It’s not exactly news to say that vacations to Walt Disney World and Disneyland are getting not only expensive but also excessively so. Simply getting in the door of these parks costs hundreds of dollars, and if you want to have a good time while you’re there, you’re probably spending a lot more. It probably shocks nobody that Disney Parks account for a significant portion of Disney’s bottom line, but even I had no idea just how vital the parks are to Disney right now, and it explains so much.
A report in the Los Angeles Times points out that according to Dsney’s most recent SEC filing at the end of their financial year, the Disney Experiences division, which includes Disney Parks and Disney Cruise Line, accounts for 70% of the company’s operating income. The other two divisions, ESPN, and Entertainment (including the movie studios and TV channels) accounted for 19% and 11% respectively. That difference is staggering.
Disney Parks Have A History Of Keeping The Company Going, But Not Like This
Disney Parks have always been a cash cow for Disney, and they are usually the part of the company that has been successful when the rest of the company has struggled. Back in the 1980s, the last time that corporate raiders attempted to make a move on a weakened company, as Nelson Peltz recently tried to make a run for Disney Board, the Parks were the main reason that Disney was still viable at all. When Michael Eisner and Frank Wells came in beginning a new Disney era, they saw the Parks and the value they had. It was under them that ticket prices began to steadily increase, as they have continued to do to this day.
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I knew Parks was a big part of the bottom line, but such a significant portion of operating income is even more than I expected. And so it’s little surprise that things are getting so expensive. A small price increase on tickets ultimately doesn’t have a major impact on an individual ticket buyer, but it has a potentially major impact on the money that Disney has to spend on its business everywhere else. And of course, it means a lot more money to spend on the parks, it order to increase that income even more.
Disney Parks Are Spending Money To Make Money
It also explains why Disney has recently pledged to spend $60 billion over the next decade on its Parks, including about $2 billion that is expected to be spent on Disneyland Forward, a major expansion of the Disneyland Resort. A bigger and better Disneyland brings more people to the park and gets them to stay longer, spending more money. It's an investment and one with a virtually guaranteed return.
ESPN is going through a major transition that will see it as a completely online offering sometime next year. Disney+ has been a financial sinkhole since its launch. That’s expected to change this year, but how much money it will actually make is still a question. While the theatrical movie business is still a big question for every studio, Disney is not immune, with more misses than hits in recent years.
All the other pieces of the Disney empire see their numbers fluctuate much more greatly. But short of a global pandemic, Disney Parks appears to be bulletproof. As long as that remains the case, we can expect Disney will continue to find new ways to make money off them, making sure they keep the company’s bottom line strong.
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