The Epcot attraction remains uncertain as GM and Disney executives negotiate a possible contract extension.
By Jason Garcia
Sentinel Staff Writer
June 22, 2009
Three weeks after General Motors Corp. filed for bankruptcy -- and nearly three months after an internal deadline to resolve the issue -- the carmaker's status as sponsor of one of Walt Disney World's marquee attractions remains uncertain.
Executives for GM and Disney have continued to negotiate a possible contract extension to keep the beleaguered Detroit auto giant as sponsor of Epcot's Test Track. But so far nothing has been announced.
Neither side is talking, at least publicly. "We have nothing new to share," Disney spokeswoman Andrea Finger said recently.
A spokeswoman for GM did not return messages seeking comment.
The sponsorship of Test Track, a high-speed ride that carries guests through a series of simulated car-safety tests, has been the subject of speculation for months. GM's 10-year contract is thought to have expired at the end of March which is also the public deadline GM had originally set for negotiating an extension.
GM has said it wants to remain Test Track's sponsor. But it is an expensive proposition for a company that this month became the second-largest industrial bankruptcy in U.S. history.
GM paid Disney $100 million for the sponsorship, according to a person familiar with the contract. The deal was front-loaded: GM paid nearly all of its sponsorship fees during the first five years of the 10-year pact, said the person, who spoke on condition of anonymity because he was not authorized to speak on behalf of either company.
GM also spends between $1 million and $2 million a year operating a post-ride showroom inside the attraction, with more than a dozen vehicles on display and terminals that guests can use to order sales brochures.
The company's contract-extension talks with Disney have been further complicated by the involvement of the federal government, which has kept GM afloat with tens of billions of dollars in loans and is about to become majority owner of the iconic company. Some worry the company could face a public backlash if it is seen as using taxpayer money to underwrite a theme-park ride.
Still, the marketing appeal is obvious. Test Track among the biggest draws in a theme park that lures 11 million customers each year gives GM a unique platform from which to build goodwill for its brands.
Since March, rumors have circulated around Epcot that Disney was permitting GM to stay on a month-to-month basis while negotiations continued.
The person familiar with the contract, who said he had been briefed on the talks, said GM and Disney were poised to sign a six-month contract extension just days before the carmaker's June 1 bankruptcy filing. The deal would have allowed GM to forgo paying Disney a sponsorship fee but would have required it to continue paying for the post-ride showroom.
The agreement would have ensured that GM remained Test Track's sponsor through the end of 2009 and spared both the carmaker and Disney the expense of erasing GM's presence from the attraction.
It's not clear, however, whether such an agreement was signed. Disney would not discuss the talks in any detail.
A sponsorship change any time soon appears unlikely. Experts say finding another car company to replace GM will be difficult for Disney, as the entire auto industry has been hammered by the global recession. Any new sponsor would also likely have to spend a significant amount of money to update and re-theme Test Track.
"We find it difficult to believe another manufacturer would be able to rationalize such an expensive partnership in today's environment," Richard Greenfield, an analyst at the stock-research firm Pali Capital, wrote in a blog post earlier this year.
Two of the companies often rumored as potential Test Track sponsors Toyota and Honda both said they were not interested.
"We have no plans to sponsor that," said Marcos Frommer, spokesman for American Honda Motor Co.
Added Toyota Motor Sales USA spokesman Joe Tetherow: "This is something that's not even on the radar."
A representative for Ford did not return a phone message.
While the fees at stake are a relatively minor amount for the Walt Disney Co., Greenfield said they are an example of the varied ways the recession has squeezed the Burbank, Calif.-based company.
Sponsorship uncertainty "illustrates how the economic meltdown is impacting aspects of Disney's businesses that we had not even thought about previously," he wrote.
By Jason Garcia
Sentinel Staff Writer
June 22, 2009
Three weeks after General Motors Corp. filed for bankruptcy -- and nearly three months after an internal deadline to resolve the issue -- the carmaker's status as sponsor of one of Walt Disney World's marquee attractions remains uncertain.
Executives for GM and Disney have continued to negotiate a possible contract extension to keep the beleaguered Detroit auto giant as sponsor of Epcot's Test Track. But so far nothing has been announced.
Neither side is talking, at least publicly. "We have nothing new to share," Disney spokeswoman Andrea Finger said recently.
A spokeswoman for GM did not return messages seeking comment.
The sponsorship of Test Track, a high-speed ride that carries guests through a series of simulated car-safety tests, has been the subject of speculation for months. GM's 10-year contract is thought to have expired at the end of March which is also the public deadline GM had originally set for negotiating an extension.
GM has said it wants to remain Test Track's sponsor. But it is an expensive proposition for a company that this month became the second-largest industrial bankruptcy in U.S. history.
GM paid Disney $100 million for the sponsorship, according to a person familiar with the contract. The deal was front-loaded: GM paid nearly all of its sponsorship fees during the first five years of the 10-year pact, said the person, who spoke on condition of anonymity because he was not authorized to speak on behalf of either company.
GM also spends between $1 million and $2 million a year operating a post-ride showroom inside the attraction, with more than a dozen vehicles on display and terminals that guests can use to order sales brochures.
The company's contract-extension talks with Disney have been further complicated by the involvement of the federal government, which has kept GM afloat with tens of billions of dollars in loans and is about to become majority owner of the iconic company. Some worry the company could face a public backlash if it is seen as using taxpayer money to underwrite a theme-park ride.
Still, the marketing appeal is obvious. Test Track among the biggest draws in a theme park that lures 11 million customers each year gives GM a unique platform from which to build goodwill for its brands.
Since March, rumors have circulated around Epcot that Disney was permitting GM to stay on a month-to-month basis while negotiations continued.
The person familiar with the contract, who said he had been briefed on the talks, said GM and Disney were poised to sign a six-month contract extension just days before the carmaker's June 1 bankruptcy filing. The deal would have allowed GM to forgo paying Disney a sponsorship fee but would have required it to continue paying for the post-ride showroom.
The agreement would have ensured that GM remained Test Track's sponsor through the end of 2009 and spared both the carmaker and Disney the expense of erasing GM's presence from the attraction.
It's not clear, however, whether such an agreement was signed. Disney would not discuss the talks in any detail.
A sponsorship change any time soon appears unlikely. Experts say finding another car company to replace GM will be difficult for Disney, as the entire auto industry has been hammered by the global recession. Any new sponsor would also likely have to spend a significant amount of money to update and re-theme Test Track.
"We find it difficult to believe another manufacturer would be able to rationalize such an expensive partnership in today's environment," Richard Greenfield, an analyst at the stock-research firm Pali Capital, wrote in a blog post earlier this year.
Two of the companies often rumored as potential Test Track sponsors Toyota and Honda both said they were not interested.
"We have no plans to sponsor that," said Marcos Frommer, spokesman for American Honda Motor Co.
Added Toyota Motor Sales USA spokesman Joe Tetherow: "This is something that's not even on the radar."
A representative for Ford did not return a phone message.
While the fees at stake are a relatively minor amount for the Walt Disney Co., Greenfield said they are an example of the varied ways the recession has squeezed the Burbank, Calif.-based company.
Sponsorship uncertainty "illustrates how the economic meltdown is impacting aspects of Disney's businesses that we had not even thought about previously," he wrote.
