DLRP and the moneyproblems

[digikleuter]

Hello there,


Yesterday the news came in that Hong Kong Disneyland made a profit. It had a bad start with almost no visitors but now they actually made money.


Do we know what the real problems are for Paris to do this? Hong Kong needs to pay royalty's? Hong Kong I guess has the same standards regarding CM employees?  There are a lot of visitors. It's expensive enough... Where does DLRP lose so much money?


Regards,
Mario

[ford prefect]

DLRP finances are beyond complicated.  The basic story is that Euro Disney SCA, the holding company, owes €1.8 billion. Ish.  Although this is reducing slowly.

The Walt Disney Company, TWDC, owns 49% Prince Al Wahleed 10% and the rest by minority stockholders.

The debt is historic and structural.  I.E. right from day one and is a result of a series of recessions, bad decisions and bad luck.

All Disney companies pay royalties to TWDC for character rights.  These have been waived year on year.

The resort makes an operating profit but all of this goes to pay down the debt.

[digikleuter]

Ow, I know all about the history and how the stucture of the holding, but that does not take away from the fact that Hong Kong makes a profit. They pay royalty's too. They have CM's to pay. But unless i'm mistaken, if you take away the debts and make a clean slate, DLRP still doesn't make any profit?


M.

[captain rocket]

No you are wrong! Paris does make a profit each year but all the profit made has to be used to pay off the huge debt. I do not know enough about Hong Kong to be able to compare them both.
As a comment, I was amazed when I looked at the ticket prices for Disneyland in Annaheim. They are much more expensive than Paris, so maybe Paris needs to look at it's pricing structure?

[DLRP Roundup!]

No you are wrong! Paris does make a profit each year but all the profit made has to be used to pay off the huge debt. I do not know enough about Hong Kong to be able to compare them both.
As a comment, I was amazed when I looked at the ticket prices for Disneyland in Annaheim. They are much more expensive than Paris, so maybe Paris needs to look at it's pricing structure?

Not quite, it's operating activities minus its debt, still isn't profit. However it's fairly complexly planned. Money is being made by TWDC anyway

[orangarnold]

No you are wrong! Paris does make a profit each year but all the profit made has to be used to pay off the huge debt. I do not know enough about Hong Kong to be able to compare them both.
As a comment, I was amazed when I looked at the ticket prices for Disneyland in Annaheim. They are much more expensive than Paris, so maybe Paris needs to look at it's pricing structure?

I agree! I bought tickets on fnac last week for €35 a day, its almost too cheap. And the annual passes are a steal, if I lived in the South of England over Yorkshire I would be tempted

[Pizzaplanet]

This topic clearly shows the bad condition of this forum. A few years ago right after the topic was posted, there were ten or more members explaining the background of the bad financial situation of the resort. Within minutes this topic would have generated a wonderful discussion. Today there are only five replies and no good answer. I guess the time of discussion boards is over, since more and more people are using Twitter and Facebook to discuss various topics.

[mnewcourt]

This topic clearly shows the bad condition of this forum. A few years ago right after the topic was posted, there were ten or more members explaining the background of the bad financial situation of the resort. Within minutes this topic would have generated a wonderful discussion. Today there are only five replies and no good answer. I guess the time of discussion boards is over, since more and more people are using Twitter and Facebook to discuss various topics.

That is true but there are also many websites that explain the above in great detail. Just google it.


That said I have hopes for Disneyland Paris now TWDC has stepped in but I believe it will take some years before they can write black numbers.

[irishbhoy1888]

No you are wrong! Paris does make a profit each year but all the profit made has to be used to pay off the huge debt. I do not know enough about Hong Kong to be able to compare them both.
As a comment, I was amazed when I looked at the ticket prices for Disneyland in Annaheim. They are much more expensive than Paris, so maybe Paris needs to look at it's pricing structure?

Disneyland aneheim has basically a brand new theme park in Disney california with some exceptional rides , dlrp does not .. a half hearted Disney studios , a magic Kingdom which needs work and Disney village which Is no downtown Disney .!
If you want more entrance cash you need to be offering a much better product . Just upping the ticket prices will turn people away .

[orangarnold]

No you are wrong! Paris does make a profit each year but all the profit made has to be used to pay off the huge debt. I do not know enough about Hong Kong to be able to compare them both.
As a comment, I was amazed when I looked at the ticket prices for Disneyland in Annaheim. They are much more expensive than Paris, so maybe Paris needs to look at it's pricing structure?

Disneyland aneheim has basically a brand new theme park in Disney california with some exceptional rides , dlrp does not .. a half hearted Disney studios , a magic Kingdom which needs work and Disney village which Is no downtown Disney .!
If you want more entrance cash you need to be offering a much better product . Just upping the ticket prices will turn people away .

Just to add onto this though, I have recently got my partner to finally agree that we can get annual passes as we worked out as long as we go for a minimum of six days in the year we have saved money compared to even buying tickets with places like fnac. It makes so little sense that annual passes are so inexpensive. I know if the parks were priced alongside the Californian or Floridian parks annual passes would be out of the question.

[irishbhoy1888]

So who knows how much exactly dlrp owes on its massive debt ?
I find it unbelievable that a place that attracts the highest visitor levels in Europe can't sort out the money issues

[orangarnold]

So who knows how much exactly dlrp owes on its massive debt ?
I find it unbelievable that a place that attracts the highest visitor levels in Europe can't sort out the money issues

It's in the annual financial reports

[Jonjo]

The refinancing of the Euro Disney group’s debt by The Walt Disney Company in 2012 was for an overall amount of 1,332 million euros.  This refinancing enabled DLP to reduce its financing costs and give them  greater investment and operational flexibility.

The following is from the 2013 fiscal report.
http://corporate.disneylandparis.com/CORP/EN/Neutral/Images/uk-2013-11-07-euro-disney-sca-reports-annual-results-for-fiscal-year-2013.pdf

For the fiscal year 2013 which ended 30 September  2013 the groups Net loss was reduced by €22 million to €78 million, reflecting the positive impact of the 2012 debt refinancing.

Resort operating segment revenues decreased by €26.0 million to €1,289.0 million from €1,315.0 million in the prior year.

Theme parks revenues decreased 2% to €737.6 million from €750.5 million in the prior year due to a 7% decrease in attendance to 14.9 million, partly offset by a 4% increase in average spending per guest to €48.14 and higher special event activity. The decrease in attendance was due to fewer guests visiting from France, Spain and Italy, partially offset by more guests visiting from the United Kingdom. The increase in average spending per guest primarily resulted from higher spending on admissions.

Hotels and Disney Village® revenues decreased 2% to €510.2 million from €518.6 million in the prior year due to a 4.7 percentage point decrease in hotel occupancy to 79.3%, partly offset by higher Disney Village revenues and a 2% increase in average spending per room to €235.01. The decrease in hotel occupancy resulted from 105,000 fewer room nights sold compared to the prior year due to fewer guests visiting from Spain, Italy, the Netherlands and France, partially offset by more guests visiting from the United Kingdom. The increase in Disney Village revenues reflected higher spending on merchandise following the opening of a new boutique, World of Disney, in July 2012. The increase in average spending per room resulted from higher daily room rates.

Other revenues decreased by €4.7 million to €41.2 million from €45.9 million in the prior year, driven by lower sponsorship revenues.

For the Fiscal Year, the Group's net loss amounted to €78.2 million, compared to a net loss of €100.2 million for the prior year. Net loss attributable to owners of the parent and non-controlling interests amounted to €64.4 million and €13.8 million, respectively

Free cash flow used for the Fiscal Year was €31.1 million compared to €9.3 million used in the prior year. Cash generated by operating activities for the Fiscal Year totaled €95.0 million compared to €144.0 million generated in the prior year. This decrease resulted from higher working capital requirements and the decline in operating margin. Changes in working capital during the prior year benefited from the deferral into long-term debt of €33.9 million of royalties and management fees, as permitted by the 2005 restructuring debt agreements. No such benefit occurred in the Fiscal Year following the removal of this deferral mechanism after the 2012 Refinancing.

Cash used in investing activities for the Fiscal Year totalled €126.1 million, compared to €153.3 million in the prior year. This decrease was primarily due to the investments made in the prior year in the World of Disney boutique and the Disney Dreams®! nighttime show.

Cash used in financing activities for the Fiscal Year totalled €5.2 million, compared to €242.5 million used in the prior fiscal year. This decrease mainly reflected scheduled repayment of bank borrowings made by the Group in the prior year until the 2012 Refinancing, as well as cash impacts of the 2012 Refinancing in the prior year.

In accordance with the scheduled maturities agreed upon as part of the 2012 Refinancing, the Group is required to repay €11.4 million of its borrowings with The Walt Disney Company ("TWDC") in fiscal year 2014.

[mvboetzelaer]

The main difference between DLP and Hongkong is the Hotels. Hongkong has only 2 Disney built (and financed) hotels. It was M. Eisner who insisted that all 7 (including Davy Crocket) hotels would be open at opening day in 1992. This was a huge investment and the hotels performed very poorly in the first years. Some were even closed for extended periods to cut operational costs, but the debt to build them remained. Furthermore attendance was lower than expected due to high prices, a small amount of major attractions, the heavily enforced "no-picnic"-rule (combined with high food prices) and overall bad economy. That put a complete hold on any expansion plans for the Parc, that were actually very needed to boost attendance to gain income to pay of the debts.
TWDC has been waiving her royalties on the Disney trademarks for years and if finally stepping in.

[Aladar]

The hotels were a very good excuse during the nineties. but, the nº1 destination in Europe losing money during 22 years? That's very strange. I still think there are some corrupt managers making a profit for themselves and hiding it very well making false accounts.