dlpSteve
Mr Dedicated to DLP
- Joined
- Mar 13, 2003
- Messages
- 2,630
I conducted an interview with Disneyland Paris expert Christian Sylt about the finances of Disneyland Paris past, present and future. He also has some great stories to tell of attractions that never came to be, the approval process for shows in Disneyland Paris and so much more.
You can read the interview here but I'll post one of the questions which gave us his longest and most detailed answer:
Could you tell us a bit about how Disneyland Paris was first funded, how that changed over time and bringing us up to the present day.
DLP is built on magic but the business which runs it was built on debt. To fund construction of the resort its operating company, known as Euro Disney, took on $4 billion of debt in the form of loans from a consortium led by Frances largest bank Banque Nationale de Paris. To raise the remaining $1 billion needed to complete the project 51% of Euro Disney was floated on Paris Euronext stock exchange with TWDC retaining a 49% stake.
The returns were forecast to be impressive with half a million visitors reportedly expected on the opening day in 1992. However, the crowds failed to materialise and it was reported that just 50,000 guests turned up. In hindsight, it is perhaps no surprise that they were put off applying the template which led TWDC to success in the US, alcohol was not available in restaurants (drawing criticism from many French visitors) and French was not the principal language spoken by the cast members.
Euro Disney was also blighted with bad luck as a recession bit down and in 1993, its first full year of business, it made a net loss of ¬813.6 million and risked closure. It was saved when Alwaleed invested ¬263 million into the company in 1994. New shares were issued in it and Alwaleed wasnt the only buyer. Euro Disneys existing shareholders - The Walt Disney Company and the public - also invested in the share issue and it raised a total of $1.1 billion. This was used to reduce its total debt to $3 billion and left $100 million to spend on building Space Mountain. It put Euro Disney on a solid footing for a while but then bad luck struck yet again.
When WDS was commissioned in the late 1990s the outlook for global tourism was rosy but it was a very different picture when it opened in 2002. The industry had been badly hit by 9/11 and WDS did little to change that. The park was relatively sparse but still cost an estimated ¬610 million to build. It put pressure on Euro Disneys finances yet again because the park had been financed by borrowings and a capital increase.
In 2005 a further restructuring deal and share issue provided ¬250 million to invest in more attractions. Alwaleed personally put in ¬25 million which took his stake to 10% with 39.8% in TWDCs hands and the remainder floated on the stock exchange. The share issue provided the money to open Buzz Lightyear, The Tower of Terror and Toy Story Playland. However, because the companys financial position had been so tight since it opened, the debt taken out to build the resort had still not been paid off. This was causing problems because the charges on the debt came to around ¬75m annually and this wiped out any profits that Euro Disney had made.
That situation completely changed in September last year when TWDC took over the debt and reduced the interest rate from 5.2% to 4% giving Euro Disney a saving of ¬45m over the next five years. I had an inkling that this was on the horizon in May last year when Alwaleed told me that Euro Disneys chief executive Philippe Gas said to him that he believes the company will make a profit within three years. This was reflected in the reduced losses which were announced in May so once again DLP is looking up.
You can read the interview here but I'll post one of the questions which gave us his longest and most detailed answer:
Could you tell us a bit about how Disneyland Paris was first funded, how that changed over time and bringing us up to the present day.
DLP is built on magic but the business which runs it was built on debt. To fund construction of the resort its operating company, known as Euro Disney, took on $4 billion of debt in the form of loans from a consortium led by Frances largest bank Banque Nationale de Paris. To raise the remaining $1 billion needed to complete the project 51% of Euro Disney was floated on Paris Euronext stock exchange with TWDC retaining a 49% stake.
The returns were forecast to be impressive with half a million visitors reportedly expected on the opening day in 1992. However, the crowds failed to materialise and it was reported that just 50,000 guests turned up. In hindsight, it is perhaps no surprise that they were put off applying the template which led TWDC to success in the US, alcohol was not available in restaurants (drawing criticism from many French visitors) and French was not the principal language spoken by the cast members.
Euro Disney was also blighted with bad luck as a recession bit down and in 1993, its first full year of business, it made a net loss of ¬813.6 million and risked closure. It was saved when Alwaleed invested ¬263 million into the company in 1994. New shares were issued in it and Alwaleed wasnt the only buyer. Euro Disneys existing shareholders - The Walt Disney Company and the public - also invested in the share issue and it raised a total of $1.1 billion. This was used to reduce its total debt to $3 billion and left $100 million to spend on building Space Mountain. It put Euro Disney on a solid footing for a while but then bad luck struck yet again.
When WDS was commissioned in the late 1990s the outlook for global tourism was rosy but it was a very different picture when it opened in 2002. The industry had been badly hit by 9/11 and WDS did little to change that. The park was relatively sparse but still cost an estimated ¬610 million to build. It put pressure on Euro Disneys finances yet again because the park had been financed by borrowings and a capital increase.
In 2005 a further restructuring deal and share issue provided ¬250 million to invest in more attractions. Alwaleed personally put in ¬25 million which took his stake to 10% with 39.8% in TWDCs hands and the remainder floated on the stock exchange. The share issue provided the money to open Buzz Lightyear, The Tower of Terror and Toy Story Playland. However, because the companys financial position had been so tight since it opened, the debt taken out to build the resort had still not been paid off. This was causing problems because the charges on the debt came to around ¬75m annually and this wiped out any profits that Euro Disney had made.
That situation completely changed in September last year when TWDC took over the debt and reduced the interest rate from 5.2% to 4% giving Euro Disney a saving of ¬45m over the next five years. I had an inkling that this was on the horizon in May last year when Alwaleed told me that Euro Disneys chief executive Philippe Gas said to him that he believes the company will make a profit within three years. This was reflected in the reduced losses which were announced in May so once again DLP is looking up.
.
those theme park attendance figures that Jonjo posted last week can't lie, still number one visited theme park in Europe and fifth worldwide. 
