Disney to sell their DVC unit?

[DonMacGregor]

So the host's "friend"(who happens to be the friend of a Disney pod caster) was sitting in an undisclosed city (we'll assume New York and I don't know why you'd be coy about that) eating lunch, and happens to be sitting at a table nest to three guys who happen to be investment bankers who happen to be from three different investment firms (and he apparently happens to know who they are and the names of each of their firms, and talk about built-in corroboration), and they happen to be talking about DVC, and the host's friend just happens to overhear them....

Got it. Talk about the right place at the right time...

 

[The Jackal]

Funny how they say Chapek wants to end it, yet under his watch they are quickly adding to VGF. Depending on buy in price DVC will probably get close to $1,000,000,000 when it’s all sold. I think the problem Disney has, at some point they will have too many resorts. The more DVC units they build will and is decreasing the people staying at Disney cash resorts. While Disney makes a whole bunch of cash up front selling DVC, cash resorts are steady cash flow. The other issue Disney is going to have a self inflicted wound by Chapek, they have gotten rid of all reasons to stay on property. I would not be surprised that in a year or two, several cash hotels at WDW close.

 

[Brianstl]

Ehhh it seems pretty specious to me. The main reason they give for selling it is the glut of banked points? Thats an issue sure, but an insurmountable one to where you'd want to sell the division I dont think.

Unless you're Bob2 and want to have cash to buy a sports betting outfit for the synergies that provides with ESPN, but really I dont think Disney would need to drum up that much cash to do that deal, sports betting is still in its infancy for being legal in more and more states, surely an all stock deal would get that done without the need for any actual cash to change hands.

I don't think Disney is going to need any money for there sports betting operations. I think someone will pay Disney and give Disney a large part of their company to partner with ESPN.

If this happens it is because it is viewed as quick way to use the revenue from the sale to pay down a chunk of the massive debt Iger saddled the company with.

 

[kilik64]

I don't think Disney is going to need any money for there sports betting operations. I think someone will pay Disney and give Disney a large part of their company to partner with ESPN.

If this happens it is because it is viewed as quick way to use the revenue from the sale to pay down a chunk of the massive debt Iger saddled the company with.

So and so sports betting, brought to you by ESPN, a walt disney company.

 

[Bearval]

Well that’s an interesting development if true. And is it DVCMC or DVD?

I truly believe it will happen if it will generate a huge bonus for Chapek. The CEO and board members all receive bonus when they meet or exceed financial goals even if they are short sighted. These people do not care about the long term as long as they get their millions for themselves and a pump up in the stock prices will keep the current shareholders happy before they sell. Just listen to Chapek's last conference call and it was all about increasing yield and shareholder value.

 

[Brianstl]

I truly believe it will happen if it will generate a huge bonus for Chapek. The CEO and board members all receive bonus when they meet or exceed financial goals even if they are short sighted. These people do not care about the long term as long as they get their millions for themselves and a pump up in the stock prices will keep the current shareholders happy before they sell. Just listen to Chapek's last conference call and it was all about increasing yield and shareholder value.

If other rumors are to be believed, Chapek actually wants to dump the huge bonus system as it currently exists for Disney executives.

 

[Brianstl]

So and so sports betting, brought to you by ESPN, a walt disney company.

Exactly.

 

[dvc lover 1970]

I truly believe it will happen if it will generate a huge bonus for Chapek. The CEO and board members all receive bonus when they meet or exceed financial goals even if they are short sighted. These people do not care about the long term as long as they get their millions for themselves and a pump up in the stock prices will keep the current shareholders happy before they sell. Just listen to Chapek's last conference call and it was all about increasing yield and shareholder value.

Sadly,
I fear you are correct. I really dislike Chapek and feel he is the worst CEO in disney history. The short term gains will be to the companies long term ruins. He and the board will receive their fat checks but they will start the downward spiral of dvc. So sad. I am considering selling some of my contracts now which I had never before. No way am I adding on any more points

 

[Bearval]

x

 

[RoseGold]

Funny how they say Chapek wants to end it, yet under his watch they are quickly adding to VGF.

The VGF expansion is just one, pre-existing building, four years after RIV's launch. Maybe 2ishM points. Very small compared to the points at RIV/Aulani they are saddled with. It's just a small project to kick the can down the road and have something new to sell. Disneyland Tower was in the works for decades.

To me, this looks more like new construction shutdown than meaningful addition.

 

[_auroraborealis_]

You know what I COULD see them doing? Trying to find a way to sever off Aulani and sell it. And only it.

 

[RoseGold]

I can totally see selling off the off-site properties, especially Aulani.

 

[Bearval]

You know what I COULD see them doing? Trying to find a way to sever off Aulani and sell it. And only it.

I am willing to bet they have been trying to figure that one out for a few years now. The other two they are gonna dump is Vero beach and Hilton Head but they will just wait these out until they expire they sell off both resorts.

 

[Brianstl]

You know what I COULD see them doing? Trying to find a way to sever off Aulani and sell it. And only it.

Because you can trade in and out of all the DVC properties, I would think Disney either sells them all or it sells none.

 

[_auroraborealis_]

I am willing to bet they have been trying to figure that one out for a few years now. The other two they are gonna dump is Vero beach and Hilton Head but they will just wait these out until they expire they sell off both resorts.

Yeah, my thought is that VB and HHI are at least in states that they already have a significant legal presence and know what is up (Florida) or a very easy state (SC is not noted for its strong regulatory environment). They have to play ball in California, all things considered. But Aulani has never been the big success with foreign buyers they'd hoped, it has never been considered "sold through," and Hawaii regulation and movement on tourism is hard to navigate.

 

[Winston Wolf]

Funny how they say Chapek wants to end it, yet under his watch they are quickly adding to VGF. Depending on buy in price DVC will probably get close to $1,000,000,000 when it’s all sold. I think the problem Disney has, at some point they will have too many resorts. The more DVC units they build will and is decreasing the people staying at Disney cash resorts. While Disney makes a whole bunch of cash up front selling DVC, cash resorts are steady cash flow. The other issue Disney is going to have a self inflicted wound by Chapek, they have gotten rid of all reasons to stay on property. I would not be surprised that in a year or two, several cash hotels at WDW close.

I'd argue that the conversion of GF hotel into DVC is the short term filling that hole in the P&L that they were discussing. Riviera sales continue to lag, and they know selling more VGF will be a hit. Fills a gap NOW, while they figure out the mid to long term for DVC. The Disneyland Hotel DVC will be a hit...but after that?? Who knows...

 

[kilik64]

Because you can trade in and out of all the DVC properties, I would think Disney either sells them all or it sells none.

Dont think that has any bearing on it, you are not guaranteed ability to do that, your ownership interest just guarantees you a room at your home resort pretty sure.

 

[_auroraborealis_]

Because you can trade in and out of all the DVC properties, I would think Disney either sells them all or it sells none.

A property could leave BVTC. As I understand the condo association membership, it is severable.

The AUL owners might have an interesting legal case were that to be tried. But the condo legal declarations also say very explicitly not to buy for the benefits derived from use exchange programs. The only "guaranteed" use is that of the home resort. The non-guaranteed component includes all access via BVTC.

The multi-site POS covers a lot and I cannot copypasta from the PDFs. But the tl:dr is that they include that you can only access the BVTC reservation component if the DVC resort you own remains a member, and that resorts can leave BVTC and not just by expiring.

 

[RoseGold]

AUL was very difficult during lockdown. It is still problematic, plus DVC is still saddled with all those unsold points with nobody paying dues anyway and a cash-strapped local government that doesn't seem to care much about the mouse. What a huge liability.

 

[EM Lawrence]

I just listened to the podcast like I do every Monday, and came here to join the discussion. I am not at all interested in owning a generic timeshare, or even a Disney location timeshare run by a typical timeshare outfit. I bought a Disney Vacation Club contract. If it becomes just another Marriott or whatever timeshare I am so out of here. Timeshares in general have a bad reputation for very good reasons. Could Bob Chapek be so blinded by the potential for SPORTS BETTING profits that he would alienate the park's most loyal fanbase? The possibility that the answer to that question could be YES is not comforting.