Disney plans to expand parks investment to $60 billion over 10 years

13 days ago in "The Walt Disney Company"

Forum Forums Tweet Share Tweet Share

Posted: Tuesday September 19, 2023 9:32am ET by WDWMAGIC Staff

The Walt Disney Company is developing plans to accelerate and expand investment in its Parks, Experiences and Products segment to nearly double capital expenditures over the course of approximately 10 years to roughly $60 billion, including by investing in expanding and enhancing domestic and international parks and cruise line capacity.

Senior Disney executives, including Chief Executive Officer Bob Iger and Disney Parks, Experiences and Products Chairman Josh D’Amaro, are gathered today with Wall Street analysts and investors at Walt Disney World Resort in Orlando, Florida for an investor summit focused on Disney's Parks business.

"We’re incredibly mindful of the financial underpinning of the company, the need to continue to grow in terms of bottom line, the need to invest wisely so that we're increasing the returns on invested capital, and the need to maintain a balance sheet, for a variety of reasons," said Bob Iger. "The company is able to absorb those costs and continue to grow the bottom line and look expansively at how we return value and capital to our shareholders."

"We have an ambitious growth story that is supported by a proven track record and a bold vision for the future of our Parks business," said D'Amaro.

Disney shares fell just over 2% in early trading following the announcement.

Speaking in April 2023 at the Walt Disney Company Annual shareholder meeting, Disney CEO Bob Iger said that Disney plans to spend $17 billion over the next ten years in Walt Disney World, bringing 13,000 new jobs to the area. It isn't clear how today's announcement impacts those numbers, or how much of this $60 billion is earmarked for Walt Disney World.

Disney's Parks business is a key driver of value creation for the company, and positive segment results in recent past quarters through FY23Q3 have come in part from strong performance at Disney’s international parks, particularly those in Asia. Shanghai Disney Resort and Hong Kong Disneyland, which have both shown meaningful growth coming out of the pandemic through Q3 FY23, have even further growth opportunities with the expansions set to open later this year.

Walt Disney Company

Disney says that its business's growth strategy for the parks over the next ten years will be a focus on stories, scale, and fans.

Stories

Disney will explore even more characters and franchises, including some that haven’t been leveraged extensively to date, as it embarks on a new period of significant growth domestically and internationally in its parks and resorts.

"We have a wealth of untapped stories to bring to life across our business," said D'Amaro. "Frozen, one of the most successful and popular animated franchises of all time, could have a presence at the Disneyland Resort. Wakanda has yet to be brought to life. The world of Coco is just waiting to be explored. There's a lot of storytelling opportunity."

Scale

Disney Parks has over 1,000 acres of land for possible future development to expand theme park space across its existing sites – the equivalent of about seven new Disneyland Parks.

"We stand alone when it comes to scale," said D'Amaro. "And while our scale is impressive, we have no shortage of space or regions of the world in which to tell new stories."

Fans

Today, Disney has seven of the top ten most attended theme parks in the world, including Walt Disney World’s Magic Kingdom Park, which has been the #1 attended theme park on earth for decades. Disney Parks welcome approximately 100 million guests each year.

Disney says there is still enormous untapped potential for reaching more consumers. According to Disney’s internal research, there is an addressable market of more than 700 million people with high Disney affinity it has yet to reach with its Parks. In fact, for every one guest who visits a Disney Park, there are more than ten people with Disney affinity who do not visit the Parks

"Ultimately what is most important to us is the relationship that we have with every guest," said D'Amaro. "Guests can spend a day with us at our Parks, a week with us on a Cruise, or the rest of their lives with us through Disney Vacation Club membership."

Discuss on the Forums

Stay in the Know with WDW News Delivered to Your Inbox

Advisable Joseph4 days ago

I saw this post on Seeking Alpha about CapEx. CapEx is the change in gross fixed assets (i.e. before subtracting depriciation), although there are usually differences between that and the relevant parts of the cash flow section of financial reports due to the exact timing of the actual payments. CapEx includes "maintenance CapEx." However, from the recent thread on the $17 billion investment, I gather that would not include ordinary maintenance, but only replacements and major improvements which extend the lifetime of assets. An expert would need to clarify this. When I look at Disney's financial reports, this is the definition of CapEx which makes the numbers make sense.

HauntedPirate4 days ago

I'm going to go out on a limb here - At least one will feature Mickey.

el_super4 days ago

Generally, yes.

ToTBellHop4 days ago

They have some fabulous passholder magnets set for 2025. Gorgeous designs.

HauntedPirate4 days ago

Can anyone comment (maybe I missed it already?) on if "maintenance capex" is included in this $60B? Saw some posts about things like bus fleet maintenance counting towards that $60B. But I've been reading so many comments in various places that it's all kind of a jumbled mess right now. And I always come back here to get the straight story.

HauntedPirate4 days ago

Does anyone still think Disney is discounting/ignoring EU?

LSLS4 days ago

He doesn't say that producers aren't in it, he says they have to include all executives in their budgets since that is all their company does, and that sometimes others don't do that (note sometimes, not that they are the only ones). That also doesn't mean that the Little Mermaid has the same things going on, he's talking specifically about Pixar. "The other thing I’ll say about our film budgets is that our whole company exists only to make these films. So when we say a budget, that is everything it takes to run the whole company. Sometimes, the budgets that get reported are physical production costs and don’t include the salaries of executives and things like that. Our budgets include all of that, so there’s some accounting context that gets lost. But that doesn’t mean they’re not expensive." And I'd be fascinated to know how much that extra overhead actually adds to a budget.

Ripken104 days ago

Later in the same interview Jim Morris talked about the very fact that they include produer's salaries in the production budgets while other studios do not.

EPCOT-O.G.4 days ago

I have little reason to doubt Elemental worked its way to profitability. But the idea that Disney is the lone studio that eschews “Hollywood accounting” is a new one, and belied by this lawsuit from one of its producing partners: https://www.cnbc.com/amp/2023/08/15/disney-accused-of-withholding-profits-from-tsg-entertainment.html

Ripken104 days ago

Pixar's president Jim Morris back in August when asked if Elemental will be profitable. "We have a lot of different revenue streams, but at the box office we’re looking at now, it should do better than break even theatrically. And then we have revenue from streaming, theme parks and consumer products. This will certainly be a profitable film for the Disney company."

Drdcm4 days ago

I heard there was a mix up with the dreamers point statue… They wanted it to be solid gold, but it had to be “premium gold” so they purchased some gold mines and refineries to ensure the quality under the shell company Walt D Mining Co. Unfortunately, the imagineers were allowed to run a bit wild and they didn’t consider the weight of a solid gold statue - they were real Indy fans… The newly created central plaza just couldn’t handle it, so they had to recast the statue in a hollow aluminum and paint it to match the desired color. This added an additional $24,000. According to my trusted sources, they only have $22 billion remaining due to the mix up. Because the gold, mines, and refineries, they spent an exorbitant $38 billion dollars on the life size statue of Walt. In order to make the most of it, they decided to take a tax write off and have dumped it in the now defunct River Country ruins. The gold could not be resold because they infused it with a toxic polymer designed to intermittent interact with the new magic band + for an extra fee - rendering it useless.

EPCOT-O.G.4 days ago

Do you have a source for this information?

ToTBellHop4 days ago

Yes, both Elemental and The Little Mermaid made money but not at the level Disney expected. They got accustomed to all those $1 billion earners pre-pandemic.

Ripken104 days ago

Just a reminder that disney includes producer's salaries in their production budgets which other studios do not. They already confirmed that Elemental has made a profit, but those that try to use these hard formulas to determine if a movie made a profit don't understand why. The two biggest reasons is disney including things like producers salaries, and disney getting a larger share of theater profit then other studios.