James Rao
Writer

Published: February 6, 2014 at 10:36 AM

And the money keeps rolling in...

Interesting stuff, Robert, thanks for summarizing and sharing the info from the call.

Dan Heaton

Published: February 6, 2014 at 10:43 AM

Is it weird that this makes me sad? They don't create new attractions, yet attendance at Disney World keeps increasing. This gives them no incentive to really push the envelope.
Anon Mouse

Published: February 6, 2014 at 11:00 AM

"In a few months" could mean May or early June, thus still be technically in the Spring. It is surely disappointing, but no less disapointing than Big Thunder Mountain's delayed opening in Disneyland. Visitors are wise to plan for this, or not. It won't hurt Disney either way.

Disney park improvements are behind the scenes. Whatever they are spending their money, the customers won't see the results visually. I can knock Disney for merely increasing park efficiency by 3,000, but this efficiency is across the board for all attractions. Disney isn't going to get more guests to do another spinner. They need to add large capacity rides. I'm glad they broke ground with Avatar. Some day, it will open.

108.236.244.129

Published: February 6, 2014 at 11:03 AM

Thats cause most of the workers are paid at the poverty level one step up the ladder from people working at Walmart
Sylvain Comeau

Published: February 6, 2014 at 11:35 AM

So they claim to have spent $539 million in one quarter. How come that money seems to disappear without a trace? Surely not all of it went into Avatar and the Mine Train ride.

I suppose a lot of it is going into the My Magic+ black hole, and another big chunk into developing Shanghai Disneyland (for example, how much does it cost to provide air pollution masks to all the construction workers? That must be a small fortune). Why do they keep building new parks while only adding to their existing parks at a glacial pace? Every new state-side park since Epcot opened as a half-day experience (Animal Kingdom, DHS) or a cheap disappointment (DCA). The company had a responsibility to add capacity to those parks before going off on overseas construction binges.

I think Universal is getting more praise because they have their priorities straight. They are building more cutting edge rides, not squandering zillions on a whiz bang glorified reservation system. They are expanding their existing parks, not building more malnourished gates overseas.

I'm a huge Disney fan, and that is why Disney keeps disappointing me. I keep hoping they will live up to the standards of their founder, who performed miracles on a shoestring. By contrast, today the WDC does the minimum, with more money than King Croesus.

Brian Emery

Published: February 6, 2014 at 11:47 AM

Disney is a Huge entertainment company. They make the most $$ of their earnings from ESPN. So if they spent a lot, it does not necessarily mean they spent that in on Theme Parks.

The management staff should be congratulated on a great quarter.

I just wish they would pay a quarterly dividend.

Robert Niles
Editor

Published: February 6, 2014 at 11:55 AM

CapEx for Disney's theme parks includes not just new attractions at WDW, but all building projects beyond ordinary cleaning and maintenance at DL, DLP, HKDL, and Shanghai, as well as DVC resorts and DCL ships. Tokyo Disney isn't included, as Disney doesn't have any ownership share of that resort -- Oriental Land Co. owns it under license from Disney. (The license and royalties from OLC count as Disney theme park income, however.)

That's a LOT of capital to support.

Sylvain Comeau

Published: February 6, 2014 at 12:38 PM

Brian, that's exactly what Robert reported in his article --Disney put that $539 million into their parks.

Robert, that was part of my point; they keep overexpanding and trying to buy up half the world, while neglecting areas of crying need at their existing parks.

Brian Emery

Published: February 6, 2014 at 1:00 PM

Exactly… There are many ways to add monies to a balance sheet. Contactors need deposits, law suits need to be paid…

Any large company will put as much as they can to offset the monies they have to pay in taxes.
So yes load up the spending sheet. As I said, it does not mean all of that money was spent on the parks. Hotels, remolding, energy, bla bla bla….

They can put whatever accounting tricks the have to. And yes they can put stuff under there parks even if the money was not sent directly in a park.

They did not flush the money down the toilet. If you are a shareholder, you should contact investor relations if you are so concerned where that money went.

TH Creative
Writer

Published: February 6, 2014 at 1:32 PM

Fantastic news for Disney! Especially hearing about record attendance at the parks.

Wait ... "remolding?"

Nick McKaig

Published: February 6, 2014 at 1:06 PM

I would find it interesting to see a side-by-side comparison of Universal's park approach today vs. Disney's. Why does it feel like Universal is moving full-speed while Disney is moving at a snails pace regarding development in their domestic parks? That would be a good read.
James Rao
Writer

Published: February 6, 2014 at 1:21 PM

Just to clarify some things...

"At Disney's theme-parks-and-resorts division, operating profit jumped 16 percent to $671 million. Revenue rose 6 percent to $3.6 billion."

So, for the quarter, the theme parks and resorts earned $671M profit. That number does not include ESPN or any other TV/Movie revenue. And that total is AFTER they "invested $539 million into parks and resorts" with only some of that money being linked to the Seven Dwarfs Mine Train ride at Magic Kingdom.

Overall, Disney made $1.8B in profit, on $12.3B in revenue. In one quarter.

And yes, the first quarter set record attendance numbers at the Orlando parks.

Wow.

Just goes to show that the Disney naysayers really are a niche crowd and a very small piece of one pie in the gigantic bakery that is Disney.

TH Creative
Writer

Published: February 6, 2014 at 1:28 PM

Mr. McKaig writes: "I would find it interesting to see a side-by-side comparison of Universal's park approach today vs. Disney's. Why does it feel like Universal is moving full-speed while Disney is moving at a snails pace regarding development in their domestic parks? That would be a good read."

I Respond: I agree. Having a no-holds-barred discussion comparing Disney's approach to Universal's approach would be a refreshing change of pace on this site.

209.44.133.160

Published: February 6, 2014 at 1:41 PM

Making record profits is easy if you have a monopoly on a product that everyone wants. All you have to do is limit the supply and keep raising prices.

From Wikipedia:

Population of the USA in 1971: 206,827,000
Population of the USA in 2014: 317,000,000

Number of Magic Kingdom parks in the USA in 1971: 2
Number of Magic Kingdom parks in the USA in 2014: 2

Price of a Disneyland ticket in 1981: $10.75
Price of a Disneyland Ticket in 2013: $92.00

84.56.105.74

Published: February 6, 2014 at 2:37 PM

Us capex is 215 million $. International 324 - should be almost all Shanghai. Gota love how Disney never discloses where the profits come from (from which parks, how much from franchise fees). In the annual report theres foreign/domestic disclosed sowewhere below page 100 thats it.


108.13.149.27

Published: February 6, 2014 at 2:49 PM

I don't want to be dismissive of those numbers. They are impressive. I probably would have guessed half that number for capital investments, although I did not know the cruise ships were included. So way to go Disney!! I do wonder how much of the $500M is for MyMagic, diesel buses, and stateroom remodels.

However, comparing that amount to Universal is a bit misleading. Yes they both have 2 large resorts in the US, but when one of those resorts is about the size of San Francisco, comparing total spending dollars doesn't explain everything. More insightful numbers might be capital investment per guest or capital investment per admission price -- cruise prices are much different than single day admission prices.

If I understand correctly, the $500M Universal amount is pure additional investment, not just quarterly income reinvestment.

Orrin Carstarphen

Published: February 6, 2014 at 3:04 PM

I believe one reason it looks as though Universal is outpacing Disney in the new rides dept. is because they had to do it to compete with Disney. Up until WWoHP opened in IOA the Universal parks were sorely lacking in attendance, my family routinely hit the major rides at the two parks in a single day. When Harry Potter opened the huge attendance gave them an influx of cash they wisely reinvested in the parks. However that being said WWoHP actually "hurt" attendance at the Studios side that is why I believe they chose to put the "London" side there as opposed to taking over more of IOA. So basically Universal is playing catch-up with Disney and unfortunately whether we like it or not Disney does not see the need for major changes due to the record attendance numbers.
75.69.20.247

Published: February 6, 2014 at 4:10 PM

This is pretty simple. Disney believes the Orlando market is saturated and is focused on increasing incremental dollars per guest. Whether their hotels are full or their parks are packed, they don't see the return on investment for big projects except at underperforming properties. They are in maintenance mode and still seeing attendance gains! When the attendance drops off, or one parks numbers impact another (DL and DCA) then you might see investment. The Asian market is booming and an obvious growth opportunity. Sooner or later Disney spending in China will eclipse that in the US, which is why they are getting a new park.
200.52.78.2

Published: February 6, 2014 at 8:24 PM

Robert, I understand the spirit of your comments but your arithmetic is wrong. To divide the 3,000 additional daily guests by the number of hours the park is open as you did implies that each guest is only riding 1 ride in a whole day. To get at the equivalent cappacity increase as that provided by the MyMagic+ system you would need to take into account how many rides (on average) each person rides on a day.

I'm sorry my first comment on your site seems like a negative one, since my oppinion of your site is overwhelmingly positive (and I read each and every article both by you and the rest of the contributors).

Best Regards from Mexico City.

Alfredo Vazquez.

Robert Niles
Editor

Published: February 6, 2014 at 9:32 PM

Alfredo,

The way I took that comment wasn't that MM+ actually increased attendance by that amount. I guess I did interpret the number cynically, going with a raw count capacity number rather than an attendance capacity number.

Phil B.

Published: February 6, 2014 at 9:42 PM

You just can't argue with the bottom line. So long as attendance continues to rise and profits increase, there isn't much incentive to adopt Universal's approach of continuing to club people over the heads with E-Ticket after E-Ticket. Disney isn't playing catch up to anybody. Even with the FP+ hiccup, the Avatar vitriol, on again off again Star Wars Land talks and a generally lukewarm reception of New Fantasyland on the interwebs, Disney just keeps chugging along turning record profits. I'm happy for the company and the executives that continue to run the show and earn their bonuses, good for them. It's the Imagineers who continue to turn out cutting edge concepts for new attractions that get filed away or shelved, possibly to never see the light of day, due to there being no feeling of urgency to give the fans something truly spectacular, that I feel bummed out for.
209.44.133.160

Published: February 7, 2014 at 8:02 AM

Price of a Disneyland ticket in 1981: $10.75

Price of a Disneyland Ticket in 2013: $92.00

Price of a gallon of gasoline in 1981 (average): $1.35

Price of a gallon of gasoline in 2013 (average): $3.49

Gasoline prices are 2.5 times more expensive than they were in 1981.

Disneyland tickets are 8.5 times more expensive than they were in 1981.

Why?

James Rao
Writer

Published: February 7, 2014 at 5:03 PM

Buying gasoline is not nearly as fun as going to Disneyland.
Tim Hillman

Published: February 8, 2014 at 6:49 AM

Comparing the price of a commodity with the price of a service is not exactly an apples to apples comparison. Let's see how entertainment venues have increased compared to Disney over the years:

Average Movie Ticket
1981 - $2.78
2013 - $8.35 200% increase

Phantom of the Opera Ticket (median price)
1987 - $50 (opened on Broadway in 1987)
2014 - $124 148% increase

National Aquarium in Baltimore Fridays After 5 Admission
1981 - $5
2014 - $12 140% increase

Disneyland One-Day Ticket
1981 - $10.75
2013 - $92.00 756% increase

Yes, it does appear that a "little" price gouging is happening.

However, it appears that Disney is charging what the market will bear, and if people keep going to the parks in record numbers they would be remiss if they didn't charge more. :/

Phil B.

Published: February 8, 2014 at 9:18 PM

Good job comparing apples to apples Tim. I think Walt, even though he understood what he did as being a business and needing to profit in order to grow, would be embarrassed by those numbers.

Just because you can do something, doesn't mean that you necessarily should. There's no reason for being THAT exploitive to your audience under the guise that, "it's what the market will bear and allow for". At a certain point you would like to think that integrity has something to do with the decision making process.

Right now, nobody seems to be impressed at WDW's offerings while it continues to increase gate, hotel, and food prices, at the same time offering little new in return, up to the point where it's been suggested that even food portions have been scaled back in some instances. Meanwhile, Universal is on a building spree, and theoretically still has less to offer overall when taking into account both resorts, yet I never hear of anybody complaining about the cost to visit Universal's parks. As a matter of fact, I only hear about how much more value you get from a Universal Resort stay as opposed to Disney, especially with their Universal Express perk for all onsite hotel guests.

98.148.244.210

Published: February 11, 2014 at 10:14 PM

I wish Disney park tickets were cheaper, but then it would be too crowded to get your money's worth. It's a trade off Disney has to balance. Hint: They're balancing it well since guests continue to come back.
TH Creative
Writer

Published: February 12, 2014 at 5:46 AM

Phil B. :"Good job comparing apples to apples Tim. I think Walt, even though he understood what he did as being a business and needing to profit in order to grow, would be embarrassed by those numbers (Disney ticket prices).

I Respond: Do you think Walt would have known that he was employing (and paying) 60,000 cast members?