Euro Disney Down Again

[Sarangel]

Troubled theme park operator Euro Disney fell deeper into the red last year as its operating costs soared and royalty payments for using the Mickey Mouse characters resumed.

The group, which in September unveiled a life-saving restructuring of its huge debt, also blamed a lacklustre tourism and leisure market for contributing to its growing losses.

However, Euro Disney chairman Andre Lacroix insisted: "The company’s annual results reflect stable visitor numbers and turnover in another difficult year for the European travel and tourism industry.

"To that is added an increase in costs essentially linked to the re-establishment of licensing fees and payments to the owner, as well as to additional charges linked to the restructuring."

Euro Disney, which operates as the European outpost of the Disney empire, including running Disneyland Paris, said its net loss for the year to September 30 was £101 million, more than double the £39m loss seen in the previous year.

"It’s catastrophic," said one analyst. "I had expected a loss of about £70m, but £101m is a little bit too much."

Euro Disney said it paid £8.76m in fees linked to its financial restructuring, and £6.4m for scrapping its "Visionarium" attraction that will be replaced by another visitor facility in 2006. Mr Lacroix said the overall loss had been impacted by the resumption of royalty payments to 39 per cent shareholder Walt Disney Co for the use of the Mickey Mouse characters.

The payments, for which Euro Disney had obtained a waiver due to its financial difficulties, resumed in the last three quarters of 2003, costing it £40m.

At the operating level, Mr Lacroix said that Euro Disney, Europe’s biggest theme park operator, had swung to a £16.6m loss from a profit of £92.1m in the previous year.

However, Mr Lacroix said the company had generated revenue and attendance growth in the important fourth quarter.

Overall turnover was largely unchanged at £729m. Visitor numbers were flat at 12.4m, despite the company spending an extra £5.1m on marketing. But spending per visitor rose five per cent to £29.7m.

According to analysts, Euro Disney faces the challenge of increasing visitor numbers to amortise a rise in operating costs linked to its opening of a second park, the Walt Disney Studios, beside the Magic Kingdom east of Paris. Those operating costs rose to £745m from £636m a year ago.

The company ended a year of cliffhanger negotiations in September with news that it had won an agreement with creditors over restructuring its debt, hauling it back from the verge of bankruptcy.

Mr Lacroix said Euro Disney’s current debt stood at £1.43 billion. As part of the debt restructuring, Euro Disney needs to carry out a £175m capital increase by March 2005.

 

[crcormier]

I certainly hope that it makes it, I can't imagine how much the naysayers would enjoy seeing a Disney park fail.

It really is a beautiful park, I'm glad I got the chance to see it. It was a tough decision to keep it centrally located as opposed to a warmer climate. (It was 32 degrees the day I went, I have pictures of Big Thunder Mountain's waterwheel frozen solid.)

Crossin' my fingers for them to make it!

 

[airlarry!]

I just keep thinking that these guys have to bite the bullet. Two choices: Close the park (terrible precedent for the company) or forgoe the royalty payments and invest heavily on expanding the Studios side with more attractions. I have yet to read a good review of the added park. The original park, after its initial problems, had finally settled in to making money for the company, as far as I have read, until the albatross was attached to its neck.

 

[Don Karnage]

Well, well.... crcormier is a DISboader!

Very small world after all. It's pronounced 'Leminstah'.

DP was beautiful but the new park really was an embarassment. Shame really.

 

[crcormier]

Originally posted by Don Karnage
Well, well.... crcormier is a DISboader!

Very small world after all. It's pronounced 'Leminstah'.

DP was beautiful but the new park really was an embarassment. Shame really.

Yes I am, yes I am.

I haven't seen the new park at all, apparently that is the source of their troubles, huh?

 

[raidermatt]

I thought the hotels were an issue as well, though my overall impression was the same as yours, Larry. That things were under control until the pre-fab park was opened. (Surely I'll be allowed a little hyperbole? )

 

[mushumadness]

its a shame its failing, but after two trip their i can see why

on average for two adults to go there from england, by air and stay in a disney hotel it tops £800 and thats for three days, (when going to florida is only another £600 for a couple)

when you get to euro disney the magic just isnt their, maybe the staff need re training to catch the magic and the prices made better. Then people may go more often.

 

[Mooobooks]

My friends in Scotland tell me that it's cheaper for them to fly to Orlando with their two kids and go to Walt Disney World than it is to got to Disneyland Paris.
There's something wrong with that equation!
Disneyland Paris is a stunning park, a lovely place with great attractions.
Walt Disney Studios is a dead-on-delivery turd, as lifeless as a frozen pool of piss. What a dreadful embarassment to everyone involved!
It has eight attractions and half of them are crap. That gives you four good attractions: Cinemagic, Animagic, the stunt show (lovely to watch sitting outdoors on metal bunches when it's freezing), and Rock 'n' Roller Coaster.
Backstage Tour: crap.
Armageddon: crap.
Magic Carpets: crap.
The Disney Animation building is a half-assed version of the great attraction at DCA.
After three hours at Walt Disney Studios you are looking around, then looking at your watch, then walking out the front gate and over to Disneyland Paris.

 

[manning]

You think Eisner will get around to reading this.............I think not.

 

[wilki32]

Totally agree with you Mushu, cost needs to come down and staff need to be fed pixie dust for the next six months.

We went end of July this year, drove down so no plane cost and still paid just over a thousand pound to stay at Sequia Lodge for 3 nights!!!

There doesn't seem to be the etquette that you find in Florida, characters mobbed by crowds, people climbing over displays, standing on the gardens etc etc etc... Now that could be a problem with the people that go there but also the CMs have to take some resposibility as well or again is it training?

The park is stunning and yes the studios does look like what it is, a second park, with massive debts I can't see this getting any better. There have been rumours of a Tower of Terror but thats just one attraction, they need another 5 or 6.

We will go again (if its still open) only because it takes about 4 hours in the car and we can fill the boot with merchandise!!!

Anthony

 

[shirley 38]

Euro Disney is not the problem Michael Eisner is.

Everything he has done in the past 10 years has been a disaster.
I truly believe he is trying to distroy THE DISNEY ENTERPRISES.