"Hey. We’ve got good news. We only lost $110.6 million this year." How would you like to give that pitch to your corporate benefactors? Well, it’s the pitch Euro Disney, parent company of Paris Disneyland, gave to their investors this week.
The losses actually are 35% better than last year’s deficit. Revenue is increasing despite slower spending which translates into lots of cost cutting going on. The next place to cut costs, lower wages (which I’m sure will go over really well in France right now). Additionally, they think adding the second gate and a few big new attractions will drive more visitors through the gates.
The conventional wisdom is that Disney ‘overbuilt’ the resort initially (too many hotel rooms was the culprit) saddling it with too much debt. So since then you’ve only seen much smaller gates opened by the Mouse (Tokyo Disney Sea doesn’t count as the Oriental Land Company built that). But those smaller parks have been struggling as well. Could it be that the theme park market is saturated right now?
With Six Flags on the ropes perhaps it is time for a little consolidation in the field. Six Flags may be out of the question for Disney as they are Warner Bros’ dependent for their themeing, but what about Cedar Fair or any number of world wide themeparks that have made a name by emulating Disney’s parks. Don’t laugh, a purchase of Cedar Fair would instantly give Disney its third gate in Southern California. Purchasing a park in Korea might make more sense than building one from scratch.
What do you think?