Today's economic times has quoted Disney as saying they are going to expand hte size of the park by 1/3 and foot the bill without changing the gov't as the major stock holder. But guess what? As usual, they are waiting on Governmental red tape to begin construction.
The expansion is supposed to create over 1000 new jobs for construction just in time for the make up of construction jobs lost in Macau...
Based on a brief translation
And the HKDL CEO MR KAM said that HKDL is going to add 3 new lands with unique attractions .
Toontown, Frointerland and just alot of space wasted on old stale rides from the 70´s... yawn
Bring us robocoasters,thrills and never before seen effects! HKDL should be what Disneyland was in the days of Walt Disney but today.
Sadly, the budget has decreased to 3.6billion HK dollars. Can't wait for the state-of-the-art Haunted Mansion!
The Standard - Hong Kong's First FREE English Newspaper
Disney plans $3.5b more thrills
Nickkita Lau
Tuesday, December 23, 2008
The government will not need to spend a cent in a Walt Disney Company proposal to inject more than HK$3.5 billion to expand Hong Kong Disneylands park area.
Disneylands managing director Andrew Kam Min-ho said the plan will not require the government, which holds 57 percent of the shares, to make an additional capital injection and will remain the major shareholder.
But the governments proportion of shares will be cut back a little bit.
Walt Disney Parks and Resorts Asia president and managing director Bill Ernest said the government and Walt Disney are negotiating on some complex issues, but he hopes a deal can be reached next year.
Disneys plan covers 48,562 square meters of the land unused in the first phrase of development. It includes three additional themed areas adjacent to Adventureland.
The current size of the park area is about 72,843 sq m, excluding two hotels, unused land and transportation facilities.
Kam said new rides, including thrilling ones geared toward young adults and some unique in Hong Kong will be included.
Kam said the cost of the expansion is about half that of the Kai Tak cruise terminal. It will create several thousand job vacancies.
The construction cost of the cruise terminal is about HK$7.2 billion, according to the government.
Kam added if the proposal is approved it will take two to three months for the project to begin and about two to three years to complete.
A Commerce and Economic Development Bureau spokesman said, as bureau chief Rita Lau Ng Wai-lan has said earlier, that since the expansion will involve capital restructure of the joint venture Hong Kong International Theme Parks Limited, the government will need to thoroughly consider the interest of Hong Kong and its return on investment. The negotiations are still ongoing and the government will not set a deadline.
An industry source believes this move is a sign of concession by Walt Disney and that the two shareholders have turned the table around. The source said the government is under pressure from the Legislative Council to stand firm and not sign another "unequal treaty" while Walt Disney is more eager to plug the deficit.
The government invested HK$23 billion in the park whereas Walt Disney put in HK$2.45 billion in building the theme park, with the ratio of shares at 57 percent and 43 percent.
The source said the government has adopted a negotiating strategy to show Walt Disney it is not desperate to expand because it has other options including buying back the theme park and running it as a franchise like the successful Tokyo Disneyland.
He believes the construction cost could be cut by 10 to 15 percent because the financial tsunami has brought down the price of raw materials.
Last edited by Asa; 12-22-2008 at 05:27 PM. Reason: Removes ad
I think the HK govt should request one condition, that it can increase its shareholding back to 57% three months after all the expansion work is completed. That will give it three months time to observe how all the new facilities are received by the visitors before deciding to invest into it.
If the new facilities and visitor numbers are good, then the HK govt will not lose out; but if the new facilities are not popular, then it can let HKDL takes it all.
This is a very tough condition that WDC will find hard to swallow, but if it really thinks its expansion plans are so brilliant, then it will take it.
For HK govt to buy over WDC's shares and run it like TDL, I don't really think it will happen, because WDC is unlikely to let it happen. But that would be interesting, given WDC's desire for a Shanghai park. Forget what has been said, Shanghai DL, if built, IS a competitor for HKDL.
I think EVENTUALLY this will happen. So far, HKDL is really ammasing crowds. more than 150 chinese peple from shenzhen were present at the park not three days ago. the gov't should accept WDC's proposal. also, there is a video up on cnn.com explaining hkdl's current gains and losses. its pretty interesting.
Last edited by HKDLFAN; 12-24-2008 at 04:31 AM.
Wait, wait, wait... so the park is only 18 acres? I find that awfully hard to believe. 72,843 square meters? That's impossible.Originally Posted by Asa
News in Hong Kong are always wrong, don't believe everything
Yes, they mistaken the money provided by the government - I mean, how could loan be a part of share?!
Anyway, the managing director Andrew Kam Min-ho also said that the expansion may start after 3 months, if they can finish the discussion faster...
Not everything coming out of hong kong is totally false. Surely, there are rumors swirling around, we get in the American parks why not in hkdl?
so what is going in the park?
Its really not about how a loan can be part of shares owned. Its about how much each party involves percentage of responsibility is.
At the moment the government has controlling rights on the property if it refrains from further investments and the other shared owners invest more veahily on the property then it offsets the controlling rights. The government can not own the majoprity stakes and then just sit back and let the minority owners do all or the major share of investments.
It's not in Disney's best interest to put the highest investment percentage and then receive the smaller revenue percent. In other words if you and someone else owned a house and the other person had the lead title you would not go ahead and invest in lots of extras in the property only to receive a smaller percentage of the benefit when the house sells.
That is why the conversation of loans and shares are linked to one another. Disney is willing to make the large investment for expansion but only if the major shareholding does the same. Disney is also willing to invest the whole thing and consider a certain percentage as part of a loan to the government. Obviously that would require that the government agree to pay the loan or risk loosing its controlling stakes in the venture.
Ok let's look at a different perspective. The Hong Kong Govt put in 23 billion hkd (or 2.8 billion usd) into the park in construction costs while the WDC put in 2.3 billion hkd (2.87 million usd) into construction.
HK Gov 23 billion hkd = 57% ownership of HKDL
WDC put in 2.3 billion hkd = 5% ownership of HKDL
In order WDC to have 43% ownership of HKDL they need to put in 15 billion (1.8 billion usd) to balance the total to 40 billion hkd that's 5 billion usd (usd=hkd/8)
You can see why the HK govt is screaming for Disney to put more money into the park. WDC was given 43% ownership of the park by the Tung Chee Wah govt but not having to invest that amount to begin with.
So WDC uses the ownership as leverage for the HK govt to plunk more money into the park or else lose ownership.
Then again construction costs is half of the story. The other half is the operating cost which we don't know. We really don't know the expenses Disney is accruing with CM/management wages, shooting fireworks everyday, food, merchandise and utilities (electrical/water)
But a large part of 23 billion is the reclamation and MTR construction costs. We can tell Disney to get out tomorrow and put in a Universal Studios at the same site, without having to spend money on the reclamation again.
Please bear in mind we did not sign an unfair treaty (like they did in the Qing Dynasty) and conceded Penny's Bay to WDC.
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