During the 2023 Annual Meeting of Shareholders, CEO Bob Iger introduced the corporate’s plan to speculate a staggering $17 billion on Walt Disney World over the following decade. This submit places that quantity into perspective, discusses the probabilities for a fifth gate and different enlargement throughout what may very well be a bona fide “Walt Disney World Decade.”
Iger’s assertion got here throughout his feedback escalating the battle between the corporate and Florida, and received misplaced within the noise about that. Specifically, Iger mentioned that Disney is “currently planning now to invest over $17 billion in Walt Disney World over the next 10 years. Those investments we estimate will create 13,000 new jobs at Disney and thousands of other indirect jobs and they’ll also attract more people to the state and generate more taxes.”
By itself, this might’ve been a colossal announcement with a ton of fanfare and pleasure from Walt Disney World fans. Instead, it has been, as famous above, been largely misplaced within the noise in regards to the battle between DeSantis and Disney. There are undoubtedly good causes for this, with skepticism about sincerity being among the many greatest. So let’s begin by addressing that…
We’ve lengthy “warned” followers in opposition to taking at face worth every part Disney says in advertising supplies. The firm is extremely adept at company communications, masterfully using wordsmithery to excite followers. Disney at all times stays on the suitable aspect of the puffery v. false promoting line, however most followers acknowledge this for what it’s and weigh advertising supplies accordingly.
However, this was not a press launch, advertising materials, and even the D23 Expo. Again, it got here in the course of the Walt Disney Company’s 2023 Annual Meeting of Shareholders. In this case, the setting issues quite a bit. SEC guidelines prohibit corporations from fraudulent, false or deceptive statements to buyers. This prevents Disney or every other firm from releasing stories with inaccurate information or executives from making knowingly false claims that analysts and buyers may rely on.
For its half, Disney tries to defend itself with a lengthy disclaimer about forward-looking statements on its investor relations pages. As famous by Disney, that is according to the Private Securities Litigation Reform Act of 1995. There’s a whole lot of language there and it’s price studying your self, however the backside line is that forward-looking statements are “made on the basis of management’s views and assumptions regarding future events and business performance as of the time the statements are made.”
Other traces point out that circumstances and plans might change on account of completely different strategic initiatives (together with capital investments, which might apply right here), execution of enterprise plans or different enterprise selections, in addition to from developments past Disney’s management (see March 2020 or Wall Street’s shifting sentiment in direction of streaming). Yada yada yada.
The level is that which can be authorized requirements for forward-looking statements throughout investor calls; what’s mentioned is the present plan however is topic to alter as situations evolve. In different phrases, you shouldn’t essentially depend on an “announcement” about plans which can be a decade out. However, it’s not whole nonsense meant to excite and hype up followers, both.
In brief, Iger wouldn’t make such a daring assertion if he had precise data that the corporate’s present plan was not to speculate $17 billion in Walt Disney World over the course of the following decade. Similarly, if there’s a plan to spend $5 billion on Walt Disney World enlargement, he can’t “round up” to $17 billion in an effort to rating factors within the firm’s combat with Florida. That could be worse than no matter shenanigans the previous Reedy Creek board (and firm executives) are being accused of supposedly doing earlier than the brand new board took over.
With all of that mentioned, I’m not satisfied that the Walt Disney Company will spend $17 billion on Walt Disney World within the subsequent decade. There are a number of causes for this, with the very first being that the corporate fairly merely has an excessive amount of debt and never sufficient liquidity to front-load spending.
This signifies that regardless of the 10-year plan is for Walt Disney World, it’s essentially backloaded. As anybody who has been across the block with the authentic “Disney Decade” or the DCA enlargement or the EPCOT overhaul or…properly, about half of the bulletins at the previous few D23 Expos…the extra distant the timeline, the much less possible one thing is to come back to fruition.
My guess could be that the corporate’s intention is to modify gears and give attention to Parks & Resorts as soon as Hulu and ESPN are sorted out (purchased and/or offered), the streaming section attains profitability or at the very least stops hemorrhaging ~$1 billion per quarter, and a number of the debt is paid down.
Some or all of these issues just about must occur earlier than significant CapEx may be spent on Walt Disney World. That alone places the begin of this work in late 2024 or 2025. This doesn’t imply Disney gained’t announce huge plans earlier, however we possible gained’t see vital development on something till then.
I’m nonetheless anticipating a significant announcement on the Destination D23 occasion this fall, and once I noticed The Rock on-screen yesterday, my first thought was that he was about to announce the Moana Land at Animal Kingdom for actual. (The precise information, a dwell motion remake, was far much less thrilling.)
My skepticism can be formed to a slight diploma by a scarcity of specifics and variability. Again, Bob Iger mentioned that the corporate plans “to invest over $17 billion in Walt Disney World over the next 10 years.” He particularly used the time period “invest” somewhat than “spend,” which means that that is CapEx and never OpEx. He additionally mentioned that the “investment” would create 13,000 new jobs at Disney, and that prime quantity wouldn’t be attainable with regular OpEx.
Iger additionally mentioned that the funding could be at Walt Disney World, not in Florida as a complete. Disney has projected that it’ll spend “up to $864 million” to construct the Imagineering Lake Nona Campus, which may also deliver 2,000 jobs to the state. Pursuant to Iger’s assertion, these jobs and that spending are not a part of these numbers.
It’s potential Iger misspoke about all or any of this stuff. I doubt that for a few causes. As we’ve identified numerous occasions up to now, Iger is meticulous and zealous at sticking to the script, and likewise is cognizant of what completely different phrases imply. (“Knows what words mean” will not be reward we’d be lavishing upon Chapek if he made this annoucement.)
More considerably, there nearly actually was a script right here. Iger knew he was going to be requested about this, and he had a solution prepared. There ought to be zero doubt about that by any means. (If you listened to the decision, he was ready for each single query–together with the obscure one about Premier Annual Passes.) Not as a result of the questions are scripted–they most actually usually are not; simply take heed to a number of the crazies on the decision–however as a result of Iger is that meticulous and knew what to anticipate. Questions in regards to the Florida standoff and streaming content material had been inevitable.
Given the entire above, I believe it’s pretty protected to say that precise CapEx investments totaling $17 billion are deliberate for Walt Disney World over the course of a decade beginning in 2024 or 2025. It’s additionally truthful to say that’s probably the most optimistic projection, and quite a bit might change, probably impacting and lowering that quantity.
Then there’s the factor that may change: Bob Iger gained’t be CEO. (Actually, that’s most likely much less sure than the $17 billion funding given his previous precedent with contract extensions!) A brand new CEO at all times makes their mark on an organization, and one of many best and most concrete methods to perform that’s by way of theme park plans.
If that new CEO doesn’t have a Parks & Resorts background, they could additionally search to scale back that quantity and spend extra elsewhere. (Another tangent, however I think this will increase the possible of Josh D’Amaro being the CEO-in-waiting exponentially, as he’d present continuity in these aggressive plans.)
With all of that mentioned, we thought it is perhaps worthwhile to place $17 billion in context to assist illustrate what it might purchase for Walt Disney World. Obviously, that’s some huge cash–particularly when you think about the truth that the unique Dino-Rama value at the very least $437 to construct. Its alternative will most likely add a “million” to the tip of that quantity.
We’ll begin by placing this into the context of CapEx numbers for the Parks & Resorts section as a complete, which incorporates not simply Walt Disney World, but in addition Disneyland, Disney Cruise Line, the worldwide parks, resorts, and extra.
Rather than trying on the final couple of years, we’re going to discard these. Some of the explanations for that ought to be apparent, given the disruptions and cost-cutting that has occurred with the EPCOT overhaul. There’s additionally the truth that one improvement cycle has been winding down for Walt Disney World, whereas the brand new cruise ships have been contributing outsized prices.
Instead, we’ll take a look at 2017-2019. That was in the course of the peak of the newest enlargement and occurred at a time (principally) previous to spending on the brand new DCL ships. In 2017, the corporate spent $2.4 billion on CapEx for the home Parks & Resorts. In 2018, that quantity elevated to $3.2 billion. In 2019, it peaked at $3.3 billion.
These are simply the totals for the U.S. based mostly Parks & Resorts, together with Disney Cruise Line. There’s a separate line-item for the worldwide parks (minus Tokyo), and the entire prices in Hong Kong and Shanghai are shared by native working companions.
The firm attributed the rise in capital expenditures on the home parks in fiscal 2019 in comparison with fiscal 2018 to increased spending on new sights at Walt Disney World, partially offset by decrease spending on new sights at Disneyland Resort. The improve in fiscal 2018 in comparison with fiscal 2017 was on account of spending on new sights at Walt Disney World Resort and Disneyland Resort, together with Star Wars: Galaxy’s Edge.
In an SEC submitting final 12 months, Disney indicated that the corporate deliberate to extend whole capital expenditures from $4.9 billion to $6.7 billion. That whopping 37% spending improve would’ve been throughout your complete enterprise, not simply home parks. Then throughout the newest earnings name, CFO Christine McCarthy indicated that quantity could be lowered by $700 (to $6 billion), which was principally a results of “timing shifts” on home parks initiatives.
The company-wide cost-cutting is one more reason why followers is perhaps skeptical of Iger’s plan to speculate $17 billion on Walt Disney World within the decade to come back. After all, the corporate has already lowered CapEx on the home parks and is slicing one other $5.5 billion in prices.
However, an necessary factor to notice there may be that $3 billion of these reductions are coming from content material, $1 billion of cuts had been already underway when the announcement was made, and there are three waves of layoffs which can be largely concentrating on staff at DTC, ESPN, and tv networks. Josh D’Amaro already indicated that frontline Cast Members on the parks wouldn’t be impacted.
Additionally, the CapEx financial savings on the home parks aren’t cancelled initiatives, however somewhat (once more), they’re “timing shifts.” That means dragging ft on initiatives to shift the prices into the following fiscal 12 months. (Anyone who noticed TRON Lightcycle Run being constructed has already seen this play out in actual time.)
So actually, the precise influence to Walt Disney World is minimal, save for the delays. As with this $17 billion in new funding, there’s a motive why the parks aren’t being focused for reductions: they’re the corporate’s greatest brilliant spot proper now!
As for what $17 billion over a decade might purchase, let’s begin with what we predict it can not purchase: we (nonetheless) don’t count on a fifth gate at Walt Disney World. This has seen rekindled curiosity within the final day, however we’re nonetheless extremely skeptical for the entire causes mentioned in that submit.
Of course, this may very well be fallacious. If you’re simply having enjoyable doing blue sky daydreaming, have at it. From that perspective, $17 billion is conceivably sufficient for fifth, sixth, and seventh gates. That’s very true in the event that they value as a lot as Tokyo DisneySea (~$4 billion upon opening in 2001) or Shanghai Disneyland (~$5.5 billion upon opening in 2016). If it’s the price of Universal’s Epic Universe, Disney might construct over a dozen new gates!
Back in realityland, a fifth gate at Walt Disney World most likely wouldn’t value that little until it had been executed within the spirit of the OG Walt Disney Studios Park in France. Construction prices aren’t what they had been within the early aughts in Japan or perhaps a decade later in China. Disney doesn’t do something almost as effectively as Universal.
On high of that, that is all of the CapEx over the course of a decade. Even if a brand new park may very well be constructed for $6 billion, that be a giant chunk of that whole, and would necessitate CapEx reductions within the current 4 parks as in comparison with the final decade. Given that, there’s each motive to imagine the plan is enlargement to the prevailing parks somewhat than improvement of a brand new one (or two).
There’s additionally the truth that Bob Iger has particularly mentioned he needs enlargement. In reality, each he and Josh D’Amaro have held a variety of interviews not too long ago, throughout which each have mentioned plans for the long run, bullishness on parks, and need for capacity-expanding additions. We mentioned all of this in nice size in Bob Iger Wants Big Expansions at Walt Disney World & Disneyland.
Again, Iger chooses his phrases rigorously. If he had plans for brand spanking new theme parks, he’d say as a lot. Instead, he has repeatedly invoked Star Wars: Galaxy’s Edge, Toy Story Land, and Pandora – World of Avatar because the blueprints for the way Disney plans to broaden its parks and “invest in increasing capacity.” There’s no want to take a position; Iger has repeatedly and constantly shared the plan, and it isn’t for a fifth gate!
With that in thoughts, what might that $17 billion purchase by way of expansions to the prevailing parks? Well, past working backwards from the above nationwide numbers for previous CapEx and attempting to take away what isn’t Walt Disney World, it’s powerful to say. Disney doesn’t usually announce the price of particular sights or lands, so all we now have are rumors and estimates of these.
As a normal proposition, take no matter you’d count on a brand new experience to value and improve that quantity considerably. The quantities spent by regional theme parks and even Universal usually are not even remotely insightful for the exorbitant bills Disney one way or the other manages to incur. (To everybody who thinks the corporate hasn’t been investing cash in Walt Disney World, you might be fallacious. The actual query is whether or not they’ve been spending the staggering sums properly.) Some of that is evident within the ending and particulars, however undoubtedly not all of it.
Rumors pegged the entire value of Guardians of the Galaxy: Cosmic Rewind at round $500 million (corroborated by Bloomberg), which might make it one of the vital costly sights ever developed. Some estimates put the whole thing of Star Wars: Galaxy’s Edge at $1 billion (every); that was previous to completion, with improvement prices shared between the coasts, and earlier than Star Wars: Rise of the Resistance was delayed. It wouldn’t shock me within the least if every Galaxy’s Edge ended up costing nearer to $1.5 billion when all was mentioned and executed.
Back in 2010, the Los Angeles Times reported that every model of the Little Mermaid darkish experience would value $100 million, which was considered by followers as a staggering sum on the time however now appears decidedly common. Radiator Springs Racers reportedly value over double that by the point Cars Land was completed. (The complete DCA overhaul was initially billed as costing $1.1 billion, however ballooned far past that.)
Outside of the United States, we now have a greater thought of particular attraction and land prices as a result of different parks truly announce them. There’s been quite a bit taking place in Japan during the last a number of years, and OLC releases particular budgets in its annual stories. From that, we all know that the Tokyo Disneyland enlargement that included Enchanted Tale of Beauty and the Beast, Fantasy Forest Theatre, and a Baymax spinner value roughly $750 million US.
Of that whole, it’s protected to say that one-third went to the Beauty and the Beast trackless darkish experience. Perhaps extra. If Walt Disney World might get a couple of darkish rides of that caliber for $250 million every, they need to! Animal Kingdom, EPCOT, and Disney’s Hollywood Studios might every use a high-quality family-friendly folks eater.
On the same observe, there’s Fantasy Springs at Tokyo DisneySea. The whole funding on that port and its accompanying luxurious resort shall be roughly 250 billion yen, or round $2.3 billion US. This makes it the costliest enlargement for any current theme park ever. (It’ll additionally enable Tokyo DisneySea to reclaim the crown as the costliest theme park ever constructed.)
Fantasy Springs will characteristic 4 new family-friendly rides, three eating places, retail, and a resort. Three of the brand new sights shall be boat rides, which is becoming for Tokyo DisneySea. It’s unclear how lavish the rides shall be, however we’re anticipating at the very least two of them to be E-Ticket sights. The remaining attraction is far smaller-scale.
There’s additionally the all-new Space Mountain coming to Tokyo’s Tomorrowland in 2027 at an approximate value of 56 billion yen. This goes to be a $400 million US attraction, and hypothesis strongly suggests it’s going to make use of the Cosmic Rewind ‘story coaster’ experience system, minus Marvel. (That checks out given the price!)
Finally, there’s Treasure Cove at Shanghai Disneyland, which incorporates the costliest opening day attraction at that park (Pirates of the Caribbean: Battle for the Sunken Treasure) and price a reported $450 million US. It’s unknown what newer additions like Toy Story Land (undoubtedly not as a lot) or Zootopia Land (most likely about as a lot) value.
That ought to provide a reasonably good thought of what’s potential with $17 billion. Most notably, at the very least a few of that’s according to D’Amaro’s D23 Expo presentation, throughout which he mentioned early idea explorations for Magic Kingdom and Animal Kingdom. This included a alternative for Dinoland USA at Animal Kingdom, and potential enlargement alternatives together with a Zootopia Metropolis and Moana Mini-Land.
With the Zootopia Land wrapping up at Shanghai Disneyland and opening later this 12 months, it is sensible that components of that will be cloned elsewhere to scale back prices. (It’s unlikely that Shanghai has an exclusivity window exterior of Asia, as there’s no want. Plus, their model of Soarin(g) opened at some point earlier than the EPCOT incarnation.) With the brand new Moana dwell motion remake, the chances of a Moana miniland additionally improve.
That presentation additionally included a daring proposal for Magic Kingdom development, albeit with shaky specifics–that portion was way more ‘blue sky’ in what it might entail. That presentation checked out Magic Kingdom Expansion Possibilities “Beyond Big Thunder” and showcased potential Coco, Encanto & Villains lands.
While there was preliminary pleasure amongst followers, that shortly soured on account of a scarcity of specifics. The optimistic sentiment gave manner for skepticism about these potential plans, particularly in mild of Disney’s not-so-stellar monitor file in constructing issues that had been “firmly” confirmed at previous D23 Expos.
I’ve no clue what particularly is on the horizon for Walt Disney World, however I believe enlargement on the two ‘kingdoms’ according to these teased plans, plus a brand new family-friendly attraction or two in Disney’s Hollywood Studios (a lot of underutilized area and a top-heavy experience roster) is probably going.
Personally, I might love nothing greater than to see a second part to the EPCOT overhaul that features Journey into Imagination, however I gained’t let my wishes cloud my judgment as to what’s possible. Disney may deem EPCOT “done” on the finish of 2023.
Everything else will possible be much less thrilling. There’s no manner Walt Disney World goes by way of one other improvement cycle with out including vital resort and timeshare capability. (Unpopular opinion: Disney completely ought to construct extra resort capability. They have pricing energy and there’s no scarcity of demand. Fans who declare rising crowds are on account of Disney’s development of resorts are fallacious, making the pretty apparent oversight of forgetting that off-site resorts exist.)
Infrastructure prices additionally aren’t low-cost, and a number of the numbers I’ve heard for current roads and different work are shockingly excessive. I doubt Skyliner enlargement is being significantly thought-about, and I actually hope one other boondoggle just like the NextGen/MyMagic+ initiative isn’t. Disney must construct precise sights, not waste cash on smoke and mirrors.
Ultimately, our view is that it’s time for the persistent pessimism to provide solution to optimism in relation to the way forward for Walt Disney World. We’ve been bullish for months, relationship all the best way again to our D23 Expo submit mortem, which went in opposition to the grain and expressed a ton of optimism–each within the plans regardless of their nebulous nature and Josh D’Amaro as a frontrunner.
Quite a bit has modified since, however our sentiment and the underlying causes for it stays the identical. It additionally helps that Chapek is gone and each D’Amaro and Bob Iger have repeatedly expressed bullishness on huge enlargement at Walt Disney World. Sure, we nonetheless don’t have concrete plans, however all of those teases wouldn’t be taking place if this had been purely bluster or good PR.
Obviously, actions communicate louder than phrases, and it is perhaps exhausting to take these claims at face worth given the entire scaled again plans, cancelled initiatives, and the truth that it took what number of years to clone a brief curler coaster in an empty warehouse. That’s truthful. There’s additionally the fact that Walt Disney World continues to outperform, and buyers have begun to take discover of its success. This coupled with Wall Street souring on streaming means Disney could lastly begin to guess larger on its theme park enterprise.
In mild of all that, it really appears like we’re standing on the precipice of the following huge improvement cycle that may as soon as once more begin at Animal Kingdom (identical to the final one!) and play out on this similar trend with main new additions to every park coming on-line between 2026 and 2031. Let the Walt Disney World Decade start!
Planning a Walt Disney World journey? Learn about resorts on our Walt Disney World Hotels Reviews web page. For the place to eat, learn our Walt Disney World Restaurant Reviews. To get monetary savings on tickets or decide which kind to purchase, learn our Tips for Saving Money on Walt Disney World Tickets submit. Our What to Pack for Disney Trips submit takes a novel take a look at intelligent gadgets to take. For what to do and when to do it, our Walt Disney World Ride Guides will assist. For complete recommendation, the perfect place to begin is our Walt Disney World Trip Planning Guide for every part you have to know!
YOUR THOUGHTS
What is your response to Bob Iger’s announcement that the corporate plans to speculate $17 billion on Walt Disney World within the subsequent decade? Think this may be reconciled with the near-term cost-cutting or the corporate’s debt load? What potential plans or initiatives have you ever most and least excited? Anything you’re hoping does not find yourself coming to fruition? Do you agree or disagree with our assessments? Any questions we will help you reply? Hearing your suggestions–even once you disagree with us–is each fascinating to us and useful to different readers, so please share your ideas beneath within the feedback!