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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  • StevenW

    I read that WDI was gutted in a major reorganization. Many expensive old timers have retired although the highly priced executive still remain. I wonder what the overhead costs are in this new environment. It can’t possibly be very high.

    I also thought it was strange that WDI can still dictate the park operations. I thought once the ride was turned over to the park, the park can decide things. Thus, the controversial window displays in DCA’s Buena Vista Street were revised after merchandising took over.

    • RenMan

      Yeah, I’m curious about that too. I was surprised (and somewhat pleased) to read that WDI has at least some sway after the thing is built rather than entirely handing it over to Operations.

    • MickeysImagination

      Oh they have SWAY! There is the Show Quality Standards department (aka SQS) who have offices right at the parks. These Imagineer’s keep an eye open for things they don’t like and monitor things they want to plus.It is my understanding that heads butt frequently between park operations and SQS.

      -Justin

  • Sifferz

    You have been writing my favorite articles on this site, right from the first one. The perspective that you have on the company is just so interesting to hear! Keep ‘em coming :)

  • Soulquarian

    Wow, what an interesting perspective! I’ve fallen victim to the one sided story approach to what does and doesn’t get budgeted for the Parks, and I find these articles quite refreshing and enlightening! Great read.

  • David Hollenbeck

    Hehehe, spit up the funding, yeah! That’s just how the easily the accountineers give up any money for fun stuff…LOL.

    I’d love to see photos of both of the signs just to judge for myself which was a better choice. Obviously, from a purely artistic standpoint, the WDI sign was probably better aesthetically, but was it truly overkill for what it was? Hard to say. I think the notion of it being in storage for 9 months, in this realm, is immaterial – if you’re going all in on the overlay, it should extend to this when necessary. Regardless of how well it was designed, maybe a paper sign really was that small item that took a guest out of the story for a moment because it looked like a cheap paper sign for something mundane amongst all the other cool, intentional well-done details around it. I think of it as a mental speed bump, but have heard it called visual tension, a distraction among others, but basically something that draws attention to itself for the wrong reason. It’s one of those things most guests might not be able to articulate specifically, but is a reason it seems the experience is a little less special.

    I don’t want to seem like I’m all for WDI because it seems like there was probably a satisfactory answer that was significantly less than $1000, but really needed to be something more than printed paper. I think this is an microcosm of where the friction gets more apparent between those focused on show and those focused on making sure it remains financially viable. The true tension is that there is rarely time to find that happy medium – especially, as the case seems here, when there doesn’t seem to be a great mechanism for finding where what the accountants and WDI find acceptable overlap. I mean, that number didn’t come from nowhere, could you have worked with a bean counter there to figure it out? I know it may have been moot given the time frame.

    Also, I’m curious, who chooses the construction company? Is that all part of the WDI proposal or is it bid separately? I’m just wondering if the WDI cost is just for design and supervision or if it’s the muscle work as well. I assume it’s included as part of WDI, but who knows? The Accountineer does!

    Dave

  • choco choco

    No no, WDI can definitely do wrong. We’ve been slaying them for their gargantuan budgets for years.

    We criticized them heavily for the Little Mermaid ride, how that thing cost $100 million is one of the fundamental mysteries of the universe.

    • LoveStallion

      I’d love to know how much of the $1.4B went to Superstar Limo.

  • Conncr

    My understanding is that each department/division of the company is expected to show a profit, even WDI. The number I have heard for Disney is 20% profit (ROI) each fiscal year. I have worked in a department similar to WDI at another company where we only served internal customers and we were their only vendor. We also charged overhead (10%) on each job we did. This is a cost accounting type system where the project costs are passed on to the department who requested the project.

    WDI does has creative control over everything in the parks: I see that as a good thing because it is a necessity that someone has that control. In Construction Management terms, WDI is the Owner’s Representative overseeing the design and construction of projects for the “owner” Disneyland. One would hope that WDI is being cost effective and using competitive bidding in all aspects of that design and construction. (Disneyland has its own sign shop for example. Why would WDI need to “buy” a sign when they could have it made in-house to their specs?)

    However, I have heard from contractors doing work for WDI that there are too many Project Manager people telling a contractor what to do; sometimes requiring multiple and costly changes from the original design specs without allowing for change orders. Because WDI is difficult to work for, some contractors are charging WDI more upfront to cover those change costs.

    conncr

  • Disneykin Kid

    Love your writing style! You explain it so regular people can understand, it’s entertaining, engrossing, and you even have a cliff hanger!

  • scarymouse

    Great article can’t wait for part two, These articles make me think twice about what all goes into these big projects. There are a lot of hands in the pie all trying to get a slice of that pie, But that said its the details that separate Disney from all the rest although Universal is getting smarter and paying attention to details and getting it done.Very interesting to say the least.

  • Puck2DaHead

    Thank you sooo much for your articles!! I agree with DustySage that your articles are probably some of the most interesting I’ve read anywhere and rich with detail. Please please please keep them coming! You have so much to offer us in terms of varying perspective.

    I can actually see both sides of the argument regarding ‘stroller parking’ signs. I can picture a Monday or Friday post or one of MiceAge’s large articles showing a picture of a ‘cheap’ sign followed by some comment about the lack of show; however, if a cheaper sign means an extra greeter or more ride vehicles (which would equal a smaller wait time), I’m all for the cheaper sign.

    I feel like I am in the minority when I’ve always said that Disneyland is still a business, and the details that you provide in your articles support many of the ideas and opinions that I’ve had. At the end of the day, parks and resorts is a business, and if they are not operating in profit (or even at cost), then there is no way that expansion and growth can occur. That much I understand, and your articles definitely help me with that understanding.

    Thank you again! I also love your writing style!

  • cal4iri

    I freakin love these articles!
    Thank you

  • goofymon

    I believe this helps explain why Disneyland is doing some extra hard ticketed events, these events do help raise money for the parks. A lot of that money being raised may be helping offset the cost of attractions such as CarsLand and other new future attractions. There was an article awhile back on miceage on how a good chunk of the 50th anniversary rehab was paid for through increase in parking fees.

  • Tielo

    Thank you for coming back for another peek inside the financial world of Disney theme parks.
    I hope you family is doing great and you absent wasn’t due to some horrible stuff.

    The whole thing about the temporary sign must have been disharting for the Operations team and not good for the relation ship between groups inside this company.
    Why does Disney need to choose only one supplier, why not go the other way? They still can and should be in charge to see the end result will be up to specs but if it can be done cheaper it would be good practice to do so. This company exists, above all, to make money for it’s investors.

  • jediblueman

    This is all interesting, but one thing I’ve never understood about accounting between departments within a large company, is that in the end isn’t it all just the same company moving money from one pocket to another pocket?
    In this case, using WDI as your only contractor, isn’t it also important to note that they are internal and part of the Walt Disney Company? And then WDI itself contracts out aspects of their work, and I’m sure that gets bidded around? What I’m saying is, if parks and resorts is forced to spend $100 million on something through WDI, but WDI is able to do it as cost effectively as possible, saving WDI money, in the long run amount to the same thing?
    This importance of cost between one department to another has always confused me. In the end shouldn’t it just be the true cost of building that matters?

  • terp79

    Great article. I would like to see these signs to compare, as a designer and a lover of typography (especially disney environmental signage) I know I would prefer a beautiful hand carved sign. I get that it will stay in storage until needed, was this sign one that could be )or has been) used again since WDI made the upgrade? What is/was the life expectancy of the sign?

    I’ve seen some of these quick fix signs throughout the parks and you can tell some are slap dash! I get this sign issue isn’t all that important to your over all post but you have me intrigued. Designers take their craft seriously and the mentality of anyone can be a designer as long as they have photoshop makes us cringe.

  • RenMan

    As everyone is saying: wonderful article and please keep them coming! I appreciate the clarity of your writing style and your choice of analogies – you’re clearly a good educator. And like the others, I’d love to see a photo comparison of the two signs, just to see what you’re talking about.

    It’s fascinating to see this insight into the inner workings of the Disney company. I, too, marvel that the divisions within the co. seem adversarial. I can understand the friction of checks and balances – that seems healthy – but at the end of the day they’re divisions within the same company and you have to wonder about the health of the corporate culture if the politics result in bad decisions.

    I wonder if the requirement to use WDI solely is actually written down somewhere or if it’s just understood.