Disney to sell their DVC unit?

[mistysue]

I'm skeptical Disney will get too deep into running betting- their stance has always been heavily anti-gambling. Have you noticed there are no casinos near Orlando? That's by their design. During the Fox deal, they cancelled and modified contracts for Fox related gambling licenses that were in process to press the point the company was against gambling so the state of Florida would keep a ban on gambling in their area. Opening up ESPN as a location for betting/gambling would open the region up after they have kept it closed to casinos for decades.

They obviously have the legal advice to navigate very specific territory such as this, but if Chapek does open the gates on Disney blessing gambling - I would expect it to have some specific angle that allows them to be anti-casino while pro-online or something equally absurd. If my husband can go meet his bookie at the boardwalk, there's no reason I can't go over to I-4 to play slots.

I'm confused with the obsession on sports betting tied to this rumor, which is false. They own almost 5% of Draft Kings thanks to the FOX deal, though they are at risk of being diluted thanks to a deal that is in the works. The real money is licensing the brand of ESPN and not requiring any overhead to run the sports betting operation or take on any of the risks.

Except thats not the context of sports books with Disney from what I understand. Its about an online sportsbook that would be accessible from everywhere (or where legal) and potentially tied directly in to the ESPN broadcasts (cable and plus). If its only about the ESPN location at WDW then Disney would just likely skip gambling all together.

Omgggggggggg can you imagine betting at Disney. “Where’s daddy mommy”. “Well son your degenerate father is over espn. Kiss your genie passes away for the rest of the week and you deffiently might as well forget about those lightening passes that money was gone by breakfast yesterday” “why mommy!? Why has Mickey made daddy like this”

 

[EM Lawrence]

Let's be perfectly honest: if DIS sells DVC, the value of points will plummet overnight.

That's what I'm most afraid of. I felt confident enough to buy DVC because it has always behaved so unlike any other timeshare out there. DVC contracts have historically increased in value instead of becoming basically worthless. If Disney sells DVC, I may still have the right to book rooms at the Poly, but will I be able to sell my Poly points without taking a huge loss? Maybe a new owner would still practice ROFR, but I don't think any other timeshare groups do that. I could be wrong, I don't claim to be familiar with the way other systems work. But I've always understood that timeshare companies make money selling to newcomers, and they don't have any interest in making sure the value of their product is maintained past the point of sale.

 

[AvidDisReader]

Thing is they can push DVC to pretty much update everything inside and outside these resorts at not cost. Maybe I am nuts but even if Disney keeps these they are not leveling these locations in 2042. They will have some of the updating already paid for by the previous DVC owners, put some extra money in to it, and sell the resorts again.

How many 40 year old very well maintained resorts get leveled in Florida, Carolina, or Hawaii?

If Disney keeps these locations, they will pick and chose which resorts they will level and redo and which they will just do an update. I have done the math before, but the Boardwalk could be a financial bonaza. Prime piece of land/location. Change to all DVC. Drastically increase the point charts. Maybe increase an extra floor. This could be an over 2 billion dollar new income resort. The others, do some sprucing up for quick turn around to resell. From my view, it is all about the land, that is why you do not sell DVC in WDW, you want to control that land. Not be beholden to a 3rd party even if it is on a land lease.

 

[Brianstl]

True Covid has hurt cash flow more than they ever could have expected, but surprisingly, the rates on that new debt raised in 2020 was very low. And some of it was used to retire older higher rate debt. The point is that there is no dire need to retire debt by selling DVC, such a small division would not have any impact on the current debt load.

https://deadline.com/2020/05/walt-d...boost-financial-position-covid-19-1202931499/
"Disney has raised $11 billion in debt in an effort to bolster its financial position. The financial details were disclosed Tuesday morning in an SEC filing. Interest rates for the six-part raise range from 1.75% to 3.8%."

After that round of borrowing S&P dropped Disney's credit rating which will increase any future borrowing cost. The goal of the possible sale wouldn't be to retire debt, but increase cash on hand to spend on things like new productions for Disney+.

I don't think Disney needs to focus on retiring existing debt ahead of schedule, but Chapek has stated paying down debt is a top objective in his Goldman conference calll.

 

[Mai Ku Tiki]

I'm skeptical Disney will get too deep into running betting- their stance has always been heavily anti-gambling. Have you noticed there are no casinos near Orlando? That's by their design. During the Fox deal, they cancelled and modified contracts for Fox related gambling licenses that were in process to press the point the company was against gambling so the state of Florida would keep a ban on gambling in their area. Opening up ESPN as a location for betting/gambling would open the region up after they have kept it closed to casinos for decades.

They obviously have the legal advice to navigate very specific territory such as this, but if Chapek does open the gates on Disney blessing gambling - I would expect it to have some specific angle that allows them to be anti-casino while pro-online or something equally absurd. If my husband can go meet his bookie at the boardwalk, there's no reason I can't go over to I-4 to play slots.

As a senior and annual pilgrim to WDW since 1972, trust me, there was once upon a time, NO WAY in Maleficent's hell that alcohol would EVER be sold in the parks. Zero, zilch never!! Not ever, no way, and NOPE! Now it's a selling point.

Vegas was once ADULTS ONLY. And now racetracks have "Family Fun Days."
And FLA is changing as well. Seems Chapek is a guy who would be fine with it.

 

[Leight19]

I’d also add it may not be about getting cash on hand versus not wanting to maintain a business unit that doesn’t deliver roi comparable to other projects and is constantly in threat of litigation when they get “clever” and try to increase revenue. I don’t think they would spin this off in a way that jepordizes their ability to profit building future dvc products so I’m not terribly worried about value dropping over night. I could be wrong in assessing how profitable building of these projects have been in past but my view is they are likely large roi during sales then low roi for the next 50 years managing (main profit to Disney is a continued “captive” audience but that still exists with 3rd party management).

 

[CanadaDisney05]

As long as we are discussing the "what if" scenario, I actually don't believe the value of DVC will drop off a cliff. I do think their will be an immediate reaction by the market, and possibly slower increases to value, or possibly even slow depreciation. But not like we see with other timeshares.

The value in DVC is really the proximity to the parks. Most timeshares just arent close to such a popular tourist attraction. As long as WDW proves to be popular, the demand for DVC will continue even if not operated by Disney itself.

 

[crisi]

That's what I'm most afraid of. I felt confident enough to buy DVC because it has always behaved so unlike any other timeshare out there. DVC contracts have historically increased in value instead of becoming basically worthless. If Disney sells DVC, I may still have the right to book rooms at the Poly, but will I be able to sell my Poly points without taking a huge loss? Maybe a new owner would still practice ROFR, but I don't think any other timeshare groups do that. I could be wrong, I don't claim to be familiar with the way other systems work. But I've always understood that timeshare companies make money selling to newcomers, and they don't have any interest in making sure the value of their product is maintained past the point of sale.

But of course, we all bought DVC for exactly what we are contracted to get. Home resort advantage at the resort we bought into, other resorts subject to availability. We didn't buy for resale value - knowing that prices could plummet for a variety of reasons. We didn't buy for benefits, knowing they could be yanked at any time. Didn't we?

 

[TheMick424]

Let's be perfectly honest: if DIS sells DVC, the value of points will plummet overnight.

This is what scares me

 

[CWTC]

But of course, we all bought DVC for exactly what we are contracted to get. Home resort advantage at the resort we bought into, other resorts subject to availability. We didn't buy for resale value - knowing that prices could plummet for a variety of reasons. We didn't buy for benefits, knowing they could be yanked at any time. Didn't we?

Would we though retain home resort advantage? Or would new company give their current owners a leg up? We’re perfectly happy to stay at bcv, vgf, or blt but don’t want to compete or lose out to non owners at month 11. I wouldn’t be happy having Disney sell DVC but I would be irate if they sold it and we no longer had ease of booking at month 11.

 

[Mai Ku Tiki]

Wait for three hours for someone to answer the phone and tell me DVC cares about branding. Hit those dwarves again and think about how that website is doing for the branding. Check out that sweet $0 Incredipass discount and tell me they care about DVC. I got quoted 7 days to combine reservations.

This rumor makes sense to me in the context of DVC's obvious service decline and complete gutting of things like TOTW and Moonlight Magic.

Marriott runs the Swolphin and a massive timeshare operation. I'm sure they could figure out how to make a website, hire someone to answer the phone and the emails, and run DVC better than the current level. The suggestion was not even that it would be permanent, just a temporary handover. That makes me even more nervous about the value of my contracts.

Agree very much about branding. I realize it's not apples to apples BUT lots of folks bought homes in Celebration early '90s because it was promoted as Disney's 'town' & Disney DID own the land & built the town center. By 2004, Disney removed all references to 'Disney' & sold to a private investor leaving many angry & broken-hearted residents.

I'm not saying the situations are similar in terms of business models, BUT I am saying Disney 'branding' is not as sacred to the company as it once was. Sadly.

 

[sethschroeder]

I would expect it to have some specific angle that allows them to be anti-casino while pro-online or something equally absurd.

Nothing is absurd they are not looking at having a casino they are looking at having online sports betting which is drastically different than a casino, slots, and table games.

Would we though retain home resort advantage? Or would new company give their current owners a leg up? We’re perfectly happy to stay at bcv, vgf, or blt but don’t want to compete or lose out to non owners at month 11. I wouldn’t be happy having Disney sell DVC but I would be irate if they sold it and we no longer had ease of booking at month 11.

You contract states they can do lots of things but the head start booking window for home resort is something in the contract. So lots of things could change but if you bought at BCV you will always get first crack.

 

[GrumpyInPhilly]

Everytime I have looked, the resorts I see aren’t great. We are resale so no concierge class.

I also own DVC resale and had expiring points due to a Covid cancellation so I deposited them in RCI and then booked The District Club by Hilton in Washington DC for 5 nights. I thought it was at least as nice as a DVC property and you get a great free breakfast with cooked-to-order omelettes.

 

[CBMom01]

I thought about this. What money does DVC make once the contracts have been sold?

 

[Maistre Gracey]

I have zero knowledge, insight, or informed guesses.
That said, over the recent years Disney has moved further and further from “everything on property is Disney”. Restaurants, entertainment, and even the new hotel, have been solidly moving in the direction of third party.

 

[mistysue]

I'm just saying the argument that sports betting is ok, but playing what is essentially a video game as in-person betting is unethical is a stupid argument. It's still betting and gambling. With a massive presence in the online gambling world I don't know how well they could keep arguing that they have a moral objection requiring the community to block local gambling.

Nothing is absurd they are not looking at having a casino they are looking at having online sports betting which is drastically different than a casino, slots, and table games.

 

[Chuck S]

I thought about this. What money does DVC make once the contracts have been sold?

Annual management fees, and cash rentals of breakage inventory.

 

[CBMom01]

Annual management fees, and cash rentals of breakage inventory.

Ahh, I did not know that DVC earns management fees. Who pays them?

 

[DonMacGregor]

Ahh, I did not know that DVC earns management fees. Who pays them?

We do.

 

[limace]

I have said before that with the stripping of benefits for on site guests, there is less and less of a case to be made for on site at WDW-especially if you rent a car and aren’t an early riser. We stayed at Bonnet Creek for part of our last stay and the units were as nice as many at DVC, the pools were plentiful and had multiple lazy rivers, and it cost us $550 for a two bedroom for a week. DVC has made its money selling an experience-even though we all read that we are entitled to is this small thing-our home resort and that’s about it-but we all really buy for the whole package. I know I did. If the rest of the package isn’t there, though….