An Opinion/Article by Stephen Brown
Friday, May 11, 2007
I do not want to spoil the fun, especially so near to the party to celebrate the return of sovereignty to China, but I do hope that these imminent celebrations will not distract us from preparing to mark the 10th anniversary of the launch of the Disney project.
And time is running out, as eight years have almost passed since the Tourism Commission presented its paper outlining the terms that Disney had managed to extract from the public purse.
The paper that the commission released that fateful day in November 1999 told us how the government had decided that Disney was the theme park operator that Hong Kong needed; the theme park operator to put us on the world map.
The benefits were to be enormous. The economic benefit was estimated to be HK$148 billion over the lifetime of the project, while Disney's coming to Hong Kong was also going to improve our quality of life, develop our environmental sensitivity and bring new standards of service quality.
Our civil servants had also apparently spent a long time negotiating the financial terms of the project with Disney, on terms that reflected the economic benefits that were to accrue to Hong Kong from the company's presence.
At the end of these tough negotiations, we were told that it had been agreed that the total cost, including the cost of reclamation, would be HK$18.1 billion. Disney was going to get 43 percent of the outstanding shares in exchange for 15 percent of the funding.
It was additionally explained that the new operating company for the park was going to have an option, valid for 20 years, to expand on to an adjacent phase-two site for only HK$2.812 billion, with the additional right of first refusal on a third site to the east.
We were even going to build a railway for Mickey and his friends.Disney was also to get the first go at the revenue, of course, charging management fees for running the park, license fees to ensure that Hong Kong was paying appropriate amounts for accessing Disney's intellectual property, and fees for training, and the rest.
Eight years on and Disney has, of course, proven to be an acute embarrassment to those that wasted so much of our resources on this project.
The Standard reported Thursday that the theme park here, which we taxpayers own the majority of, is facing declining numbers and declining guest spending, with operating income falling in the second quarter of the current financial year.
There is also apparently some ominous-sounding discussion on how to structure a financing due in September. All this goes on without us, the shareholders, being allowed to see the numbers.
Our administration simply backed the wrong horse when it chose Disney. That is not just my opinion, it is shown by the fact that Disney's share price has gone nowhere over the past 10 years.
But equally, the price of the Disney experience has probably been worth paying, as Hong Kong has learned old lessons the hard way and has now moved on from its disastrous flirtation with interventionist policies.
Consequently, and rather ironically, we have a lot to be grateful to Disney for; imagine how many more projects the taxpayer would now be funding if its theme park had been a huge success.
Source : HK Standard NewsThe 10th anniversary Disney celebrations in 2009 should have a simple central message: civil servants should remember that they are meant to serve.
Equally, and apart from lessons learned the hard way, it has not been all gloom and doom on the entertainment front over this period.
Despite all the billions that we poured in to establish a foreign entertainment company here, we have also realized that Hong Kong had one of the true stars of the entertainment business living here in our midst, namely Allan Zeman.
At the same time that Disney has been floundering, the unassuming king of local entertainment has taken Ocean Park and turned it into a real winner.
Whereas the civil service required 49 additional civil servants, costing almost HK$50 million per annum, to get Disney off the ground, Zeman has hit the cover off the ball at Ocean Park without even being able to afford a pair of socks.
There can be few greater compliments in the business world than being invited to help advise Steve Wynn, the kingpin of the Las Vegas entertainment industry, on how to run a leisure business.
So, for those believers in free markets and the irreplaceable vitality of individual entrepreneurship, it will come as no surprise that it was Zeman the other day, rather than the government front man on the Disney deal, Mike Rowse, who was sitting at Wynn's side being praised for the help that he has given that company on its Macau projects.
On balance, the lesson in market forces has been worth HK$18.1 billion, plus of course the railway.