Originally Posted By leemac <<i.e. - heavy investment into rides/attractions today without some view as to what it will return to me would be viewed as risky...doing it right before the economy changes ( and hopefully it will) and if there were studies for pent up demand for potential trips to WDW- would be great timing. merging the two is difficult. As you mentioned, it's easier to sell building another DVC unit as there is a cash flow identified ( or forecasted sell rate) at time of initial investment. >> The joys of being in the theme park business. I've said before and I'll say it again - you have to be insane to enter the theme park market these days. It is hugely risky but Disney do already operate in that space. The problem is that the riskiest business unit is being run in the same conservative way as everything else. The two just don't mesh. WDP&R should be investing in infrastructure now whilst construction rates are still low but they rarely do (didn't in '01/'02 either). If you build something that is inherently marketable and will attract new and repeat guests then you have a winner - any investment is a gamble but choosing not to invest in your existing parks is foolhardy.
Originally Posted By Christi22222 >>I'm not advocating that - but investment in the parks will continue to lag behind until Hunt's model is ditched. I've hated the model since it was first introduced. You need a more holistic approach that also includes intangible benefits that can't be measured in an income statement.<< leemac is my new hero (blush). Are we allowed to be groupies on this site? I have not been here long enough to know who you are or what you do, but you've just confirmed so much of what I've felt and believed that I'm giddy. And that focus on financial *models* that look good on paper but miss all the other important stuff about a business is the b.s. that is ruining our country and reasonable capitalism. I promise to try not to stalk you on LP....
Originally Posted By davewasbaloo >>>WDP&R should be investing in infrastructure now whilst construction rates are still low but they rarely do (didn't in '01/'02 either). If you build something that is inherently marketable and will attract new and repeat guests then you have a winner - any investment is a gamble but choosing not to invest in your existing parks is foolhardy.<<< Absolutely. Forget about my sentimentality, it makes good business sense to invest now to pull people away from the other options, and when hard negotations can bring in best value on the capital investments.
Originally Posted By skinnerbox <<WDP&R should be investing in infrastructure now whilst construction rates are still low but they rarely do (didn't in '01/'02 either). If you build something that is inherently marketable and will attract new and repeat guests then you have a winner - any investment is a gamble but choosing not to invest in your existing parks is foolhardy.>> ABSOLUTELY CORRECT! Thank you, Lee, for this wonderful accounting discussion with vbdad. What an eye-opener! OK, DVC fanbois... and you know who you are... The above quote from leemac is precisely the reason I'm against the River Country DVC development that Spirit originally posted about. DVC is quickly approaching that oversaturation point that leemac described, and I find that troubling. Disney should be re-investing in the PARKS and not building new DVC resorts. The infrastructure is aging and failing and needs serious work. This is where investment at WDW *should* be going. But no, Burbank believes yet another DVC resort or two or three is a better use of their funds. I'm not anti-DVC. I'm anti-DVC Growth At the Expense of the Parks. Why is that so difficult to understand?
Originally Posted By vbdad55 >>WDP&R should be investing in infrastructure now whilst construction rates are still low but they rarely do (didn't in '01/'02 either). If you build something that is inherently marketable and will attract new and repeat guests then you have a winner - any investment is a gamble but choosing not to invest in your existing parks is foolhardy << ---- agree completely which is why my comment on trying to gauge the 'window' so that you are delivering product the same time demand is rising. The issue today is where is the other side of this tunnel ? Is the light at the end of the tunnel aopportunity or a train. - Also agree it's hard to be conservative and successful in the theme park business as it is not a high profit margin venture. Disney is unique in that is has a much larger built in loyalty base , based on history than other playters in the market so I think they can afford to be more conservative., but yes there is a finite amount of that loyalty also. --tough call-- guess wrong and the economy stays in the tank for a decade ( and more than one economist already predicting that ) and you could expand yourself out of the theme park business as well- unless the other partds of the business cover for that long..don't think investors would view that kindly, do you?
Originally Posted By vbdad55 Thank you, Lee, for this wonderful accounting discussion with vbdad. What an eye-opener! ------- NOTE: I am going to defer the detailed accounting knowledge to Lee as he is a CPA ( I have an MBA and a PhD in Busienss Analytics) - so I use the inoput from knowledgable people like Lee to make my decisions. I have appreciated his Disney specific insight as well, as there can be variances in some things as he has explained also.
Originally Posted By vbdad55 OK, DVC fanbois... and you know who you are... The above quote from leemac is precisely the reason I'm against the River Country DVC development that Spirit originally posted about. DVC is quickly approaching that oversaturation point that leemac described, and I find that troubling. Disney should be re-investing in the PARKS and not building new DVC resorts. The infrastructure is aging and failing and needs serious work. This is where investment at WDW *should* be going. But no, Burbank believes yet another DVC resort or two or three is a better use of their funds. I'm not anti-DVC. I'm anti-DVC Growth At the Expense of the Parks. Why is that so difficult to understand? ---------------------- it's not skinner- but read many of the posts that is not the sentiment. The direct 1:1 correlation of DVC building to no park investment is not there- Lee has confirmed that. They CAN and shoulld mutually co-exist. It is management's decision to do one and not the other. If you read closely he also tells you any investment is risky - some don't seem to think so at all. Lee accurately describes the theme park business as not exactly a sane place to put ones money to begin with. low margins make the investment risky. Again as I stated very little has the built in fan base that WWoHP had..I wish it was ours as I would have liked that risk over other things. So this DVC fanbois ( if that's what you must can me and RT etc- fine) - has been saying all along ( and again clarified by Lee) that getting the go ahead to build something that has a guaranteed return on investment today is easier than venture capital for something that may or may not have that return/ Previous E tickets for instance have proven to be a mixed bag. $1B investment in DCA was a nightmare for the company- now plunging another $1.2 B into it without any guarantee because basically they have to..or take the loss on the initial investment. I openly agree with Lee ( and others who actually stated their argument that way) that investment in rides/attractions that would coincide with the opening of a demand window of a strengthened economy is the perfect storm for success. But skinner- do you, or Lee or anyone else including us DVC fanbois know when that is ? No, you don't Do you know the financial ramifications of significant investment if the economy takes 10-12 more yeas ( as some have predicted) to turn around ? It's easy to play riverboat gambler with someone else's money. I do it for real and have no qualms about being more conservative than speculative because there are people's jobs on the line. Have you ever had to let anyone go from business ? How many of you have ? How about releasing hundreds at at time due to business decisions that didn't pan out ? Until you have walked in my shoes I suggest you at least consider why someone may be on the other side of that argument. Lee had given you the detailed accounting ( and I thank him for that) and a general statement on what he believes should be done- we agree other than I am likely more conservative in that time frame approach than he is. Nothing wrong with that as long as one knows the risks on erring on either side- because you know what- either one of us could be wrong. I look at more than the accounting, more than the marketing, more than trend analysis and business analytics but when that is all done and said- the 'call' to do something or not do something is never - ever black and white. so I ask you in return, why is THAT so hard to understand ?
Originally Posted By skinnerbox This question is specifically for vbdad and RT: Can you now finally understand, thanks to leemac's description of how DisCo invests in WDW, why most of us appear to be anti-DVC to you folks when we're actually not? Those of us who are against further development of DVC resorts at WDW are so because we know that DisCo is using funds that could be and should be invested in the parks. As leemac pointed out, now is the time to repair infrastructure with construction costs so low, and to refurbish and expand park offerings. But DisCo instead wants to use that capital to expand the DVC holdings with at least two or three new resorts on WDW property. Most of the posters in this thread believe this is short-sighted and moronic. The funds should be going into the parks, not more timeshares. And of all people participating in this thread, I would think that you two would be supportive of improvements for the parks, given your financial investment into DVC membership. WDW DVC is quickly reaching saturation. Why would you applaud this move? Do you want to see WDW DVC oversaturate? How could that possibly be good for the business unit? Wouldn't it be smarter to invest in the parks so that the potential for new DVC members increases, with keeping the parks fresh and well maintained? DisCo is misguided on this. They need to stop expanding DVC and start focusing on the parks again.
Originally Posted By HokieSkipper <<The direct 1:1 correlation of DVC building to no park investment is not there->> That wasn't my argument at all. You claimed that DVC spending had no affect what so ever on the ability to build attractions. I said it did. leemac said that is the case. I feel vindicated.
Originally Posted By HokieSkipper <<This question is specifically for vbdad and RT: Can you now finally understand, thanks to leemac's description of how DisCo invests in WDW, why most of us appear to be anti-DVC to you folks when we're actually not? Those of us who are against further development of DVC resorts at WDW are so because we know that DisCo is using funds that could be and should be invested in the parks. As leemac pointed out, now is the time to repair infrastructure with construction costs so low, and to refurbish and expand park offerings. But DisCo instead wants to use that capital to expand the DVC holdings with at least two or three new resorts on WDW property. Most of the posters in this thread believe this is short-sighted and moronic. The funds should be going into the parks, not more timeshares. And of all people participating in this thread, I would think that you two would be supportive of improvements for the parks, given your financial investment into DVC membership. WDW DVC is quickly reaching saturation. Why would you applaud this move? Do you want to see WDW DVC oversaturate? How could that possibly be good for the business unit? Wouldn't it be smarter to invest in the parks so that the potential for new DVC members increases, with keeping the parks fresh and well maintained? DisCo is misguided on this. They need to stop expanding DVC and start focusing on the parks again.>> Yes. This.
Originally Posted By skinnerbox <<so I ask you in return, why is THAT so hard to understand ?>> Apples and oranges. DisCo has chosen not to invest in both DVC and the parks. They could do both. But for the past decade, they have chosen a different path. DisCo has chosen to focus their investments in room expansion instead of park expansion. Which will eventually kill their profitability, down the road. As for the economy... now is the time to build in the parks when construction costs are low. DisCo isn't willing to take the risk, which again is spineless and short-sighted, if they want to continue owning and operating the parks in the future. Unless DisCo wants to dump their parks and resorts onto another owner -- which I do not see happening -- they are obligated to maintain and improve what they have. If they don't, then the infrastructure will crumble, the offerings will become stale, and the vacationers will stop coming. That's the way amusement parks and resorts work. Keep offering new rides, maintain the ones you've got, improve the park overall, and folks will keep coming back. If you don't do these very basic things, folks will not pay to play, even during good economic times. DisCo has a choice: either they invest in WDW parks or they don't. DisCo has chosen to invest in DVC instead of the parks. Most of us here believe that's a huge mistake. Why is THAT so difficult to understand?
Originally Posted By leemac <<WDW DVC is quickly reaching saturation.>> Skinnerbox I totally understand where you are coming from but no-one of us knows that saturation is approaching. We can certainly surmise as much but it is pure conjecture. I've seen the projections and WDW Co. is absolutely convinced that they haven't exhausted that gold mine yet. Those dwarfs will continue to dig, dig, dig, dig, dig until the last nugget is brought up. A valid point is that the company has a poor track record of knowing when to stop - saturation won't be obvious to WDW Co. until it hits them like a freight train. I wonder if that point will be before Al retires....
Originally Posted By skinnerbox <<A valid point is that the company has a poor track record of knowing when to stop - saturation won't be obvious to WDW Co. until it hits them like a freight train. I wonder if that point will be before Al retires....>> Lee, I firmly believe that the tea leaves are clearly readable regarding oversaturation. But as you pointed out, DisCo is infamous for not knowing how to read the leaves properly and consequently, not knowing when to stop building. They've neglected the WDW parks for far too long, and need to focus on them again. Potter should have been the ultimate wakeup call. But they're still snoozing through the alarm. I'm afraid that freight train you've mentioned will be the only thing to yank them out of their stupor. As for Weiss... even if he retired tomorrow, I fear that too many of his flying monkeys will remain and preserve the blind spots, if not increase them. DisCo has a brief window of opportunity here to turn things around, and they're going to blow it. Unbelievable.
Originally Posted By Christi22222 Considering the diversity of Disney's fan base, both geographically and otherwise, I'm not sure you couldn't skew the numbers to show supposed demand for DVC's for eternity! The freight train will most assuredly arrive to the station late. And even then I'm not sure they will get it. FC and PI don't seem to get their points across, and they feel an awful lot like a freight train.
Originally Posted By RoadTrip <<Let me spell it out for you nice and clear - the accounting for the dues is irrelevant - it is governed entirely by the contract. If the contract states that it will be used for maintenance then that is what it will be used for. I suggested that there was an element bound up in that for management fees etc.>> I assume that would be lumped under operations expense. The Boardwalk contract states: "The Board shall fix and determine from time to time the sum or sums necessary and adequate for the Common Expenses of the Condominium. Common expenses shall include the expenses for the operation, maintenance, repair or replacement of the Common Elements and the Limited Common Elements, costs of carrying out the powers and duties of the Association, all insurance premiums and expenses relating thereto, including fire insurance and extended coverage and any other expenses designated as Common Expenses from time to time by the Board, or under the provisions of the Declaration. The Board is specifically empowered, on behalf of the Association, to make and collect assessments and to maintain, repair and replace the Common Elements and to make and collect assessments and maintain, repair and replace the Common Elements and Limited Common Elements of the Condominium."
Originally Posted By vbdad55 Can you now finally understand, thanks to leemac's description of how DisCo invests in WDW, why most of us appear to be anti-DVC to you folks when we're actually not? --- not that much new news really- some but the anti -DVC sentiment is way beyond that. Canyou not understasnd Leemac did not say they cannot co -exist- the money is NOT mutually exclusive - either can be put either place- IF MANAGEMENT WANTS IT TO> maybe if there was a stronger financial case to putting it in the parks they would- the explanations you are touting also said it WAS risky... obviosuly you are willing to risk it, I would not be - today. I would be looking for when to do so as it does need to be done, but I do not believe it is today. The safe investment is DVC units.. why is that so hard a concept.?
Originally Posted By RoadTrip <<<<WDP&R should be investing in infrastructure now whilst construction rates are still low but they rarely do (didn't in '01/'02 either). If you build something that is inherently marketable and will attract new and repeat guests then you have a winner - any investment is a gamble but choosing not to invest in your existing parks is foolhardy.>>>> Maintenance, yes. Expansion and new attractions? I think Disney has already taken on about as much as they can in that area with the 1.2 billion dollar rebuild of DCA. I would guess (having no inside information) that the funding of the DCA enhancements has much more to do with the lack of new development at WDW than DVC expansion does. Seeing that DCA has never met initial attendance projections, I think that is exactly the right place for Disney to be putting its theme-park capital expenditures at this time. WDW clearly should be next on Disney’s list, and I anticipate that it will be. But when you are in the middle of a recession where are you going to put your capital expenditures? Parks that are enjoying near record attendance, or a park that has never met projections from day one?
Originally Posted By vbdad55 >>Most of the posters in this thread believe this is short-sighted and moronic.<< how many of those posters are in positions where they are investing their corporations money based on ALL the facts, not just emotion ? << And of all people participating in this thread, I would think that you two would be supportive of improvements for the parks, given your financial investment into DVC membership. << if you are going to put words into my mouth - please at least try and get it right will ya - no one has said they are against more money to the parks. Read my posts- and try and comprehend- I said the parks need investment- but economic conditions what they are now may not be the right time You keep making this a simplistic decision, for God's sake man, it is not. This is a major corp with plenty of people on the payroll and everything from teachers pensions to individual 401ks invested in their stock. Try and take into consideration something other than adding another whee coaster. When the time is right I am ALL FOR adding more things. Do you ignore the fact that Disney has laid out over $2B in the last few years for DCA and HK ? Do you think they have a magical basket of unlimited funds ? They HAD to fix DCA...and the HK venture was speculative. So they are supposed to do it everywhere at once ? I wish they had laid some into Florida too, but they didn't-
Originally Posted By vbdad55 >>WDW DVC is quickly reaching saturation. Why would you applaud this move? Do you want to see WDW DVC oversaturate? How could that possibly be good for the business unit? Wouldn't it be smarter to invest in the parks so that the potential for new DVC members increases, with keeping the parks fresh and well maintained? << I absolutely agree there is a saturation point and have said so- so again paraphrasing me totally incorrect- but what would facts be in a rant. If they are selling as many units per years as they were 5 years ago- have they reached saturation point ? Gee, I'd say no. RT has already given you the fraction of rooms DVC represents compared to the hotels being completed and just recently done- none of which got one red cent from buyers. Why is that so hard to understand ?
Originally Posted By vbdad55 >>I'm not anti-DVC. I'm anti-DVC Growth At the Expense of the Parks. Why is that so difficult to understand? << again when pencil is put to paper, and that includes strategic vision ( and associated risk) there is NO reason they should not and could not co-exist. Have you ever thought that if they stopped building DVC units tomorrow they likely would not invest in the parks at this time anyway - but look for the right time ?
