Is 'The Magic' Expensive?

Fun with numbers…..

Epcot used to pull near Magic Kingdom numbers, but things went south several years ago. The “erosion” at Epcot is that the park has not been kept up-to-date. That was not only the key business concept of the park but written into the sponsorship agreements as well.

In the deals, every Future World pavilion was to receive a make-over every ten years. The “Tomorrowland” problem was well known (the future keeps catching up) and even in the dark, dimly lit ancient days of 1982 people understood that technology would change.

So along comes 1992 and the expiration of the sponsorship agreements. What started as a mechanism to insure that Epcot was fresh and interesting is suddenly seen as a PROFIT CENTER. Yes, Disney now wants to turn a hefty profit on the deal itself, not just on happy smiling guests.

Naturally, any CEO is going to have an “interesting time” trying to explain why this cartoon company is suddenly demanding $150 million just to keep their sign on some amusement park ride. Many participants simply bailed – General Electric, United Technologies, Unisys, Kraft. Others simply hemmed and hawed for delay after delay while Disney did nothing to enhance their pavilion (like AT&T). Others got a minor makeovers like Energy (Exxon) and The Land (paid for by a new sponsorship from Nestle – which in turn was a booby prize for the Switzerland Pavilion). Seas, without any sponsor, rots in place. Only General Motors opted for the full bang – and THAT’S a story all on its own.

The result is that Epcot is filled with shows that should have been replaced a decade ago. It’s gone stale and the public sees that. ‘Mission: Space’ will help a little, but as a park Epcot needs more than just one ride every ten years. It’s little wonder why the attendance has been falling.

On Tokyo Disneyland, the resort is built on landfill in Tokyo Bay. There is no room left for a third major theme park. The notion about “crazy Japanese throwing money” is nothing but a lie thrown out to the analysts. The greater merchandise spending in Japan (usually on small gift items) is offset by Americans spending more on meals and hotel stays. Anyone trying to say that people buying rice candies with Mickey Mouse on the wrapper offsets the profit margin on a $200 a night motel room needs to find another excuse.

The other simple fact is that Tokyo is in a hugely competitive market and so they spend money to constantly improve and add to the parks. Quality wins out in the end.


P.S. Rumors say that Nestle is bailing out of their argeement as well. At least the Annual Pass holders get a nifty new lounge out of that business problem.
 
AV - weren't the various Future World pavilions/attractions always subsidized by sponsors?

I remember reading that roughly half of the money for the 'original' EPCOT came from sponsorships. So using the company's numbers that means $500M was put up in the early 80's for the 7 pavilions that were in Future World by 1983. Dividing it up equally works out to ~$70M per pavilion in sponsorship money. Now it wouldn't surprise me a bit that in that ten years (especially remembering the inflation of the early eighties) that the new sponsors would be expected to fork over 2 times as much (ie ~$150M).

Were the make-overs in the original contract supposed to be done 'without additional cost'?

If TDS continues to be a huge hit I imagine that in 15 years the OLC will fill in a hundred more acres of Tokyo Bay to build the third park - just like they did to build TDS.

One advantage that a Japanese company does have is profit margin expectations - they can re-invest 5-10% more than an American company can back into their business simply because 3% NET is perfectly acceptable to their shareholders. Also nobody is going to sue them if somebody gets hurt on a ride...so the lawyers don't end up designing the rides...
 
AV- lets say we trash the idea that 2/3 MK attendance represents any modicum of success for Epcot. I was affraid that someone who blow me out of the water with just such Epcot info. It opened to equal MK attendance numbers and was a success as such. Then, in 1992, all hell breaks loose. Sponsorship fades, pavillions get dated or go into disrepair, attendance drops to 2/3 the MK numbers, and Epcot begins to experience some degree of 'failure'.

Keep in mind, some people want to stipulate that Epcot was the last great park done the 'old', 'right' way. Complete and mature from the start, up to Walt's philosophy, everything that could be given.

So riddle me this. Who is responsible for the 'failure' in Epcot that hits in 1992? Is it current management that allows the sponsors to get away or doesn't pony up the cash to keep the pavillions fresh and up to their opening day standard? Was it ever envisioned that that would be the case when Epcot was first opened - did they intend for that type of financial burden to be placed on the company? Was the failure perhaps in the design, concept and implementation of a park so heavily dependent on sponsorship? Could the 'old', 'right' management have made a mistake? Is it possible they made a bad decision, based solely on the spreadsheet, that allowed them to have a 'complete', 'mature' park from day one that would be unable to sustain its attendance numbers on its own in the future?

Where am I going with this, you ask. Well, perhaps 'old' management may have made a few more mistakes than people realize, and perhaps current management doesn't make as many as everyone thinks. People say AK is incomplete, no BK you know, not the full, original concept. Well, perhaps if SoBe (they use a dragon, right?) was brought in as a sponsor we could have put BK in from the get go. But wait, that whole sponsorship thing didn't work out in Epcot. Lets not create an accident waiting to happen. Is it possible that current management (not perfect I know) should get a little more credit? Maybe, just maybe AK isn't the failure some of the 2's and 3's see, but a smart, viable park that will provide lots of Magic now, and can be improved upon in the future when the company is in a position to make those improvements. I asked the question before, does anyone feel that WDW would be better right now, or in the future, if AK was not done at all just because the original concept including BK couldn't be given all at once?
 
The point! The point? Is there a point
Of course there’s a point!!! There’s always a point with me. To show the vast difference in philosophies!!! So!!! Let’s dive in!!!
Epcot was the last park built the 'old way'. This is a good thing as far as you are concerned, right? As such, it was done the right way, no huge philosophy departures, no glaring mistakes.
Oh, I’m sure if we look closely enough we might (and I stress ‘might’) find some little mistakes. But overall you are 100% correct!
Despite the fact that it is nothing like Walt originally planned, it is what Walt would have done.
Now this little, seemingly innocent, sentence could start a 12 page thread all by itself. Suffice to say that yes, I stipulate!!! (If you really want to delve into the ‘what ifs’ of EPCOT (city vs. amusement park), start a new thread. I will gladly join in! I just might surprise you!!)
Now, Epcot brings in 2/3 the MK numbers.
I cheated and read ahead. If you happened to miss it, go back to AV’s post.!!
You still think Epcot is fine.
Fit as a fiddle, when it first opened!
No Magic erosion. The crumbling has not yet begun. The only erosion that may have been around would have been the margin erosion Eisner would have seen had he been around because he could have done it cheaper. Still on beam?
You fell off the beam, crashed and burned!!! Again, see AV’s post regarding the stagnation of EPCOT. ALL of it under Ei$ner’s watch!!!!

And because you’ve made this absolutely wrong assumption, the rest of your post is meaningless to me, simply because it does not address, in the least, my argument.
Basically, that each new park will realize some decline in attendance numbers as compared to the previous park, due to narrowing of scope and appeal as new ideas (that might not appeal to everyone) are given to the public.
This really doesn’t need to be said again, as AV addressed it as only he could, but you’re wrong!! When EPCOT first opened it rivaled MK for attendance!

OK – NEXT POST!!
Then, in 1992, all hell breaks loose. Sponsorship fades, pavilions get dated or go into disrepair, attendance drops to 2/3 the MK numbers, and Epcot begins to experience some degree of 'failure'.
You see, nothing ‘broke loose’. It was so gradual that no one, except the most vigilant of us ;) noticed. Even to this day many refer to EPCOT as their favorite park (me included). But the difference between the car #1 folk and me is that I say, “While it is still my favorite, it has grown stale and stagnate. And it needs a complete overhaul as quickly as possible”!! I believe the car #1 people either ignore the stagnation (a most popular stance) or make excuses (lack of funds, corporate sponsorship, etc.). And to add insult to injury the current regime seem hell-bent on replacing “way cool, very long, immersive attractions” with a rather short rides!! Kinda misses the mark for EPCOT, don’t you think?
Keep in mind, some people want to stipulate that Epcot was the last great park done the 'old', 'right' way. Complete and mature from the start, up to Walt's philosophy, everything that could be given.
{to be read as Gary Cooper} Yep!

The rest of your questions I could probably muddle my way through, taking pages upon pages to do. But I really am anxious for AV to answer it!! (Yes!! Every time that guy posts I learn something!!) So, have at it AV!!!!
 


Okay here we go.

The Problem with Epcot is that the conditions that allowed for the “World’s Fair” model of corporate sponsorships don’t exist anymore. Corporate image making is a very different art today than it was in 1980. Ad dollars are spent differently and the audience is more targeted. Spending on an amusement park ride seems rather wasteful when you could by a lot of cable ads for the same amount of money.

And Disney is a much less desirable “partner” now as well. The reason all these companies signed up for Epcot was so that a little of the “magic” would rub off on them. Disney was known for being super-high tech, Sperry/Unisys and United Technologies signed on for that reason. Disney had a number of long time sponsors (going back to the opening of Disneyland), so AT&T, Coke and Kodak came along for the ride. Disney was also just an entertainment company – who better than squeaky clean “G” movies to soften the images of hard-edge companies like Exxon, GE and General Motors.

But on the road to media giant, Disney changed. It’s a direct competitor of GE’s own NBC network. The company lost its squeaky clean image. Business dealings tweaked other sponsors. Worse, Disney lost the aura of high tech wonder that it used to enjoy.

So for various reasons Epcot lost it business model. The tragedy is that the current management has not replaced it with anything. The financial resources of Disney today are many times the size of the 1980’s and Disney could easily afford to maintain Epcot without sponsors. Disneyland used to be just as dependent on sponsors as Epcot and it’s survived without them. But instead of putting making the investments to maintain the park, current management has let things slip in order to maintain profits.

As Epcot’s attendance figures show, that’s going to be a loosing model. The more Epcot grows stale, the less people attend and the less revenue is created. That forces another round of cuts which further weaken attendance, and so on. New attractions are the force that keep all parks fresh – a park that uses tomorrow as its theme compounds that problem immensely.

I should also add that the old pavilion style of Future World attraction was designed so that new show could be added often. The big show was supposed to change every ten years, but the smaller shows were to change more often. The 3-D theater in Imagination is a good example. There is no reason why other shows in the The Land, Seas, or Health couldn’t continue. Even reprogramming ‘Body Wars’ would be a very inexpensive but very popular change. Instead, the small shows were tweaked inplace of the changing out the main attractions. And that’s not what was intended.

In the end I’m wondering if the biggest issue with Epcot isn’t the sponsorship problem, but is the failure to address the problem at all.
 
Uh....ummmmm....oh, ?? but......, how about...... D**N! I'll think of something :crazy:.

Others have said it, but have I? This place is so cool. (the DIS that is :))

Ah, here we go.....kind of goes to show just how expensive, and complicated, the Magic really is :cool:.

I guess Epcot was a cutting edge business model in the 80's. Problem is, cutting edge often times equals risky. Current management inherited that risk and must deal with the fallout. As I have said before, I don't envy them. If all that AV says is true (come on, I can't agree outright ;)), perhaps the ball has been dropped :rolleyes: , but that doesn't mean the Magic isn't as strong. As the Car #1 optimist I remain, I have to believe that the problem of failing to address the problem will be resolved. We know not when, we know not how, but just as the decline was gradual, so shall be the revival.
 
Well, EPCOT has always been the 'red-headed stepchild'. My favorite Disney 'character' put it thusly: "There isn't a practitioner of the somewhat arcane art of business-school management that would have ever built EPCOT".

But IMHO - EPCOT isn't that far off the beam as it stands today:
Test Track is excellent and is sponsored,
Space will be excellent - crossing my fingers - and is sponsored,
Life is very good to excellent - let's say with a new Body Wars movie it is excellent - and is sponsored,
Energy is OK to good - put it second in line for a make-over - and is sponsored,
JII is very good to excellent - crossing my fingers since I haven't seen the new ride yet - and is sponsored,
Land is very good and is sponsored,
Seas is bad to OK - put it first in line for a make-over - and NEEDS a sponsor,
Earth is good to very good - put it third in line for a make-over - and is sponsored.

And basically the World Showcase pavilions are just fine - although if I were King I would replace 'The Outpost' with Australia and do a 'Soarin' attraction. Or maybe convince China that they need to expand their pavilion to do a 'Soarin' down the Yangtzee attraction - now that would be kewl...

After all of the above EPCOT would be just fine and dandy, dandy and fine. Put everything back onto a 10 year 'recycle' schedule and watch the money roll in. :-)

AV - what would that all cost? Body Wars Movie + Energy moderate makeover + Seas major rebuild + Earth moderate makeover + China Soarin' down the Yangtzee? Oh, yeah, would somebody go schmooze Nestle' also? :-)
 


What’s interesting is that with all its problems, EPCOT Center is the real reason why WDW changed from a one day visit into a full resort. The shear size of the place immediately made WDW the focus of a trip instead of being just “one of the sights to see around Orlando”. Building MBA-approved Eisner-sized parks would have left WDW as being no better off than Universal Orlando. And the exact same problem is going on with the Disneyland Resort; there simply isn’t enough there to make people see a “resort”.

Yes, Epcot can be fine and dandy. But Mr. Bstanley you’ve listed six projects you want to see done in the process of discussing how wonderful the place is. That’s been my point – Epcot needs that kind of constant tuning. Everyone knows that. So why hasn’t it been done? Why isn’t there a new ‘Body Wars’ film in the works? Why isn’t ‘Energy’ being worked on.

The difference between #1 is that you seen to believe that it will all just happen somehow, by someone, at sometime, for some reason. There are others who are looking for the who’s, why’s, when’s, and how’s. We’re not seeing a lot of answers (and a lot of evidence that they won’t be coming anytime soon).


P.S. – Yes, I’ve heard Mike’s “I hate Epcot” speech a lot too. It usually comes between his “Walt wasted money by keeping a personal photographer on staff” speech and his “they were going to let someone else build a hotel” speech. Someone suggested we could all save a lot of time by programming the "dead guy" speeches into an AA figure and propping it outside his office.

Funny thing is that all his “business school perfection” talk didn’t stop after he built Euro Disney. And what’s even funnier is that all the exact same things he “hates” about Epcot and Tokyo are exactly the same programs he’s putting into place at this very moment at Disneyland Paris, Disneyland Hong Kong, Animal Kingdom and California Adventure.

For all the “arcane arts” he blasts Epcot for, he sure turns to them when he gets himself into trouble.
 
Well AV, being over-medicated with Pixie dust (my favorite Car #1 mental image :-) doesn't preclude me from imagining things that would improve my EPCOT experience. But The Magic was still as strong for me at EPCOT in Nov 2001 as it was when I first visited in Dec 1991.

And there have been updates done at EPCOT since I first visited, and there are others ongoing as we 'speak', and I'm sure there are more on the drawing boards. I will agree though with the concept that other 'business distractions' have impacted the 'rate' of updating at EPCOT.

Also I absolutely understand that somebody has to 'take the helm' and guide EPCOT to be better. I don't know who's in charge at EPCOT, but I hope they send monthly numbers and project requests to AW who sends them to PP who sends them to the big ME showing how doing this or that will increase our numbers by this or that. Shoot - if I was in charge of a $5B resource like EPCOT and had 10M people walking in my gate every year I would make dang sure that every last one of those people got a business card from me with an email address asking for suggestions and I would feed that back up the corporate food chain as well!

OK, deep breath here - I apologize for the land mine - I almost didn't do it - but I really feel we DISers need to stop blaming everything that happens on the big ME. That wasn't a big ME quote. The big ME stole it from someone much more respected.
 
A key car differentiator is our confidence about the future.
I have to believe that the problem of failing to address the problem will be resolved. We know not when, we know not how, but just as the decline was gradual, so shall be the revival.
I think in business parlance this all has something to do with milk, cash, and cows. Some have faith the milking will stop. Others, won’t be convinced until there are signs to the contrary. Even this scenario has me concerned. A prolonged period of slow decline that eventually becomes a prolonged period of slow recovery. As the saying goes “ a prolonged period here, a prolonged period there and it adds up to…”.

We’ve identified a number of WDW “opportunities” for capital.
·EPCOT updating $$
·DAK expansion $$
·New transportation $$$
·DD parking $
·New water park to replace RC $
·DL has aging issues. When will these hit the MK? $

On a positive side there doesn’t appear to be a dire need for more resorts, or a fifth park. On the negative side is the poor health of the rest of the company, lack of management interest, infrastructure investments are not sexy to Wall Street, and post opening fixes for DSP and DCA appear greater than they expected.

Even if I saw signs the current approach had reversed, I’m concerned about the backlog.
 
I think in business parlance this all has something to do with milk, cash, and cows.

Maybe it has something to do with that 'cyclical nature of business' thang ;).
 
Iarworth - roger that - the 'confidence' thing is THE differentiator IMHO.

I believe every occupant of every car (except perhaps the car#4 people) 'get' The Magic and wants to feel more of it when they visit DLResort or WDW or go to the latest Disney movie, etc.

From 1996-2001 there was a bit more than $8B spent by the Disney corporation on 'Theme Parks and resort - Capital Expenditures'. During that same time period the 'Theme Parks and resort' NET was just under $8B so I have confidence that the money is there.

It isn't that the milk was going to buy a new truck, the milk was going to the new baby cow. It remains to be seen how much more milk the baby will need before it becomes a milk producer...
 
Well AV, being over-medicated with Pixie dust (my favorite Car #1 mental image :-) doesn't preclude me from imagining things that would improve my EPCOT experience. But The Magic was still as strong for me at EPCOT in Nov 2001 as it was when I first visited in Dec 1991.
Bstanley. Why is it so hard for you to understand. This paragraph could have been written by me, with just a few very minor changes. Take a look:
Well AV, being over-medicated with Pixie dust (my favorite Car #3 mental image :-) doesn't preclude me from imagining things that would improve my EPCOT experience. But The Magic was still as strong for me at EPCOT in July 2001 as it was when I first visited in July 1982.
Notice the few changes? Not very important and even extends the time period!!

SO, am I over-medicated with pixie dust, too? Sometimes I think I am!! But the statement is true nonetheless. Yet I am firmly the driver of car #3. Does it occur to you to wonder how this could be? Or do you discount my gleeful “State of the Parks Addresses” and anecdotes about the marvelous, and very magical, times I have there.
And there have been updates done at EPCOT since I first visited, and there are others ongoing as we 'speak'
Well, I don’t know about you, but overall I feel the updates fall on the losing side of the ledger. In fact, just thinking about it as fast as I can type, I can’t recall any!! (that doesn't mean that you can't remind me some!! It wouldn't be the first time I was dead wrong! ;)) Now, many of these are personal taste issues, but for me, most point to a radical change in management and ‘magic’ philosophy. However, in all fairness, I can’t understand for the life of me how someone as well informed and ‘Disnified’ as yourself can’t possibly see that!! So I guess we're even! :)
and I'm sure there are more on the drawing boards
I really gotta ask!! What, in all the wide, wide (Disney) world, could possibly lead you to that conclusion?
I will agree though with the concept that other 'business distractions' have impacted the 'rate' of updating at EPCOT
See. To me this is merely another indicator of the philosophical change.
but I really feel we DISers need to stop blaming everything that happens on the big ME
Then who would you hold accountable? If he isn’t in control, who is? And does that mean that if he were replaced, nothing could change the direction in which Disney is heading?
It isn't that the milk was going to buy a new truck, the milk was going to the new baby cow.
What baby cow? It was (is) going to ‘feed’ the other animals at the same farm (read ABC, internet, etc.)!! The baby is starving and the old cows themselves could sure use some help as well!!
Iarworth - roger that - the 'confidence' thing is THE differentiator IMHO
So, I'm really wondering. What gives you that 'confidence'?
 
So, I'm really wondering. What gives you that 'confidence'?

Even though it appears that nobody in Disney senior management has ever taken their family to a theme park, they STILL haven't managed to screw the place up.

Now, I'm well aware of the list of "takeaways", and I agree with most of them.

Yet, there are some plusses that have been added that I see as having increased the Magic as well. The biggest is probably FastPass (a true "gift from the gods" for my family"). Others include the Cinderella castle show, an apparent increased emphasis on maintenance (even if its due to necessity), Character Caravan, AK (there are Magical things there, and the resort is better off with it from a guest perspective), AKL, new Figment, the Grand Californian (I know, not WDW, but since DCA comes up so much...), and others I could come up with as well.

All in all the negative changes probably outweigh the positive ones, but even with a mgmt team that doesn't "get it", the place is still Magical. So I've only moved to somewhere around car 1 1/4. Maybe I'm naive, but these parks have such tremendous value that I don't see anyway that they will be allowed to be run into the ground.
 
Even though it appears that nobody in Disney senior management has ever taken their family to a theme park, they STILL haven't managed to screw the place up.
WHAT!!!!!!!???????

You mean to tell me that even though you realize that senior management clearly doesn’t ‘get it’, just because they haven’t taken away all the magic, or even most of the magic, you think the future is just peachy-keen!!?? What kind of logic is that!!??
All in all the negative changes probably outweigh the positive ones, but even with a mgmt team that doesn't "get it", the place is still Magical.
So, negatives outweigh the positives and again you mention Team Disney ‘not getting it’, but that’s still OK with you. Their current course is just fine! Steady as she goes!! Full steam ahead!! Go Ei$ner!! He’s the man of the future, creating magic by the minute!!! No concerns about tomorrow.

After all, Car number doesn’t worry about anything at all. And Car number two is certain that any diminished magic will bounce right back. Being a car 1.25 says to me, “Don’t worry. Be happy.” Current management knows what it’s doing.

And I really don’t understand that. Because it flies in the face of your first sentence. Remember:
Even though it appears that nobody in Disney senior management has ever taken their family to a theme park
That sentence alone would plant me firmly into Car #3. even if they had screwed nothing up…… yet!!!!
 
Even though it appears that nobody in Disney senior management has ever taken their family to a theme park, they STILL haven't managed to screw the place up.
All in all the negative changes probably outweigh the positive ones, but even with a mgmt team that doesn't "get it", the place is still Magical. So I've only moved to somewhere around car 1 1/4. Maybe I'm naive, but these parks have such tremendous value that I don't see anyway that they will be allowed to be run into the ground.

I am so utterly... I am so... I can't believe... I just don't know what to say!!!!
 
Herr Baron,

My understanding of the Car thing is that Car #1 is 'the magic is as strong as ever' and Car #3 is 'the magic is in serious jeopardy'. So if your Magic is as strong as ever perhaps you should change cars?

As the NewK here (New Kid) I plead ignorance of your previous postings - I do promise to pay attention though!

As to updates - Speaking strictly about Future World - During my 10 years of EPCOT attendance I have seen WoM replaced with TT (+), watched Ellen be added to Energy (+), heard Jeremy Irons replace Walter Cronkite (=), saw Figment Out and now back In at JII (- then +), and finally Horizons flattened and Space rising (+). I consider these as 'updates' even though some were/are whole blood replacements. Sorry you don't like them.

I believe the odds are high that there are more updates like the above on the drawing boards simply because I never heard about any of the changes listed until after the contracts were signed so I suspect there is more going on than I know about...

There have been 2 baby cows in the last six years that drank much of the Parks and resort milk - AK and DCA (not ABC nor Internet). I personally think AK has beaucoup Magic, and DCA does not.

My confidence for the future comes from my belief that there are plenty of people in the world willing to pay big bucks to experience the The Magic and that there are many thousands of people producing The Magic today and it inconceivable that they will all forget how to do it before the people with the money will forget that they want it!
 
You mean to tell me that even though you realize that senior management clearly doesn’t ‘get it’, just because they haven’t taken away all the magic, or even most of the magic, you think the future is just peachy-keen!!?? What kind of logic is that!!??

(Raidermatt emits another exhaustive sigh.....)

I've tried to explain this before, but obviously still lack the communication skills necessary to at least come to an understanding with the 3's...

But, I've got quite a stubborn streak in me, so here goes again...;)

Here's an analogy I've tried before, one that I think explains my logic very clearly, but perhaps got lost in the shuffle.

Let's say there were 1,000,000 units of Magic at WDW. The net change I see is -100. That's not enough for me to say the Magic has faded. Literally, it has, but by such a small amount it hasn't, practically speaking. At the current rate of decline, it will be eons before the Magic truly fades noticeably.

So, even though mgmt doesn't get it, the Magic is so strong that even the net negative vibe they are putting out hasn't made a dent.

Now, you may disagree with my evaluation of how much things have faded, but beyond that, please explain the fault in the logic, because I still don't see it.

I am so utterly... I am so... I can't believe... I just don't know what to say!!!!

Fortunately, Baron did (a shock, I know), so please see above...;)
 

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