Interesting stuff, Robert, thanks for summarizing and sharing the info from the call.
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.
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.
The management staff should be congratulated on a great quarter.
I just wish they would pay a quarterly dividend.
That's a LOT of capital to support.
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.
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.
Wait ... "remolding?"
"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.
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.
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.
Population of the USA in 1971: 206,827,000Population of the USA in 2014: 317,000,000
Number of Magic Kingdom parks in the USA in 1971: 2Number of Magic Kingdom parks in the USA in 2014: 2
Price of a Disneyland ticket in 1981: $10.75Price of a Disneyland Ticket in 2013: $92.00
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.
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.
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.
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.
Average Movie Ticket1981 - $2.782013 - $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 Admission1981 - $52014 - $12 140% increase
Disneyland One-Day Ticket1981 - $10.752013 - $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. :/
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.
I Respond: Do you think Walt would have known that he was employing (and paying) 60,000 cast members?