As it opens new attraction, Disney prepares to cut capital spending

[March Hare]

I am surprised this hasn't been posted yet

From the Orlando Sentinel:

The opening of the 12-acre "Cars Land" caps a five-year, billion-dollar overhaul of Disney California Adventure, the second gate at Disneyland, which failed to meet expectations after opening in 2001.

But it also marks the crest of a $6 billion wave of capital spending across Disney's U.S. theme-park and resort holdings. And senior Disney executives now vow to cut back.

"We should be coming down substantially — substantially — in domestic spending," Disney Chief Financial Officer Jay Rasulo said during a recent presentation to stock analysts.

"We don't have any other big projects right now" in the U.S., Disney President and Chief Executive Officer Bob Iger said during a separate presentation. The lone exception, Iger added, is a "land" planned for Disney's Animal Kingdom based on the movie"Avatar,"which isn't expected to open until at least 2016.

Such comments are meant to cheer investors who are pressing Disney to improve profit margins at its parks and plow more cash into dividend payments and stock buybacks. But they also alarm some of Disney's most passionate fans, who argue that its theme parks — particularly those at Walt Disney World, the company's biggest and busiest resort — need more investment, not less, to prevent them from becoming stale.

so it looks like they are not going to try and compete with anyone and more proof that Walt's ideals of not caring about investors over the visitors to his parks are going away let the bean counters and greed take over

not sure if I can post the link so if I can't please feel free to remove it but the story was too long to copy it here and there is more
http://www.orlandosentinel.com/the-d...,7260737.story

[DizneyFreak2002]

Shhhhhh can't tell this to WDW fans... They won't believe you... Wait, you quoted an article?? Got to be proof Rasulo said that, right??? I mentioned this last week as I have a Tweet from Jason Garcia himself saying Rasulo said this and was told there was NO WAY Rasulo would ever say something like that...

WDW is now the real estate arm of the company... If it isn't a DVC project, then it is nothing... And forget Avatar... Budget has already been cut and the scope of the project has been watered down... Meanwhile, down the street in Universal, major things are being fast tracked... MAJOR THINGS...

Rest on your laurels WDW... you'll soon find out you are WAY behind the game and can not catch up....

[Jared]

Rest on your laurels WDW... you'll soon find out you are WAY behind the game and can not catch up....

I totally respect your passion, and you know I agree with most of your points on this issue, but the quoted comment goes a little too far.

If Universal can catch up with Disney -- which it certainly has -- from as far behind as it was, it's silly to say that Disney can't leapfrog the competition again someday. It may not be tomorrow or this year or this decade, but you know as well as I that a new management team is coming. With that will come change.

Maybe it'll take Universal to truly surpass Disney for the real change to happen. But I can't agree that Disney has fallen -- or will fall -- irreparably behind.

[DizneyFreak2002]

I totally respect your passion, and you know I agree with most of your points on this issue, but the quoted comment goes a little too far.

If Universal can catch up with Disney -- which it certainly has -- from as far behind as it was, it's silly to say that Disney can't leapfrog the competition again someday. It may not be tomorrow or this year or this decade, but you know as well as I that a new management team is coming. With that will come change.

Maybe it'll take Universal to truly surpass Disney for the real change to happen. But I can't agree that Disney has fallen -- or will fall -- irreparably behind.

Disney can bury the competition now... But, in Orlando, the question is, do they have the guts to try?? Sadly, no...

I think Universal Orlando has surpassed WDW in may aspects already... And WDW management is resting on their laurels... Sometimes, the giant is caught sleeping, and doesn't rise again... We all know Disney has the ability to put out some amazing things... If these things are for anywhere but WDW... What does management have a fear of in FL??? Since when is good enough, well, good enough with Disney??? That is the attitude of the leadership in place in TDO... I said it before, and will continue to say it, the only way for things to change in WDW is for managers to lose their jobs, you know, "spend more time with their families"...

[Jared]

I agree that Disney needs a new management team to enact real change. We both know that day is coming sooner rather than later.

[DizneyFreak2002]

I agree that Disney needs a new management team to enact real change. We both know that day is coming sooner rather than later.

Can't come soon enough... I'm going to PM you a little later with something... Hopefully, you'll give it some thought... I promise, it isn't bad...

[March Hare]

I'm not going to go as far as saying they are going to rest on their laurels I just think it is bad management to cut spending on capital improvements just as all the competition is spending more. It just infuriates me when companies only worry about the few share holders screaming they want larger dividends and not trying to improve business to increase profits over the long hall it is called being penny wise and pound foolish. I am watching the company I have worked for, for over 20 years, crumble because we were bought out by a publicly traded company and they have done nothing for our customers while they squeeze every penny out of us for the share holders to get their money making us go from #1 in our area to dead last all the while their stock price went from over $40 a share to under $4 because they are a failing company now. So lets worry about share holders while we kill a strong business it is just stupidity and I am sure Walt is rolling over in his grave rant end

[Dixie Springs]

DizneyFreak's "real estate arm" characterization is spot-on. DVC is a gold mine. I don't want to start any arguments about how awesome or stupid the idea of membership is. The point is that it's big bucks. Otherwise there wouldn't be a timeshare salesman/booth in your Disney hotel lobby.

Sheer money decisions hit Disney fans hard (I'm still stewing over the Empress Lilly becoming Fultons - gads, that was named after his wife!). We can't help it. All the business lectures don't help (and I'm a free-market lover).

I agree also with the Universal 'threat'. For hardcores, nothing compares to the Disney vibe, but how many of us are there? Particularly when we are becoming less enchanted.

Band-wagon rant complete.

[BrerGnat]

Well, honestly, what do you expect? They just spent $6 BILLION in five years in the U.S. $6 BILLION. That kind of spending cannot continue indefinitely. That's how companies go bankrupt. There has to be a balance of spending and return of investment.

None of us here can even fathom that kind of money, so who are we to moan and groan that this spells the end of Disney? That's ridiculous.

Look at your OWN household spending. I don't know about you, but if I have a month where I spend a gross amount over and above what is "normal", I cut back for a few months after that to bring everything back into balance. Companies have to do the same thing.

And, honestly, I don't understand any of the anger here. DIsneyland just completed a massive overhaul of DCA, and spent quite a bit of money at Disneyland park as well refurbishing and retooling Main Street and the Matterhorn. That park has finally gotten the attention it was lacking for a LONG time. For years and years, WDW got all the attention and it only makes sense that they want to build up the West coast parks to be more of a vacation destination. It stands to reason that WDW will have its turn with "improvements" in the coming years. They are already spending a fortune at MK, and I have no doubt that the final product will be worth the time and money spent.

And, as much as I agree that Universal is making a huge push to be competitive, I really don't think, in the long run, that they will outdo DIsney. They never have yet. The kind of money that they are spending to make improvements in the parks cannot be maintained. Universal has a history of opening attractions and then just letting them turn stale. They use movies for their rides that don't have "staying power" and the attractions become irrelevant rather quickly (in terms of theme park ride shelf life). I mean, come on. Look at how many rides have been "rethemed" at Universal over the years, yet the actual experiences don't change too much. Despicable Me is going to be IRRELEVANT 5 years from now, same as Jimmy Neutron. Shrek is kinda out, ditto Twister, Waterworld, Men In Black, etc. Universal doesn't even only use its own movie properties. Most of the rides are based on movie licenses obtained by Universal. Universal can make claims that they have "all new" this or that, but really, it's just replacing one movie franchise with another when they realize NO ONE wants to ride something based on a movie/show that NO ONE has heard of or cares about. Even the Harry Potter land was a RE THEME of an area at IoA that was a failure.

You can be as critical of DIsney as you want. On the other hand, when one tries to make claims that because Universal has done ONE thing right in it's park history by choosing a popular franchise with staying power and built a land to house it, and that makes them SUPERIOR in the long run, well, that's just short sighted.

DIsney will be fine. Universal will (probably) do well enough in the future to stay competitive. But, the truth is, DIsney doesn't HAVE to try as hard as Universal because they simply have a superior product and always have.

Disney is not always right. They make a LOT of stupid decisions. However, sometimes, they do hit the nail on the head and pull something brilliant out of their hats. Carsland is going to be popular for a LONG LONG time. That movie is already 6 years old and kids are STILL going crazy for it. Cars merchandise sales ALONE have made over $8 BILLION for Disney. That's what you call a winner.

Sounds like a lot of hating on Disney for what they are doing in CA. Why not replace the badmouting with a trip over there to see what it's all about? You might come away with a bit more appreciation with what Disney has done.

[Hammer]

Well, honestly, what do you expect? They just spent $6 BILLION in five years in the U.S. $6 BILLION. That kind of spending cannot continue indefinitely. That's how companies go bankrupt. There has to be a balance of spending and return of investment.

None of us here can even fathom that kind of money, so who are we to moan and groan that this spells the end of Disney? That's ridiculous.

Look at your OWN household spending. I don't know about you, but if I have a month where I spend a gross amount over and above what is "normal", I cut back for a few months after that to bring everything back into balance. Companies have to do the same thing.

And, honestly, I don't understand any of the anger here. DIsneyland just completed a massive overhaul of DCA, and spent quite a bit of money at Disneyland park as well refurbishing and retooling Main Street and the Matterhorn. That park has finally gotten the attention it was lacking for a LONG time. For years and years, WDW got all the attention and it only makes sense that they want to build up the West coast parks to be more of a vacation destination. It stands to reason that WDW will have its turn with "improvements" in the coming years. They are already spending a fortune at MK, and I have no doubt that the final product will be worth the time and money spent.

And, as much as I agree that Universal is making a huge push to be competitive, I really don't think, in the long run, that they will outdo DIsney. They never have yet. The kind of money that they are spending to make improvements in the parks cannot be maintained. Universal has a history of opening attractions and then just letting them turn stale. They use movies for their rides that don't have "staying power" and the attractions become irrelevant rather quickly (in terms of theme park ride shelf life). I mean, come on. Look at how many rides have been "rethemed" at Universal over the years, yet the actual experiences don't change too much. Despicable Me is going to be IRRELEVANT 5 years from now, same as Jimmy Neutron. Shrek is kinda out, ditto Twister, Waterworld, Men In Black, etc. Universal doesn't even only use its own movie properties. Most of the rides are based on movie licenses obtained by Universal. Universal can make claims that they have "all new" this or that, but really, it's just replacing one movie franchise with another when they realize NO ONE wants to ride something based on a movie/show that NO ONE has heard of or cares about. Even the Harry Potter land was a RE THEME of an area at IoA that was a failure.

You can be as critical of DIsney as you want. On the other hand, when one tries to make claims that because Universal has done ONE thing right in it's park history by choosing a popular franchise with staying power and built a land to house it, and that makes them SUPERIOR in the long run, well, that's just short sighted.

DIsney will be fine. Universal will (probably) do well enough in the future to stay competitive. But, the truth is, DIsney doesn't HAVE to try as hard as Universal because they simply have a superior product and always have.

Disney is not always right. They make a LOT of stupid decisions. However, sometimes, they do hit the nail on the head and pull something brilliant out of their hats. Carsland is going to be popular for a LONG LONG time. That movie is already 6 years old and kids are STILL going crazy for it. Cars merchandise sales ALONE have made over $8 BILLION for Disney. That's what you call a winner.

Sounds like a lot of hating on Disney for what they are doing in CA. Why not replace the badmouting with a trip over there to see what it's all about? You might come away with a bit more appreciation with what Disney has done.

Agree with Natalie on all of her points. Companies need to keep some sort of budget or they will weaken themselves financially, leaving them ripe for takeover. Remember, Universal had an influx of cash after being purchased from Comcast and that definitely helped.

I still do not like going to Disneyland. I make that flight accross the country maybe 2 times a decade. I hate long flights. I need a flight to not take longer than the battery life on my portable DVD player (5 hours) as I am not a relaxed flyer . I won't even do the flight often to go to San Francisco and Wine country, and I love it up there!
Also, I can combine visiting my Mom with WDW, so Florida is a win/win for me!

[Jared]

Agree with Natalie on all of her points. Companies need to keep some sort of budget or they will weaken themselves financially, leaving them ripe for takeover. Remember, Universal had an influx of cash after being purchased from Comcast and that definitely helped.

I still do not like going to Disneyland. I make that flight accross the country maybe 2 times a decade. I hate long flights. I need a flight to not take longer than the battery life on my portable DVD player (5 hours) as I am not a relaxed flyer . I won't even do the flight often to go to San Francisco and Wine country, and I love it up there!
Also, I can combine visiting my Mom with WDW, so Florida is a win/win for me!

I totally understand, Christine. Nobody would ever begrudge anybody for loving Walt Disney World. I know I do. I have an annual pass and will probably spend two weeks in the parks in 2012. I enjoy every second of the time I spend in those parks.

But right now, at 11:30 a.m. on June 18, I don't see how anybody can empirically argue that Disneyland doesn't offer a vastly superior experience than its Florida counterpart. What's more, there are serious plans for two new E-Ticket attractions and a third gate in California. This is (probably) happening, and it's a wonderful thing.

The Wizarding World of Harry Potter is, in my mind, the single most significant development in the theme park industry since EPCOT Center opened. It has fundamentally changed Universal, and that's why they are adding a new Potter-themed land at the other park, plus Wizarding Worlds in California and abroad.

Here's the difference: Disneyland, in addition to the $2 billion it spent on California Adventure, is ready to upstage Potter years in advance. With the Wizarding World up and running -- and phase two on its way -- Walt Disney World has decided to stay pat.

This is not an issue of money. It's an issue of philosophy, and the guests are the ones who suffer from it.

Of course, this raises the question: Why do I (and so many others who feel the way I do) keep going back? The answer is because a watered-down Walt Disney World is still a wonderful, magical, exciting experience. Hopefully, it always will be. That doesn't mean we can't wish for Disney to do what it's capable of doing. Seeing them raise the bar in California only make it more frustrating.

[BrerGnat]

Seeing them raise the bar in California only make it more frustrating.

Seeing them raise the bar should make you feel confident that the Disney parks will not settle for their parks becoming "stale."

What many people here fail to realize is that, as much as many here don't go to Disneyland because it's "too far", people who live on the west coast feel the SAME WAY about WDW. I lived in California from 1994 to 2011 and in that time, I came across people who had been to WDW only a handful of times. For a long time, those people felt that Disneyland really needed some attention. Now, you are upset that the Disney company has done something to keep Disneyland fresh? That seems selfish. Go to Disneyland and enjoy what they've done over there. It doesn't have to be "WDW vs. Disneyalnd." If you are frustrated with how WDW is these days, make a trip to the other coast. It's hard to come away from Disneyland AT THIS POINT IN TIME, disappointed.

Remember, Disneyland is what started all of this. WDW was created as a response to it's popularity. Just because WDW is bigger, that does not mean that it should get all the money for improvements.

For what it's worth, I was at WDW last December. I really didn't find a THING to complain about. It was a great vacation and everything seemed tip top shape. We are going to Disneyland in November since we have to fly out there for a wedding, and I'm very excited about it. I can't wait to experience the new DCA for myself after watching the project take shape over the past 5 years.

[Stu29573]

I have been planning a trip to WDW in November of next year for quite a while now. However, seeing what Disneyland and CA now have to offer, it may be time to fly to the other coast. Being in Texas, its about the same distance either way. The only thing that is holding me back at all is that I enjoy the totally enveloping environment of WDW and I dont know if I want to give that up. Much thought is needed......

[AgentC]

. . .

The Wizarding World of Harry Potter is, in my mind, the single most significant development in the theme park industry since EPCOT Center opened. It has fundamentally changed Universal, and that's why they are adding a new Potter-themed land at the other park, plus Wizarding Worlds in California and abroad.
. . .

I'm going a little off track here.

I agree that Universal has done a wonderful job with TWWoHP and that someone there was very smart to get the rights to the attractions. And they are very smart to keep pursing Potter themed lands.

But the writer in me says that rather than the single most significant development in theme parks, JK Rowling created books that changed our cultural landscape in way that hadn't been done for a long time.

She got kids and parents reading and immersed in a world that was so real that people would show up at bookstores at midnight for the release of the newest edition. And the movies fanned the flames. There was and still is such an enormous in Potter, that Universal would have almost had to try to mess it up for it not to be a success.

Universal executed the ideas beautifully, but they executed JK Rowlings vision not Universal's vision. We wouldn't even by discussing in Universal is better than WDW if not for JK Rowling.

Okay soapbox away.

[Joannelet]

Universal has a history of opening attractions and then just letting them turn stale. They use movies for their rides that don't have "staying power" and the attractions become irrelevant rather quickly (in terms of theme park ride shelf life). I mean, come on. Look at how many rides have been "rethemed" at Universal over the years, yet the actual experiences don't
change too much. Despicable Me is going to be IRRELEVANT 5 years from now, same as Jimmy Neutron. Shrek is kinda out, ditto Twister, Waterworld, Men In Black, etc..... Even the Harry Potter land was a RE THEME of an area at IoA that was rethemed.

Natalie I totally get what you are saying but there is some things I want you to think about. Disney finally started working on Cars Land AFTER universal started pulling Harry Potter together. While Disney will never lose to Universal they take too long on a lot of their popular movies. Cars was a huge success in 1995. It is 2012....
Universal hit the Harry Potter nail on the head. It was still in its prime when it opened and they put as much detail into it like Disney would have to it. Disney is right about adding Cars Land...they NEEDED to.
This whole Avatar thing is what would concern me. I didn't see the movie but I do know it made a ton of money, people love the movie and it is current right now but it won't be done till 2016? These are the things that annoy me. Look at Phineas and Ferb even. The merchandise for popular current things took so long to come out as well as the characters. The same thing with things becoming stale can be said about Disney as well....the honey I shrunk the kids play area (although it can be rethemed to A Bugs Life), the Tangled meet and greet is now rethemed to Brave- I know these are areas as opposed to Universal rides but it is still retheming of some sort to keep it current which they should do. They need to.
Again Universal will never surpass Disney but while some technology on rides in Universal surpasses Disney's at times, Disney's movies just stand longer.....And I have only been a handful of times to Universal...it is not something I go to again and again like Disney. Disney has something for everyone for ages 0 to 100. (even pregnant women) I was prego in Universal and couldn't go on one thing!
They do need to stop spending and start gaining for a while and that is fine too. There was a long time before that this occurred as well. It is what happens. Cars land in Cali and Fantasyland expansion in WDW will keep us busy for a while.
Disney no matter what will always be the best. It is all in the name as long as management doesn't take the customer service part of that company away it will never go under. Their guest services exceed any company out there. Companies all over try to emulate the Disney standard. as long as their greeting us with fairy tales and pixie dust that magic aspect of it will never stop someone from wanting to go again and again. Universal will never have that magic about it...no matter how many Harry Potter magic wands they sell
P.S.
I cannot wait to go to Cars Land!

On the other hand Disneyland definitely needed Cars Land and the overhaul that it got. My gosh that park was such a mismatch. It was too all over the place. I went there in 2008 and said my gosh it's like they threw all 4 WDW parks together in one park. There was no rhyme or reason to any of it.

[Jared]

Now, you are upset that the Disney company has done something to keep Disneyland fresh? That seems selfish.

Natalie, I don't understand why you think anybody is complaining about Disney's unbelievable work at California Adventure? Just the opposite -- Disney fans everywhere are thrilled about all the work in California. In fact, it's proof of what the company is still capable of doing. It's an incredible achievement, and I know I'm planning a Disneyland trip in 2013.

As for the parks seeming "stale," that's inevitable when you're a repeat guest. That's never been my complaint. In fact, I've never felt bored at the Walt Disney World parks. My problem -- and the problem of many others -- is that the corporation is treating Walt Disney World as a real-estate development business, while Disneyland is world-class themed resort. Am I jealous? You bet.

I agree that Universal has done a wonderful job with TWWoHP and that someone there was very smart to get the rights to the attractions. And they are very smart to keep pursing Potter themed lands.

Very true. It makes you wonder what would have happened if Disney closed the deal with Rowling.

[March Hare]

Well, honestly, what do you expect? They just spent $6 BILLION in five years in the U.S. $6 BILLION. That kind of spending cannot continue indefinitely. That's how companies go bankrupt. There has to be a balance of spending and return of investment.

I'm not saying they have to spend $6 Billion they just need to spend enough to fix, maintain, and maybe even improve things and just occasionally add new rides. I wouldn't expect a major overhaul like this more than once every 10-20 years. It just seems that every time we turn around they are bowing down to share holders and letting things go almost to the point of dangerous and sometimes beyond, some share holders are parasites and only care about making a quick buck. I love going to WDW I don't like seeing everything in disrepair. I also understand that some things will take a while to fix like the Yeti but come on some things just need a new coat of paint or a new parts that would be very simple for them to make in a work shop and replace when the park is closed. Every time they say they are going to cut back on spending they don't fix anything unless they have to. I think they could spend a little more and give the share holders a little less and keep things up between the major projects. Up keep is just as important as spending because both can kill a company, one by loss of money the other by loss of customers and yes even Disney can fail with bad management decisions they are not as invincible as people think.

[AgentC]

Very true. It makes you wonder what would have happened if Disney closed the deal with Rowling.

Agreed. Definitely a lost opportunity for WDW or Disneyland. I'm not sure if we will see something like the HP affect again for a long time.

[DizneyFreak2002]

oh lordy... more people sprouting off at the mouth...

The DCA redo was necessary because they screwed up that park from the start... So, they spent X amount of billions MORE than the original budget because of poor poor planning..

With that said, let's look at what is on the drawing boards shall we???

Rasulo said they will be cutting spending correct??? Well, the money they are going to spend, where is it going???

Well, DL is set to get TWO, that's right TWO huge e-tickets and a THIRD gate... WDW: um... um... a Grand Flo DVC, um... Poly DVC... um... Avatar (still a maybe but signs are slowly pointing to it happening)... Um... nothing....

Why does TDA feel the need to build some Potter swatters out there in good old CA??? But, WDW doesn't... Even though IOA/Uni has cut into WDW's business, even though IOA's attendance has skyrocketed while WDW's hasn't barely moved... Ohh, WDI has Potter swatters at the ready for WDW, but, well, we know how TDO works...

Carsland is an example of what WDI is capable of doing when management lets them do their work instead of meddling... Though, WDI has their own issues with costs... Oh, and please, someone, please show me where people are bashing Carsland... I have yet to read anything bad about it... I'd be interested in reading so though...

AgentC, you say Universal didn't create their own world, they created JK's world.. True.. And what a world she created (not perfect, but WOW)... Let me ask you, people want a Star Wars land right??? Whose property would that be based off of??? Surely not Disney's since they don't own nor did they create Star Wars... If they ever did a Star Wars land, they would have to recreate George Lucas' vision, not their own... I have no doubt it would be great, but let's not mistake here that Disney would be creating their own world... They won't...

BTW, JK wanted Potter in Disney... She went to Disney... Disney all but had the rights wrapped up... UNTIL, they refused to build HER WORLD... They wanted one little attraction tucked away in one of their theme parks... She wanted her world to be brought to life.. She also wanted control over her own property (don't blame her, I'd want control over what I created too)... Disney, nah, they wanted no part of that... I remember vividly that Universal execs all but conceded Potter to Disney while they looked toward Lord of the Rings... In fact, one of their upper managers was on record saying Disney beat them on Potter... Then, a week later, BAM Universal had it...

We are slowly seeing the same thing with Avatar... What was supposed to be a huge beautiful land could possibly be getting gutted to 1 clone attraction, a restaurant, and a gift shop.. And if that is what happens, FAIL... I pray that guy who told me this is wrong... I pray daily he is wrong... Only time will tell... But, here is a chance to bring something innovative to WDW, bring back that WOW factor that has been lacking in recent years, and show WDW fans what WDI is fully capable of... And, management may once again be messing with things...

Ohh, and yea... unless it is a DVC project, WDW has NOTHING in the can after new Fantasyland... (other than maybe Avatar)..

So, is there any wonder why WDW fans are jaded today??? Any wonder why you are seeing more and more negativity??? Sit back and think and you'll have your answers...

[Polynesian Dweller]

One of the things not mentioned in the article, or at least I didn't see it, is the Disney's bankers have been unhappy with the level of loan debt they are reaching due to FLE, Carsland, building ships etc. Businesses do these large projects via lender loans not with their own capital which needs to be kept around for a lot of reasons.The banks are pushing which makes large investors concerned but it starts with lenders.

Thus they have to get debt loan down to sustainable levels but that doesn't mean they will stop altogether. What is of concern is that they pay attention to the competition and produce high quality attractions and maintain what they have. We'll have to see if they have the will to do that.