Budget cuts at Walt Disney World

[Eoghann]

It may have been here or over on wdwmagic, I forget, but I made the point that by any conceivable metric 7DMT is an E Ticket. People choose to burn FastPasses on it; they line up outside the gates half hour before park opening to rope-drop it; they blow money on a pre-gate BOG breakfast to get on it; and they stand in line for north of an hour while they could be doing any number of other things, to ride it. Fans may not feel that it's worthy of the e-ticket coronation, but Disney, while they may not use that term, certainly do.

That's it exactly. People say "it's not an E-ticket" or "it's only a C-ticket" when what they actually mean is. I don't think that ride is as good as it should be. Just say that! The ticket system was not a quality measurement.

 

[adam.adbe]

The key fact in there (to my mind) is that operating profits have grown 22% on a 9% revenue growth. And yet they still feel the need to shave and scrimp and cut. Those numbers don't scream of a company with payroll that is out of control.

They could certainly spend their money more efficiently when it comes to attractions, but I'm not seeing the need for staff cuts outside of pumping profit margins ever higher to boost that stock price.

I'm probably going to earn yours and lol's undying scorn here, but I'm not sure that fair.

Their margins really aren't that healthy, so that jump isn't half as impressive as it looks when expressed without context.

I know a lot of people have been pointing to their pre-tax $900 billion or so of profit last year, but honestly to me that's a troublingly low number for a company with as many parks, and resorts as Disney. Clearly Shanghai is causing a lot of the pain right now, as is nearly a decade of serious neglect, but if they let profits get much worse, they'll be facing calls to spin off the parks division again.

[edit] I'm going to let that 'billion' typo there stand as a monument to lazy proof-reading. Dis made a trillion and is buying Apple. You heard it here first!

 

[Eoghann]

I'm probably going to earn yours and lol's undying scorn here, but I'm not sure that fair.

Their margins really aren't that healthy, so that jump isn't half as impressive as it looks when expressed without context.

I know a lot of people have been pointing to their pre-tax $900 billion or so of profit last year, but honestly to me that's a troublingly low number for a company with as many parks, and resorts as Disney. Clearly Shanghai is causing a lot of the pain right now, as is nearly a decade of serious neglect, but if they let profits get much worse, they'll be facing calls to spin off the parks division again.

I actually don't disagree with any of that. But it points to the problem of being part of a huge company that's beholden to shareholders.

Everything you listed is a problem created either by another part of the company or by going cheap on investment to keep shareholders happy in the short term. Arguably then (at the very least) poor management. None of it really points to a payroll problem.

Have I mentioned this week that I'm not a fan of Wall Street and what it does to companies?

 

[jade1]

Any cutting at WDW currently is a bad idea IMO. And no offense to CP, but they do not know enough compared to experienced CM's and its annoying.

 

[sachilles]

The star wars show and fireworks at DHS starting in April is an interesting development relative to the budget cuts for the 2nd Fantasmic show. Fits perfectly doesn't it?

 

[jade1]

The star wars show and fireworks at DHS starting in April is an interesting development relative to the budget cuts for the 2nd Fantasmic show. Fits perfectly doesn't it?

Wait, so they are keeping Star Wars Fireworks instead of adding a 2nd Fantasmic?

 

[Eoghann]

The star wars show and fireworks at DHS starting in April is an interesting development relative to the budget cuts for the 2nd Fantasmic show. Fits perfectly doesn't it?

The timing seems quite neat. Obviously the new fireworks show has been in the planning for a while so they would have known that.

I might argue that the park could really do to have both shows, but at the least this isn't so much of a cut as as swap.

 

[sachilles]

Wait, so they are keeping Star Wars Fireworks instead of adding a 2nd Fantasmic?

Not exactly. New epic star wars show spectacular. Details in the news thread.

 

[jade1]

Not exactly. New epic star wars show spectacular. Details in the news thread.

Ah sorry.

 

[jade1]

Hmm that actually sounds pretty good (and no FP+ needed), worth a trade off IMO. But 2 Fantasmics AND that show would be better.

 

[book_junkie]

Well, and they're only doing that to kick-off the newest moneymaker, the Staw Wars marathon they've added to this park. Plus, they have to have something out there to placate those who are planning to arrive for the now defunct Staw Wars Weekends who don't read the news.

 

[Eoghann]

t if they let profits get much worse, they'll be facing calls to spin off the parks division again.

So that raises an interesting question in my mind. It's purely speculative because Disney won't spin off 40% of their revenue when the largest remaining portion is shrinking.

Would Disney Parks be better off as a separate company where all the focus is on the parks? Or would we see the same management style anyway?

 

[rteetz]

Wait, so they are keeping Star Wars Fireworks instead of adding a 2nd Fantasmic?

In busier months there are 2 fantasmics per night. Instead of doing that they'll play it off as oh look at the new Star Wars fireworks.

 

[jade1]

In busier months there are 2 fantasmics per night. Instead of doing that they'll play it off as oh look at the new Star Wars fireworks.

True, but I will take/prefer that option in a landslide.

 

[mshanson3121]

I know I got some people stirred up with my comments on the subject yesterday, but I still think this is making a mountain out of mole hill. Teamsters union, pointing out that their painters are getting laid off "out of sync". Strikes me as more union labor tactics, than any sort of real news.
The other cuts are paired with the slower season approaching, and have not been indicated to be permanent. The painters were seasonal, and had a finite end date anyway, they were just cut loose earlier.
I'd suspect there are about a 100 different levels of painter employed by the parks, as I'm certain the same skill is not required to do detail work on an attraction as is required to repaint a hotel room.

Apparently you don't pay any attention to the busy seasons at Disney. They are actually approaching one of their busier/busiest times of year with Easter and Spring breaks. And from there, once that rush has passed, it won't slow down that much at all, remaining a pretty consistent 5-6 through April and May, which by the end of May you'll be back up into your 7s & 8s, where it will remain until the middle part of August. So, contrary to what you're claiming, they are coming OUT of their slower season and into their busier season. Hence the reason people are upset about the cuts and why it's an odd move for them.

 

[rteetz]

Budget cuts the subject of Disney all week. Disney PR thinking let's announce this new Star Wars show so we can cover that up. Problem solved they will now talk about Star Wars fireworks instead of the cuts. It makes sense now. Typically disney wouldn't announce this on a Friday.

 

[sachilles]

Apparently you don't pay any attention to the busy seasons at Disney. They are actually approaching one of their busier/busiest times of year with Easter and Spring breaks. And from there, once that rush has passed, it won't slow down that much at all, remaining a pretty consistent 5-6 through April and May, which by the end of May you'll be back up into your 7s & 8s, where it will remain until the middle part of August. So, contrary to what you're claiming, they are coming OUT of their slower season and into their busier season. Hence the reason people are upset about the cuts and why it's an odd move for them.

You aren't saying anything contrary to what I have. Once this weekend is over, It's about as slow as you can expect in WDW until easter break where it ramps up to the 5/6 level. Then as May ends it starts to go up again. If you had to cut labor costs, this would be the time to do it, when fewer folks are in the parks...yes? As you rightly assert, you don't want to be pulling this stuff off at peak times.

 

[soniam]

Hall of presidents popular?

When I went as a kid, I remember waiting in line, maybe just until the next show started, but the theater would then be completely packed. I thought it was a great show. I still like it, but I the Tiki Room too. DS doesn't like it, but he gets to do it this trip (muwhaha). We only do it every so often though, so I am not a totally cruel mother.

 

[Josh Hendy]

I don't know that you can really blame him for Paris. He inherited a mess there and you either close or dig out. Their plan is solid enough they just have a whole lump of debt to pay off.

I think that the entire Eurozone is so messed up that there is a very real danger that Iger will only be piling losses upon losses by attempting to "dig out". I question whether Orlando can generate enough profits to carry the Eurozone and PRC debt in the short term, and I'm skeptical whether the Paris and Shanghai parks will be able to pay off their debt in the long term.

For decades now DLP was supposed to be "turning the corner" ... "it just needs to be completed" ... and so on. Now the park is STILL inadequate, we're told, and the financial and ethnic/cultural problems in the EU are the worst they've been since the 1930s.

 

[mshanson3121]

You aren't saying anything contrary to what I have. Once this weekend is over, It's about as slow as you can expect in WDW until easter break where it ramps up to the 5/6 level. Then as May ends it starts to go up again. If you had to cut labor costs, this would be the time to do it, when fewer folks are in the parks...yes? As you rightly assert, you don't want to be pulling this stuff off at peak times.

You called it "going into a slow season". This week, the week they did the cuts was actually a fairly busy week. Then there are two weeks where it should be slower, then it ramps up. I guess I really don't consider two weeks a "slow season". It does not make sense to make cuts at a time when your busier season starts in two weeks - a time when you should be actually be increasing workforce to prepare for the busy season. If you were making this argument towards the end of August or after the Christmas rush, sure. But no, not now. And for the record - Easter break ramps it up to 8-10, not 5/6.