imagineering for another go. It's possible, even likely, that Disney would have ended up delaying Star Wars Land even if it had never started the project in Shanghai. But it was a lot easier for Disney management to justify those capital delays when Shanghai was running over budget.

So what about that loss of six months' income? That is an operational issue. But in accounting terms, that delay was a one-time, extraordinary event. One-time items are the "get of of jail free" cards that companies hand to analysts, hoping not to be punished for a loss that doesn't reflect an ongoing problem in the company. Disney doesn't have to make cuts to balance that — analysts know what's up.

Of course, all of Disney's capital and operational expenses get thrown together on the company's bottom line. And any corporate executive who wants to keep her or his job wants that bottom line to look as black and as fat as possible. But any analyst with the ability to read a spreadsheet looks far beyond the bottom line. They know exactly what's happening in Shanghai. Nothing that Disney does stateside will hide that.

But... aren't cast members hearing from their managers that they're under orders to cut costs due to Shanghai? Here's where the corporate game of telephone comes into play. Of course, Disney wants to deliver the best bottom-line performance that it can, despite a hit from delays in Shanghai. So that's why upper-level executives would tell their department managers to take a hard look at all aspects of their operations, to see what might be cut to improve their departments' contributions to the bottom line. And yet... executives tell managers to get out the scissors all the time. With Bob Chapek taking over the Parks division from Tom Staggs last year, it's likely that such a call would have come anyway, with or without Shanghai in play. An immediate boost to the bottom line is an immediate boost to a new leader's reputation.

Disney always cuts labor hours in the shoulder season between Spring Break and the start of summer. And with Star Wars Land construction taking over large sections of Disneyland and Disney's Hollywood Studios, several attractions were going to close — whether for a short time or forever. But managers now are looking for whatever other cuts they can make to their labor and operational budgets, to see which ones they can "get away with," without resulting in a loss of income or attendance.

Many fans are citing the elimination of the Pixar Play Parade at Disney California Adventure for the next month as an example of #ThanksShanghai. But the festival marketplace food booths for the DCA Food & Wine Festival effectively block the park's parade route, making the parade impossible to run during the festival. Sure, Disney could have found other locations in the park for the booths, allowing both the parade and the festival to run at the same time. But here's how that cost-cutting analysis comes into play — Disneyland management is betting that it doesn't need the parade to draw visitors while the festival is running. And if the parade isn't going to improve the bottom line during the festival, why run it? Why not save the expense and let that flow to the bottom line?

Here's how you know that the current cuts at Disneyland and Disney World ultimately don't have anything to do with Shanghai. Imagine if Shanghai Disneyland becomes a wild financial success, earning more than Disney anticipated and contributing billions to the company's profit. What happens then?

Here's what happens — If the cuts at Disneyland and Disney World do not result in a loss of income or attendance at those parks, Disney won't change a thing. Disney will bank the extra profits from Shanghai and the extra profits from cutting superfluous expenses at DLR and WDW. The only way that Disney will back off cuts at its U.S. resorts will be if those cuts result in losses for the company. Ultimately, the parks' direction is not determined by what's happening in China. It will be determined by the decisions of Disney's theme park customers.

If fans decide that they'd rather go spend their money at Universal, Knott's, SeaWorld, Six Flags, or other parks and attractions, than put up with cuts at Disney, then Disney will have a reason to open its checkbook to win back its former customers. But if fans continue to support Disney's theme parks — deciding that Disney with cuts is still better than the competition — then why of Earth should Disney increase marginal spending on labor and operations? It's making its money without that expense.

Every time Disney raises its ticket prices or cuts something in its parks, fans go online and wail and moan. Many say that's the final straw and that they will stop spending money at Disney's theme parks. And year after year, Disney's theme park attendance and income grow anyway.

Disney knows exactly what it is doing. And it does it better than anyone else in this industry, which is why Disney is far and away the industry leader in attendance and income.

Don't like what's happening at Disney's theme parks? Don't say #ThanksShanghai. Give credit where credit is due and say... #ThanksDisneyFans.

Replies (58)

April 3, 2016 at 3:42 PM · This is spot on. The loss in ESPN subscribers may be impacting other divisions who need to boost their bottom line so overall the consolidated P/L for Walt Disney is in line with forecasts. However I've always been skeptical of the blame Shanghai for the reasons you outlined. Has no impact on the P/L, perhaps it impacts the cash flow statement, but Disney is probably borrowing the money anyways so Balance sheet ratios stay in line. Why use your money when you can use someone else's mantra when it comes to paying for Capital Expenditures
April 3, 2016 at 4:17 PM · #NeverblameDisney
April 3, 2016 at 4:22 PM · Why do I feel that under Walt, fan loyalty would of resulted in a desire to give that fan even more. You seem to be saying that fan loyalty should be a reason for the world's leading theme park innovator to give the fan a cynical service reduction. Why should that make any fan stand up and cheer? Isn't this why Disney Inc. has to continually purchase outside talent, (Pixar, Marvel, Star Wars) because they've lost their own inward drive to surpass customer expectations with mind blowing innovation and excellence?
April 3, 2016 at 4:47 PM · Bob, you are absolutely correct. Disney knows what its doing. But they DON"T know what the public will do. The highest cost in operating any business is personnel. And, in the words of Dick Nunis, "you can always get people." And that seems to be true for Disney Parks. But Imagineering has been working overtime to eliminate the human factor in future rides. Isn't that what animatronics is all about?
Here is the story we all need to remember; A farmer accidentally spills some sawdust in his chicken feed. Nothing happens. The birds keep laying eggs as usual. Hmm, he thinks if he adds it regularly he will cut feed costs. Nothing happens. He tried a little more. Same thing. He tried even MORE. All his birds die. Moral of the story; A little sawdust is OK. A lot more is disaster. The customer will ultimately decide. And when Disney hears those wallets snapping shut loud and clear THEN they'll start sing'n another tune. Until then; Fork up or shut up, and step aside. There's another heavy wallet behind you that has way too much money in it.
I can hear the pre-recorded message now; Thank you, Sir, for visiting Disney's Magic Kingdom. Before we can let you pass in to the Happiest Place on Earth, we need you to place your wallet on the little square in front of you. That's right, the one with Tinker Bell on it. Go ahead.
Good. Now take your hands away and... "Floop"...."there you go! That sucking sound was the money leaving your wallet. You didn't see it go? Well of course not. Trust me its all gone. That's Disney magic.
Have a wonderful day in the Magic Kingdom. Bye Bye.
April 3, 2016 at 5:13 PM · Wow. You really just blamed Disney fans. Fans shouldn't be punished for corporate bs. Disney has never made this many cuts at one time.
April 3, 2016 at 5:14 PM · Re-WyoRon

I think what Robert is trying to say (and what I've been saying for over a year now) is that many people complain that Disney's betrayed their fanbase; but Disney keeps seeing a ride in attendance and income every year. If Disney was really upsetting it's fans, than the numbers would say otherwise. But they don't. Ergo, Disney thinks that it's giving it's fans exactly what they want, and that the people complaining on the internet are just a bunch of grumpy little trolls. Ergo, there's no need to change their current business model. So if you're really upset with the way that the Disney parks are, then here's an old saying that I suggest you take to heart:

"Put your money where your mouth is."

In other words, actually stop visiting Disney and giving them your money and convince a whole lot of other people to do the same. The civil rights advocates of the 1960s didn't end segregation just by complaining about it. They organized sit-ins, bus boycotts, protest marches, etc. So do that! Don't just talk! Act!


April 3, 2016 at 5:31 PM · I don't blame Shanghai, more the competitiveness of the marketplace (Universal raises prices annually, too, and cuts hours/closes old attractions as well). Disney is watching Universal take over more of the market in Orlando (not to mention all other competition), and Knotts continue to rebound in SoCal.

So the plan, on the short term, is to show profit over popularity (particularly since Disney doesn't release attendance figures). Outside of Star Wars and Marvel expansions, they don't have a lot of compelling projects on the horizon, so delaying that is actually in their best interest. In the mean-time, they can raise prices and build lesser attractions (meet and greets, after-hours events, ride overlays, etc), and determine just what price they can set for these offerings.

The theme park wars are on, it's just not over immersion or the best ride... It's over value.

April 3, 2016 at 6:17 PM · No blame Shanghai for the increased cost at the parks. Shanghai has went so far over budget that they are making up for it by raising prices
April 3, 2016 at 6:31 PM · The real issue with goods and service providers including Disney is the greed factor "bottom line". Why do so many believe that as long as they can get away with it no matter what it might be then it's all fair. Disney for the last three years been basically printing money due to movies and parks, but have sacrificed cast members for cheap foreign workers and cut benefits of those that are still with them. Now for the guest experience that has been impacted by unhappy staff and long lines.
April 3, 2016 at 6:47 PM · I do not agree. Walt Disney was one amazing man, with more imagination and drive than most of his or any other era. But Walt was ALSO a tremendously successful businessman and the philosophies he developed have carried on in the ways that Disney does business today. If not, Disney wouldn't be the fantastic entity it is. In business, tough decisions have to be made sometimes to ensure that a successful company remains so. I've been traveling to Disneyworld every year since I was 28 (now 45) and there is NO ONE who does it better, more extravagantly, or more efficient and with the ideal of putting the customer first. ALL the others aim to emulate what Disney does.

Organized labor will always jump on any cuts and look for the most convenient excuse to blame on the company and it's "evil management", when the truth is that Disney is no different than any other business that is beholden to it's investors. Sometimes that means they have to tighten their belts from time to time. Disney doesn't HAVE to bring in outside talent, they've capitalized on their success and added some of the most popular and imaginative properties to their family in order to expand their popularity and success well into the future. That's just GOOD business.

And as a devout Star Wars fan, as well as Marvel, Pixar and the core Disney properties, I for one applaud them for their efforts. I only wish they had bought Marvel BEFORE they made all these side deals with various producers and Universal Parks in particular. One can only imagine the amazing things they could do at Disneyland and Disneyworld with all Marvel rights in hand.

Your last comment is the most ridiculous of all..."...they've lost the own inward drive to surpass customer expectations...." Last I checked, "Frozen" was an inward driven Disney production and it's become the biggest animated film of all time.

Disney's future is well in hand, and like the author of this article stated, they KNOW exactly what they need to do to be successful.

April 3, 2016 at 6:53 PM · Yes, capital is accounted for differently than operational expense. But that is only one of the three accounting sheets; Profit and Loss, Balance Sheet, and Cash Flow. While most focus on the P&L, all 3 matter.

The extra investment has been estimated at $800M and Disney owns 43%. Assuming equal investment, and it likely isn't, that's an additional $350M. In comparison, the last 3 years cash flow are $ +848M, -510M, +544M. An additional 300M cost and 100M lost 6 months business is significant, A simplified look, but cash flow matters. Good business practice requires either cutting or deferring costs to protect cash on hand.

April 3, 2016 at 7:11 PM · So your explanation for the budget cuts is that Bob Chapek wants to look good, but I heard that Iger gave Chapek a mandate to make cuts at Imagineering, so it sounds like it's not just Chapek's initiative.

I don't think these 'shoulder' cuts are normal, they're deeper than just seasonal cuts. They're actually affecting the guest experience. Disney charges premium prices, and they need to continue offering a premium experience, not cut back on it.

I hope that Harry Potter at Universal Hollywood will wake Disney up and realize that they cannot cut back and still expect people to just swallow it. I expect that the So Cal theme park audience will be drawn to Potter for the next 2-3 years, until Star Wars land opens.

I still think that Shanghai has an effect, even if it's because of the 6 month income loss as you say. The domestic parks are doing gang busters, don't penalize your best customers by trying to make up for losses in Shanghai. That would be a dangerous short sighted policy.

What's that old business saying? It costs less to keep existing customers than to get new ones. It seems like Disney WANTS less theme park customers, just as long as they pay more. Again, short sighted, they need to increase supply (third theme park), not just raise prices.

April 3, 2016 at 7:56 PM · Tom "cold as ice" Staggs was, at one time, Disney's CFO. For Tom it's all about giving less for more. Uncle Bob Chapek so Tom's bro. Under Uncle Bob many small licensees were dropped when their yearly quotas were doubled. Meaning if your contract was for 500 hand bags now you had to sell twice that to maintain your Disney license. Many licensees left Disney because they didn't sell enough. Oh, BTW, Disney doesn't help their licensees sell their merchandise. You'd think they would do features in the Disney Insider. Nope. A Mass press release. Nope. Nada. Disney's fantasy line slogan is: "In the world of fantasy we mean business". Let's face it folks, Disney is in business to make money. They're serious about it. It's their business to be serious about it. Don't get cross with then or anyone for being serious about their income. Are you serious about YOUR income? Do you work for free? You might say, "hell no!" Well, don't blame Disney for feeling just the same.
April 3, 2016 at 8:52 PM · "there's a strong consensus within the analyst community that Disney already did that... by delaying Star Wars Land for nearly two years."

I suspect there is a delay in the construction of Star Wars Land at Disney Hollywood Studios. The ground breaking there appears to be enough acreage for Toy Story Land only with two rides, the roller coaster and a spinner. They demolished the backlot, the Motors show, and Catastrophe Canyon. They didn't demolish land for Star Wars Land that will begin at Star Tours and possibly further west and up to Echo Lake.

I presume Disneyland's Star Wars Land will open first in 2019, then Toy Story Land at DHS in 2019, and then another two or three years, DHS' Star Wars Land will open in 2021. It only makes sense to stagger the openings with Animal Kingdom's Avatar will open in 2017. BTW, they preserved The Muppets at DHS as Muppets Courtyard so this appears to be an attempt to save some money.

April 3, 2016 at 8:56 PM · Coolade drinker.
April 3, 2016 at 9:05 PM · I think "National Lampoon's Christmas Vacation" has it pretty well covered...

"Sometimes things look good on paper, but lose their luster when you see how it affects real folks. I guess a healthy bottom line doesn't mean much if to get it, you have to hurt the ones you depend on. It's people that make the difference. Little people like you."

April 3, 2016 at 9:41 PM · I do think it is wrong to state that Shanghai Disneyland is the primary reason for operations budget cuts elsewhere, but I also think it's wrong to say that the project had no influence on the cuts. My guess is that after Shanghai ran over budget and got delayed, the operations departments were asked to make cuts just so that everything looked better and not directly to recover the money lost. Would they still have happened if Shanghai was on schedule? Possibly, but I have a feeling they would be a lot slower and a lot less noticeable.

Hardcore Disney fans in general are among the more foolish in the theme park fan community. They tend to complain about everything yet do nothing to inspire change. Anyone who thinks Disney will make changes that decrease revenue or profit when there aren't needed benefits elsewhere doesn't understand basic economics, and anyone who expects these cuts to be reversed after Shanghai opens even if they don't show a negative effect on income is going to be very disappointed. Disney is a business and always has been, the inner workings and strategies to maximize profit just weren't as obvious before.

April 3, 2016 at 9:50 PM · Wow. You're blaming the fans for the greed of the execs, and their need to bolster their reputation? When did you go on Disney's payroll?
April 3, 2016 at 10:25 PM · While it is true that capital expenditures and operating expenses are kept separate, the bottom line is a combination of both. That bottom line is what has to look good.

If one is suffering, the other has to make up for it. The budget overruns in Shanghai have an INDIRECT affect on the operational budget.

What this article fails to mention is that Hong Kong Disneyland was in the red last year. This accounts as an operational loss. So, then we have to look at the combination of budget overruns in Shanghai and the operating income loss in Hong Kong.

But, wait...what about the billion dollar bailout that occurred last year at Disneyland Paris? That was also considered an operating income loss. Disneyland Paris has barely stayed afloat since its opening in 1992.

To make up for all of their losses in France and China, Disney's goal is a cost savings of 30% on the operating budget stateside. This means cutbacks to the entertainment, attraction capacities, and Cast Member hours. This will temporarily make the bottom line of the company look good but not for long.

It is not the fans' fault for these losses. Fans are already starting to taking their money elsewhere. The #ThanksShanghai hashtag is pretty spot on, although the cost overruns there are not entirely to blame. Perhaps the tag should read #ThanksHongKongFranceAndShanghai

April 4, 2016 at 2:20 AM · So who is to blame? I know who i blame ... BOB IGER. The worst CEO in history for the theme park division. Not one e-ticket attraction under his tenure in Orlando. Disgrace.
April 4, 2016 at 3:35 AM · Once someone makes up their mind about a topic, they tend to take any development and twist it to substantiate their viewpoint. You can present facts (like the difference between capital and operating budgets), but it won't matter.

For example, some annual passholders are moaning about the perceived loss in theme park time due to Disney After Hours. But, the fact is that in just a few weeks, the overall total hours available to passholders will increase greatly due to Disney's Animal Kingdom being open an additional "X" hours each night. That's a fact that gets dismissed because it doesn't fit into their "Disney has turned Evil" viewpoint.

That said, I think Disney does need to shoulder some blame with the general ill will. If they hadn't engaged in multiple price increases each year, I think the outrage would be tempered.

In the end, all the complaints are not likely to matter. I do agree with AJ Hummel is correct that lots of complaints are hollow and that those people will still make their annual trips. I'm also certain that as far as Walt Disney World goes, Disney wouldn't mind a decrease in annual passholders because those folks tend to spend less than first-time/once-in-a-lifetime guests.

April 4, 2016 at 4:12 AM · Who's to blame for $16 hamburgers at Pecos Bills? Is that passholders faults as well? Silly apologists.
April 4, 2016 at 5:11 AM · It's wonderful that Disney execs want to give their visitors the proverbial middle-finger by cutting hours to their CM's even if Shanghai is a convenient scapegoat. The complaints at Epcot front entrance are through the roof because they only have enough budget to run 1 tram BUT the attendance to the park requires them using parking areas that 1 tram can't cover. And I'm so thankful I am not a Disney CM having to deal with my hours having been cut back where I would barely be making ends meet with 40 hours a week. It';s all a sad state.
April 4, 2016 at 5:47 AM · I agree with AJ's points and think he's right on with his analysis.
April 4, 2016 at 6:09 AM · There is just one issue--Cast Member hours were cut before, during, and after spring break. So the argument thT Disnry always cuts hours during the shoulder season doesn't fly. Also, not since right after 9/11 have hours been cut like this: scheduling full time cast members 7:45 so the don't get a second paid break during their shift.
April 4, 2016 at 6:50 AM · No mention of something else that particularly affected budgets at Walt Disney World, My Magic + ?
April 4, 2016 at 6:59 AM · My family has been annual passholders to WDW since 2005.We have seen the trends in when they cut labor after spring break or when the construction of New Fantasyland. I personally have not a loss in labor force, but a loss in general courtesy. I have seen more C.P.s than ever before that have had a lack of knowledge of where a bathroom is to just plain being ignored. I will gladly spend my money in a park that has construction going on with a lack of ride choices(DHS). The loss I've seen over this time has been in lack of training and "buy in" from New CMs. We visit the Parks in average of once a week and cruise once a year with Disney,we spend with them. We have also had annual passes at Sea world and 6 flags as well. From what I have seen is the Over the top Service now turn into the same service we get at Universal or Sea World.People have choices and are willing to over look certain things.Going to Disney used to be for the Service they provided. We get that in the Ships.We have seen the slip in the Parks for awhile. Please don't revamp your Parks without revampming Traditions and making sure the new CMs are bought in. #disney4life2005
April 4, 2016 at 9:00 AM · It's just like Walmart, people complain about the long lines. But they continue to shop there. A company has no push to change u keep spending money there.
April 4, 2016 at 9:05 AM · How about #ThanksDisneyMonopoly, #ThanksDisneyManagement, or #DisneyPennywisePoundfoolish?

What would Disney's profits be, if Disney management had not made so many bad decisions: EuroDisney, Hong Kong Disneyland, MyMagic+ and now Shanghai Disney?

The Disney CEO job must be the easiest in the world: cash in on the goodwill that Walt built, raise prices every year until you've destroyed customer goodwill, then take your golden parachute and get out.

April 4, 2016 at 9:32 AM · Like most things, there a multitude of causes. But there is no doubt that Disney has pulled out most every trick in the book, especially in Florida, to pull more money out of guests right now.

Remember there is also that other mandatory SEC financial statement that captures both of these issues -- the Cash Flow statement. Good analysts care an awful lot about the that statement and the operational gains made within Cash from Operations do indeed offset the CapEx line inside of Cash from Investing Activities.

And don't underestimate the power of perception -- a monster domestic quarter can very much obscure a weak Shanghai report. It will still be topical, but becomes bullet point #3 instead of #1. And it's not just the parks, look at the new Star Wars digital release date -- April 1, the first day of the second quarter. Whatever the reason(s), Disney really, really wants a strong second quarter.

April 4, 2016 at 9:58 AM · Sometimes I have to wonder where all the monies disappear to. Disney charges a lot to stay at any of their Hotels. Their Theme park tickets are pretty high - add in Food, parking, souvenirs, tee-shirts, soda, water, vacation clubs, cruise’s…. And I can go on….

Plus the Marvel movies are making monies, add in other movies, Star Wars is Huge… They do not pay a large dividend on their stock…. So I wonder where are the monies?

Are they giving TH Creative kickbacks again? Hahahah

I am sure the Disney executives and making $$$$$$.

April 4, 2016 at 9:58 AM · Im sure the average new guest or once in a while guest won't notice much of anything or won't know any better. People who go frequently though I think are starting to feel a bit used. We are getting a lot less for a lot more. the difference in 2 years or 10 years is huge. I don't personally feel like I get what I got. I also don't think the sky is falling. It's still a great trip down to WDW, still a great place to have fun with family and friends, but it is getting harder to justify spending so much yet getting what you know is less.
April 4, 2016 at 10:26 AM · Its kinds of like commercial aviation... Planes are packed, no amenities, and no little to know incentives... yet we still keep coming back..
April 4, 2016 at 11:38 AM · When the budget cuts were announced to the Cast Members, Shanghai was specifically mentioned as why they were losing up to a day if pay each week.
April 4, 2016 at 12:11 PM · It's truly a shame that Americans have to pay higher prices and get less for their money cause Disney execs make poor decisions investing in foreign countries. Disney world and land are iconic American parks that have flourished from Americans spending their hard earned money. The Disney company should remember this and write off their foreign losses and keep investing in the American parks instead of short changing us just to offset the losses around the world. Stop trying to expand around the globe,instead expand the parks,the hotels,and the quality people right there in Florida and the rest of the world will find a way to make the trip to Disney world here and bring more money to our economy after all like I said Disney is an american icon,let's keep it that way.
Yea
April 4, 2016 at 12:14 PM · I love both WDW and DL parks and yes will continue to be a long time patron. I however do not like the continuing rising of costs, construction that limits access in both parks, and lack of what used to be that customer service we knew and loved.

To cut cast members is wrong because you lose the atmosphere of Disney. I also believe Disney should concentrate on their parks in the USA vs creating more over seas. Especially sine France and Hong Kong aren't doing well and have resulted in loss of profits. And yes, I do believe Shanghai Disney is one of the contributing factors for price increases of both parks in the USA.

I don't know what the answer is but Disney needs to put it's customers first because it's starting to look like the only ones who will be able to afford Disney will be the rich!

April 4, 2016 at 12:24 PM · I will always love wdw. I first went in '98 on my honeymoon and we fell in love with the parks and resorts. Our 13 year old girl has already been there 5 years in a row, but if you're looking for another park that you can stay at for a week that gives awsome thrills and inspires lifelong memories, go to cedar point in Sandusky ohio. A Midwestern secret that sits on a peninsula in beautiful lake Erie. Full of the best rollercoasters on earth and amazing beach front hotels.you and your family will love it.
April 4, 2016 at 12:32 PM · "Sometimes I have to wonder where all the monies disappear to."

The money hasn't disappeared. They are sitting in banks waiting to be spent. High profits feeds the stock markets that compels businesses to spend more money to feed profits. Once a certain amount of cash is banked, they will pull that money out and see if it can be put to better use. Some money is awarded to stockholders, some money is used to buy companies like Marvel and Pixar, and some money is used on new projects. Of course, the executives get their cut.

April 4, 2016 at 12:47 PM · i feel like Disney wouldn't wait to see whether or not they lose customers before reverting schedules/hours, etc. back to how they were before; that's too much of a risk.
April 4, 2016 at 1:50 PM · And the workers or employees suffer. I don't believe that Shanghai is to blame as much as the company in wholes mentality. Cut the loss of whatever by cutting the lowest denominator which is the employees. It's a real kick in the arse if you are working for a company that decides to layoff and find your position is expendable. It's also a shame how the worlds best theme parks or zoos treat their employees. You might have a different opinion Niles but I was working for a zoo where you could work for them but be on a seasonal basis so they wouldn't have to pay insurance. Only a select few were full time and the wait to get those position was until someone retired. I've heard other places go the other route and work you to death paying ya minimum wage and then end up having an accident on the monorail because the operator fell asleep because working a long shift.

Most companies don't really care about the employees as long as they are producing and the bottom line. Just because Disney is Disney doesn't mean it's not a corporation.

April 4, 2016 at 3:12 PM · "Sometimes I have to wonder where all the monies disappear to."

Disney wasted $20 billion repurchasing its stock-market shares over the past few years. Yet another bad investment by Iger and Co.

Brain-dead bean counters screw up. Fans and cast members get stuck with the bill. Welcome to the Wonderful World of Wall Street Disney.

April 4, 2016 at 3:15 PM · I'm sorry. Do any of you actually work for the company? Are any of you aware that the company has ACTUALLY come out and said that the cut backs are because of Shanghai? Because that's what they have told the CM's. I know this first hand. My wife is a cm. I have countless friends who are cm's. I, myself, used to work for the company. I have seen how poorly the castmembers are being treated because of this. Hours are being cut right and left. Benefits are being cut. And the castmembers are being told it IS because of Shanghai! So maybe you should check all the sources ahead of time.
April 4, 2016 at 3:30 PM · There is also what Cast Members are being told, which is that Shanghai is what is causing at least some of the cuts.
April 4, 2016 at 3:53 PM · But... If they upped their game even more, then maybe there would be even MORE gains in attendance and per guest spending.

There is also no thought here to long-term effects. If a guest comes this year and has a bad time, they won't be back two years later. If a child comes to Disney and their experience is totally unmagical, then that guest will not become a fan as an adult. Again, there is no end to how much of a fan you can be. It's not a binary; fan = yes or fan = no. If your experience is incredible, then you will become an extreme fan, rather than someone who simply "kind of likes Disney parks".

Part of the reason that Tokyo Disney is so pristine as that Japanese management thinks way beyond the next quarter - that's how Japanese culture tends to be.

Now it is quite possible that they have an over-attendance problem right now resulting in guest dissatisfaction. In effect they paying the price for not having expanded much for so many years. Had they invested more in expanding park capacity ten years ago, they could welcome way more guests now, and those guests would stay more days at the resorts because there would be more to see. Again, if all you care about is the next quarter you are unlikely to start spending on something that only pays off in 6 years. How much more money would Epcot make if Future World had more awesome attractions?

How many people go into the Imagination Pavillion, say "this is really lame" and then leave the park or don't ever come back? My guess is thousands and thousands of people do this every year. It's maybe not a majority of guests, but thousands of people is still tens of millions of lost revenue - so if management were less probe to simplistic bean counting they would now have more cash in their pockets. Not to mention, ten years from now, those disgruntled guests will not be bringing their kids....

In the film industry (which I work in) the people who spend the least on production and do everything on the cheap are not, in the end, the wealthiest. It's people creating Hunger Games that have the mansions on the beach. Same here. Nickel and dime-ing is not a road to long term prosperity.

- Robert Ruffo

- Robert Ruffo

April 4, 2016 at 3:53 PM · But... If they upped their game even more, then maybe there would be even MORE gains in attendance and per guest spending.

There is also no thought here to long-term effects. If a guest comes this year and has a bad time, they won't be back two years later. If a child comes to Disney and their experience is totally unmagical, then that guest will not become a fan as an adult. Again, there is no end to how much of a fan you can be. It's not a binary; fan = yes or fan = no. If your experience is incredible, then you will become an extreme fan, rather than someone who simply "kind of likes Disney parks".

Part of the reason that Tokyo Disney is so pristine as that Japanese management thinks way beyond the next quarter - that's how Japanese culture tends to be.

Now it is quite possible that they have an over-attendance problem right now resulting in guest dissatisfaction. In effect they paying the price for not having expanded much for so many years. Had they invested more in expanding park capacity ten years ago, they could welcome way more guests now, and those guests would stay more days at the resorts because there would be more to see. Again, if all you care about is the next quarter you are unlikely to start spending on something that only pays off in 6 years. How much more money would Epcot make if Future World had more awesome attractions?

How many people go into the Imagination Pavillion, say "this is really lame" and then leave the park or don't ever come back? My guess is thousands and thousands of people do this every year. It's maybe not a majority of guests, but thousands of people is still tens of millions of lost revenue - so if management were less probe to simplistic bean counting they would now have more cash in their pockets. Not to mention, ten years from now, those disgruntled guests will not be bringing their kids....

In the film industry (which I work in) the people who spend the least on production and do everything on the cheap are not, in the end, the wealthiest. It's people creating Hunger Games that have the mansions on the beach. Same here. Nickel and dime-ing is not a road to long term prosperity.

- Robert Ruffo

- Robert Ruffo

April 4, 2016 at 6:00 PM · CapEx wouldn't impact the P&L but would decrease Free Cash Flow and decrease the equity value of the firm.
April 4, 2016 at 6:52 PM · IMO what is sad is the loss of the legacy characters, the legacy rides and, of course, the shunning of Walt's legacy. In addition, there is no care about the longtime Disney fans, the families of the 70's and especially the late 80's who saw the incredible growth in parks and resorts in the early 90's.

Now they truly only care about the one time visits of those international visitors who will spend huge coin for 10-14 days...once! So I guess we'll soon be forced to see the Star Wars Tower of Terror and the Marvel-ous Water parade in Bay Lake...*sigh*.

April 4, 2016 at 11:47 PM · Rob after those DISNEY MOM rewards
April 5, 2016 at 4:52 AM · Disney is a large company. Everybody makes cuts. It allows companies to stay in business. These cuts should be made in September in order to account for the slow down of kids going back to school. Maybe there were less cuts then. Ticket prices are high, but I was on line yesterday and found an room for $120. I paid twice as much when I went to gen-con.
April 5, 2016 at 5:11 AM · it might not be the way companies like this generally run but the cast members at disney world are being told by management that the budget cuts are specifically to fund shanghais budgeting mistake so you can type out a breathy excuse as to why this isnt true but all over walt disney world park people are being told they are working 1 day a week because of shanghai so
April 5, 2016 at 5:34 AM · My friend, Sarah, is a single mom of three. After reading this article, she only knows one thing for sure. A day of pay will be missing from her pay check as hours have been cut indefinitely. How does she stretch her remaining meager compensation for all her hard work. Food, rent, medications, diapers, clothes.....just a few necessities that will suffer.
This is the bottom line.
April 5, 2016 at 7:07 AM · IDK why we don't blame the fans more? They are determined to visit Disney no matter what and complain it's crowded or there isn't enough to do. They renew annual passes supporting the company year after year. They join DVC and contract themselves to a Disney vacation for a decade or 2.

Is Disney a greedy for profit business? Well yes!

Should the fans who feel ownership in a company they love and adore take responsibility for it's issues as well? Yes.

If you think things are bad, just stop going for a while. Try a Six Flags or Knotts Berry Farm. Rent a house near the ocean for a change. Take a few years off and see how much Disney hurts without your business. I realize it sucks that they might not notice you aren't there... but it might help "fix" things.

Regardless... Disney is fine. Everything is fine. We're all fine here now... how are you?

April 5, 2016 at 8:03 AM · What I think maybe this article misses is the tongue in cheek aspect of #thanksShanghai. Is the author not familiar with thanks Obama type memes/videos/quotes? I believe the overwhelming majority of cast understand Shanghai to be a convenient scape goat and smoke and mirrors. To consider it anything else is to discredit the labor force and an insult to their intelligence. #thanksShanghai should be read aloud with heaps of sarcasm coupled with a very large eye roll. There have been and will continue to be various practices put into place at the parks & resorts designed specifically to minimize if not outright eliminate certain labor costs. Just as everything else is budgeted so too is the acceptable amount of guest dissatisfaction that can be reasonably sustained as long as profit continues to grow. The sad thing is building attractions on the cheap is one thing but keeping your front line workers at/near/or below poverty wages then cutting their hours even further has irreparable consequences to employee morale. Something has to give when you set expectations that guests are traveling to the happiest places on earth. Cast members are real people with families and dreams of their own. If they can't suddenly pay their bills the system can only bend so much before it breaks. Sure their seems to be an inexaustable supply of bodies to continually step into job vacancies when someone leaves however the talent pool gets more and more shallow each time. The most educated, creative, intelligent, experienced, passionate, and loyal cast will only remain so long as they are appreciated, recognized, supported, nurtured, inspired, motivated, and treated fairly. That is not the case anymore behind the magic. Exceptional cast have left after giving their all to the company without receiving their due in return. The damage is done. That kind of company resource/asset can never really be replaced. The results are the guests continue to pay more for less.
April 5, 2016 at 10:09 AM · Dissapointed in this article, it seems you want to write something positive so you'll get invited to a free preview or something. Blaming the Disney fans? That's low.

Is it all about Shanghai? Probably not, but it's certainly not the fans fault for spending too much money.

April 5, 2016 at 12:06 PM · I've said it before and I will say it again. The stateside Disney parks offer a lousy value compared to overseas. The Tokyo Disney resort offers two of the best theme parks in the world and charge on average 30% to 40% less than Disneyland or WDW.
April 5, 2016 at 3:30 PM · The problem with this analysis is that it ignores Disney's history. For decades whenever one portion of the company has money issues, another portion suffers. You don't even have to go back that far. Magic Bands overruns? Delay the much-needed Star Wars lands! This has happened for DECADES! Back before Marvel and Pixar, whenever the movie division suffered, the theme parks - and their fans - are the ones who end up suffering. Projects are canceled, shows and parades are cut, prices are increased. When Disney spent too much buying television channels, that money would come out of the theme park budget.

The worst thing is, Disney IS this simplistic. Everything they do, they do for their shareholders. Why? Because it's easy to tell the shareholders "Well, we sucked in this category but the theme parks are making money and these cost-cutting measures INCREASED our profits!" I don't recall reading a Disney Annual Report that doesn't brag about purchasing something globally and cost-cutting elsewhere (usually in the parks division). They don't take three to four years to build a new attraction to please the parkgoers. They don't build new parks to please Disneyland/WDW's visitors. They don't buy television channels to increase attendance. Disney has operated following this shareholders-first-fans-last mentality for over 20 years. It's pretty disingenuous to think that's changed in the slightest.

April 6, 2016 at 3:47 AM · I have voted with my wallet. Last year we skipped Disneyworld and spent 5 nights at Universal Orlando. It was fantastic. Not many bigger Disney fans around than our family. We still fly to Disneyland resort almost annually. Just not a fan recently of Disneyworld lately Lack of new attractions, Hollywood studios..., magic bands and the advance planning required, now raising prices on anything/everything. I get it. Parks have record attendance . Just not a priority for us now to spend our money there.
April 7, 2016 at 11:15 AM · I couldn't give a flying damn why they're making these draconian cuts. The parks are booming, the crowds keep coming, prices keep spiralling up...and they're cutting left and right. Utter B.S.
I usually like Robert's articles, but what really bugs me about this one is the casual assumption that it's perfectly normal and okay for Disney to do whatever they think they can get away with, and that they should care about NOTHING BUT the bottom line.

The most successful people and enterprises are those who demonstrate that they care about something other than money -- namely, they care about providing an excellent product. They have PRIDE.

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