Accountineering, Disneyland Resort Attractions and Entertainment

Written by The Accountaneer. Posted in Accountaneering Disney

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Published on May 30, 2013 at 4:00 am with 59 Comments

Hello readers!  I apologize for the long time between articles. Family comes first…now let’s get back to some Accountaneering!  I’m excited to share a story about a trip to WDI, in which I was able to ride a prototype attraction that I’ve never seen described online before.  But before we touch on that, let’s set some context.

The A&E Menu: this is the document that outlines all the capital spending for the Disneyland Resort over the next five years and beyond (A&E=Attractions & Entertainment).  As part of the Planning team, it was our job to populate the A&E Menu.  Generally, the major items on the A&E Menu were new attractions, entertainment spectaculars, and major refurbishments.

Now, any Disney fan would take that menu and populate it with new E-Tickets every year.  But just like any menu at a restaurant, you need some appetizers, entrees, and deserts at all price points.  A nice dinner consists of a balanced order across the menu…not just two of the most expensive entrees!

The financial planning process begins with the Five-Year Plan (5YP), where the Resort develops an all-in five-year financial model.  This model takes the base business, layers in known changes (labor rate increases, annualization of partial year impacts, removal of one-time events, etc), then adds on top new investments.  The A&E Menu at this point is often a bit aspirational.  This is when the business units “pitch” the ideal business plan up the ladder.  By “ideal” I’d like to emphasize that it is what’s financially feasible.  No theme park in the world (not even Tokyo Disneyland) can spend hundreds of millions of dollars every year on new attractions. The depreciation on the income statement would bury the Resort.  What “ideal” translates to is a nice peppering of varied new offerings over the five year window.

In the years post 2001, Disneyland was in a rough spot.  We had just spent $1.4B on the Resort expansion (conversation around the content of that spending will come in a future article) and 9/11 hit.  I am not exaggerating when I say that the Resort, as a whole, operated at a loss for a few years after 2001.  Let that sink in for a moment…had Disneyland been a standalone business, it was in the red.  The last thing you can do in that situation is massively invest a boatload of new cash on expensive new A&E items.  This resulted in minor investments such as A Bugs Land and Luminaria.  Sure, it would have been great to go out and green light Cars Land but the Resort simply couldn’t afford it at the time.

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We submitted the 5YP to Parks & Resorts who then would consolidate/edit and submit to Corporate.  The Corporate Planners then crunch financial models and discuss with the Senior Leaders of the company.  The results would be new targets being sent back to Parks & Resorts.   Parks and Resorts then spit up the funding and handed new targets to Disneyland.

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So, as expected, those new targets would often be more aggressive than the originally submitted financial model.  This would put a squeeze on the entire business; it would push for more revenue, squeeze spending, and, most important to this conversation, reduce Capital spending.  We’d take that submitted A&E Menu and start editing to make the menu fit the new financial target.  It wasn’t always just cutting; sometimes it was just re-arranging.  Let’s say we had an E-Ticket placeholder in year four but the year four targets were tight, while year three had some breathing room (perhaps spending was re-directed to the Studios for a new blockbuster in year four or the Cruise Line had a new ship being built).  We’d potentially try to squeeze an extra D-Ticket into year three and push the E-Ticket out to year five, while year four relied on a parade.  It was an annual jigsaw puzzle of making the spend levels match the targets.

I’d like to take a small aside to talk about one aspect of the process that you never hear about online.  By reading all the blogs and forums online, it is obvious that Imagineering can do no wrong, while us Accountaneers destroy all the original concepts (I think the term DustySage used in the April MiceChat podcast was “slaughtered”).  Let’s look at the other side of the coin for a second.

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For argument’s sake, let’s say any of you have a set budget to repair and enhance your house and you have to plan those items over the next five years.  Your kitchen needs a major remodel (think the current Big Thunder rehab), while you’d like to put on an addition for your growing family.  Now let’s say that I tell you two things.  First, that you can only spend 80% of what you thought you needed.  Secondly, and most importantly, I tell you that the only contractor you can use is the best one around…and the most expensive.  Despite the fact that you know this contractor may be charging you a 30% premium, you can’t work with anyone else.  I hope you like your new kitchen because you just had to postpone your addition a few years.  Welcome to working with Imagineering.  Don’t get me wrong, the Disney fan in me loves WDI and (most) everything they do, but this is a very real part of financial equation. Let’s circle back and look at two specific examples…the first small and the second, well, much bigger!

In the early years of the Haunted Mansion Holiday overlay, the crowds easily exceeded all expectations!  I was working with the Operations team during those early years and we needed some stroller parking signs.  I got the call to swing out to the Mansion gate one morning, and one of the ops guys was so proud to show me the new digitally printed signs he had made.  They looked great with perfect colors and great design.  The best part was that the signs cost $10 apiece.  So, over the course of the 3 months they were being used, we could reprint and replace as often as needed.  It was a great solution to solve for an unbudgeted item that year…until WDI saw the signs.

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Apparently they didn’t take too well to the fact that Operations took the initiative to have these signs printed.  They came back a few days later with the demand that the Operations team pay $1,000+ (no joke) for a wooden sign with hand-carved lettering and painting.  Sure, their new sign looked great, but I can tell you I’d never think twice seeing the $10 digitally printed sign in the park.  Operations had to purchase the new sign (WDI had show quality authority).  This resulted in an extra $990+ that got spent on a sign that sat in storage nine months of the year.  That extra funding?  It had to be cut out of the budget elsewhere (I’m sure some of you complained about a greeter position that disappeared that holiday season or that Space had cut down on some rockets to save some labor).  While it sounds small in the grand scope of Disneyland, Operations just paid a 100x premium in the name of WDI show quality.

Now let’s go to the other end of the spectrum.  Again, I’m as big of a fan of a great WDI E-Ticket as the next person, but wouldn’t some price competition be welcome?  When we first placed the Tower of Terror on the DCA A&E Menu as an E-Ticket placeholder, we put it there as $100M.  That’s a lot of coin.  The attraction actually came in just above $115M.  Think about that for a moment: $115M.

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Now here’s a question: If you sent the Tower out to bid across a number of contractors, could it be built for less than $115M?  My gut tells me not only yes, but significantly less.  Working with WDI, and only WDI, to populate an A&E Menu is difficult at WDI prices.  Wouldn’t it be refreshing to have a number of attraction vendors to put up against each other?  WDI “overhead” can crush any hope for responsible spending.  I know this is not a popular argument (see my first article…bad guy) but it’s a financial reality.  How many of you work for a company where all of your Capital spending is dictated by a single vendor?

People are going to point to Cars Land and say “See what happens when you give WDI an unlimited budget?!?!?”  Agreed!  I LOVE Cars Land!  BUT, anyone notice the dearth of new attractions at WDW the last few years?  The lack of a true E-Ticket in the New Fantasyland?  As much as people like to pit the TDO (Team Disney Orlando) versus TDA (Team Disney Anaheim), the reality is that it all comes out of the same budget…Parks & Resorts.  Now think about if WDI had some competition in bidding for those projects.  I’m not standing too far out on a limb to argue that an open bid process for Cars Land and New Fantasyland could result in enough funding being freed up to finally give Disneyland or Epcot that new E-Ticket (or a bunch of smaller attractions) they have been waiting for…all within the same budget.

Back to the original intent of this article (I think I broke my soapbox). After a rough couple years in the early 2000s, the funding for the A&E Menu started to open up a bit in the future years.  I got the call in 2004 to go with a small contingent of DLR executives to WDI and have them pitch some blue sky ideas.  Some of those ideas were merely concept drawings while others were actual functioning prototypes.

As we stepped through the front door of WDI…hold on a sec…let’s make this my first two-part article!

Coming next time: some concept art that many of you are VERY familiar with and a ride on a prototype that most people have neither seen nor heard about!  Until next time…keep your pencils sharp and your beans counted!!!

About The Accountaneer

The Accountaneer grew up going Disney parks and was quickly hooked on the pixie dust. He soon found himself sharpening pencils and counting beans for the world's favorite mouse. He hopes to share with readers a little insight on how decisions are made in the Happiest Place On Earth.

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59 Comments

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  1. That sign story is just ridiculous. Wow.

    Great article!
    Only two articles in and you are already my favorite! Can’t wait to read more from you.

    • Yeah, it seems to me like there could have been some middle ground that didn’t get explored.

  2. Love these articles, and I’m so glad you wrote another one. I was worried that some Disney mafia silenced you after the first one. :)

    Perhaps I missed it, but can you explain the inclusion of picture of the fenced-off Goofy house? I’d love to know the financials behind why half of Toon Town doesn’t function as originally envisioned.

  3. Thank you, Accountaneer!!!

    People who have never worked in Finance love to blame us when budgets get cut or stupid financial things happen. I love the way you describe the big picture and how it all fits together so anyone can understand it. We hate it when our dreams get slashed, too, but it’s almost always beyond our control. Management decisions happen, engineering bids happen, accidents happen, the economy happens. It’s not the financial analyst’s fault – we’re just analyzing and reporting on the situation. Blaming us is like killing the messenger for bringing in the news. We have input, but the big decisions aren’t made here, they happen much, much higher up.

    So many people need to have someone to blame when things don’t go their way, but let’s get rid of the “sharp pencil boys” comments. They’re just stupid, outdated, and sexist! Financial analysts are dedicated company employees who help make good things happen, too, but rarely get recognized for it. It’s easy to blame people you never see, but we certainly don’t deserve criticism for doing our jobs. We help keep the company in business – just like Roy did for Walt.

  4. Thank you, Accountantaneer! :)

    Interesting article, but I’d like more of a big picture view. In their first two years at Disney, Michael Eisner and Frank Wells almost doubled admission prices to Disneyland and Walt Disney World without hurting attendance. Where did that money go? Didn’t admission prices continue to outpace inflation in most of the years after that?

    And maybe the “can’t do an E-ticket every year” mentality led to attendance stagnation at Disney World, while the “if you build it they will come” mentality has dramatically increased the number of people visiting Universal Orlando during the same time when WDW’s #s were limp. Broken Yetis ought to be considered unacceptable by everyone at Disney.

    Could WDW afford EPCOT? Did Tokyo Disneyland have to make their Pooh attraction that elaborate? Did the new Legoland Hotel in Carlsbad really need to make their elevators into mini discos?

  5. This is one of my favorite articles we’ve ever run. So much information here! Thank you Accountaneer! Keep ‘em coming.

  6. Great article. And it’s a tough balance to strike – because I could very easily see someone on a Disney message board saying “Look how cheap this sign looks – I think it was made in MS Publisher, we used to get ornate hand carved signs, it’s details like this that separate Disney from Six Flags”

  7. You mentioned the TDO vs TDA conception, and we always bicker about the perceived about the lack of funding for new stuff in Orlando.. Yes it’s a fair point that eventually as you go up the budget comes from the same place but are Parks and Resorts the ones making that call of “more $ in CA, cut cut cut in FL”? (And of course CA makes cuts too and FL has more parks to administer but that’s the conception by fans anyways). And are Parks and Resorts a studios entity or aren’t they based in Florida as a sort’ve umbrella division anyways? I’m sure FL gets money sent its way plenty but what gets on most people’s nerves is that even as the general public they can practically feel the budget minimizing on a regular basis and it always gets the impression of local decision makers trying to maximize the bottom line.

    Also, you talk about WDI and Haunted Mansion Holiday.. We’ve often been under the impression before that HM Holiday and Small World Holiday were special projects in that DIsneyland’s internal teams got to develop them rather than a full blown WDI project. During and afterwards WDI likely had creative control anyways but is that part of the story true and did that make a strong impact on being able to afford these layovers that they otherwise might not have been able to given what you’re talking about?

  8. You dirty tease! Part II needs to be up now! lol Great article, I love reading them!

  9. I’m loving these articles! Thank you so much for sharing the other side of things… it truly is enlightening!

  10. What a tease! Can’t wait for the second part of the article.

    I can totally understand the sign aspect of WDI. The internal struggle must be painful. As a guest, I do think that Show Quality is important for most things. I love what the signage department can do in a short time (always amazed how professional the ‘temporary’ signage looks), but I can understand WDI’s views as well.

    Another amazing, fascinating look at the ‘sharp pencil boys’. Thanks again!

    • and on the other side, I’m sick of all the 2D easy-made signs everywhere these days.

      To be fair, I understand the need for temporary signs without killing a budget. But I really hate semi-permanent to permanent 2D signs that try to play off being themed with their oh so clever wordage.

      /And I reaaaalllly hate the walt quotes on every construction wall. “it’s kind of fun to do the impossible” for when they’re finally getting around to repainting some rails or doing pavement work for example. Walls around the 7 Dwarves coaster are great though.

      • I agree almandot. I hate how sometimes the temporary signs become permanent as well. The worst offender over here has to be the World of Color queue signage, which is pulled out every day and placed on the end of BVS. They just need to get something to put there that looks better. (But the $10 signs are easier than that).

        The Walt Quotes grind my gears too, but I think it’s a way to justify the sponsorship now.

  11. Finally an accountant get his turn. Sometimes in industry we are forced to use the gold plated pipe and wires when silver would do. It bolsters the budget and makes the project engineers look important… harumph… harumph I supervised a 10 million dollar project while you over saw a mere 9 million dollar project… harumph… harumph. I can see the same type of chest beating from the WDI boys! I have enjoyed both articles as they bring the other side of the story, but I want part II right now! Good job Accountaneer.

  12. As a Sourcing Professional and seasoned negotiator for a major telecom company, I completely agree with your point about a single-source or single vendor strategy…but I am a little confused. Tell me if I am wrong, but WDI is an “in-house” department or division, not an external vendor. If they tell you it’s going to be $115M for the attraction, that is the cost for providing the attraction up to their specs. Any excess “profit” from that seemingly high rate would go back to the bigger Disney Corp bucket. If you argument is that WDI had excessively high standards (such as with the sign story) that is not a result of single-source spending…that’s a result of corporate standards set by WDI and sanctioned by exec management. Not to say that I don’t get your point, I have had to deal with the “Cadillac” vs. “Chevy” models of building a telecom network. It all comes down to executive philosophy.

    • Mr Snappy – it’s not about WDI Profit.. but about efficiency. WDI is notorious for burning through cash and spending…

      • WDI should be considered overhead. Their costs for employees should not count for the project. This is what happens when there is a set amount of employees that have to be paid and figuring out how the budget is allocated. My feeling is the $115 million for Tower of Terror is spread among the employees no matter how slight their contribution to the project.

      • I work in the engineering department of a company that treats this department as a profit center; unlike most organizations that treat engineering as an operational cost. We sell nothing, but spend a lot of money, so the best we can hope for is to break even and still held accountable for all overruns.

        Also, like the Disney model, we are the sole point of engineering within the entire organization (that one vendor). Now we/I have the power to use outside contractors, but no one else does and we have the right of first refusal to any outside work, which in turn frustrates others. Now prior to my arrival here 13+ years back, there was a time when projects were sent out for bid and typically low bid won the project. I can tell you that our reputation (we are 115 years old) went down the toilet faster than you can “floosh” and are still digging out of those messes. So in many aspectsI will more often side with WDI, as the quality is high, but also have a healthy respect for the sharp pencil boys and girls.

        What it all boils down to is compromise. Easy to say. Hard to do.

        -Justin

    • Agreed. This article, while informative, is very confusing in that WDI acts as a Project Manager, not a “contractor”. I am sure WDI (Disney in general) does bid out the actual construction work, attraction vehicles, etc. But why would Disney seek an alternative to their in-house and world-renown design / R&D facility? Does Mercedes bid out the design of their next 500SL? Of course not (they may indeed hire a respected auto designer, but not another company).
      Sorry, but you do sound like a typical accountant here. We’ve seen what happens when Disney cheaps out, it ends up costing more in the long run. Quality and show first!

      • I agree. I’m sure I’m not the only one who feels DL is loosing it’s magic. Over the years the magic has dwindled away. I don’t believe it’s a lack of funds. Disney is making record breaking profits. There is no reason for a sad, pathetic Tomorrowland; a rusting, dirty facade on Small World; peeling paint in Toontown; ugly safety gates that take away from the whimsy; the horrible, smelly bathrooms that wreak all the way out to the walkways and same old Disney merchandise for sale throughout the park. Every year seems to get worse. It’s not that there is a lack of money, it’s a lack of spending the huge profits to please your customers. You wouldn’t have record breaking profits if it wasn’t for us. Now you want to charge us for the Christmas fireworks and parades that you’ve been offering as part of the ticket price for years? The greed is just so out of control and it ruins the magic. One more thing…I’d rather have the old, outdated, pastel Tomorrowland back than the empty, confusing space it is now.

        Disneyland wants my money, right? Show me that you want my money. Show me that you want me to spend my money in your park instead of Universal or Knotts.

  13. Great article. It’s defnitely interesting to hear the flipside of the coin. It’s easy to lose sight of all the components that make the engine work, and you become more appreciative of those other aspects. Thank you!

  14. Great article!

  15. Thanks Acountineer, another great article. Working for an engineering firm, I certainly know the benefit of bidding out projects, thanks for the perspective on WDI. I’d certainly love to see their financials. Sounds like a lot of what they charge for a project is to recoup R&D and blue sky for the previous year or so since I’m sure WDI would not last long if corporate just viewed it as a cost sink.

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