Money, money, money, money...
I'm sure that the majority of people that visit this site know that the Tokyo Disney Resort isn't actually owned by the Mouse...
We've had a lot of articles on Blue Sky Disney about the Tokyo Disney Resort, many pertaining to the amazingly wonderful Tokyo DisneySEA, but several on Tokyo Disneyland and their parent owner, the Oriental Land Company.
Even though the economic impact of this natural disaster will dramatically hurt the OLC, it will also have a substantial impact on the Walt Disney Company. Perhaps you were wondering how this could be? Disney doesn't own anything tangible in the company and has no actual fiscal investment in the resort. What it does have is a royalty agreement with the Japanese company. A percentage of everything that the company makes from the resort goes directly into the coffers of the Mouse's vault.
What it boils down to in general, the agreement calls for ticket/gate profits to pay a 10 percent fee on every guest that enters the park. In addition to this, food and merchandise both have to pay a 5 percent fee on every purchase made in the resort. Now, according to The Street in their evaluation of this agreement, that comes to 7.5% of the Oriental Land Company's annual revenue. This comes out to a hefty $230 million dollars every year that the WDC gets for licensing it's characters/properties out. Not bad. This gives you an idea as to the net profit the Japanese partner makes on its Disney affiliation: slightly over 3 billion dollars a year, when converted from Yen.
In addition to this, not taken in to account is the fees that the Japanese are charged for the use of Walt Disney Imagineering. All construction and design has to be done through WDI's work, which helps defray/subsidize cost of technology that will be used throughout all the other Disney Parks. One has to also wonder how the effect of the hiring of Imagineers has prevented or at least lessened the layoffs of these employees when design time was cut and projects were not heavy in the production pipeline.
So can you imagine the dent in the projected sales or profit of the upcoming corporate calendar year for the Mouse? You can already presume that anywhere from $40 to $50 million dollars will be lowered from any fiscal reports in the coming annual earnings that are announced next year. If it last into the fall, you can expect $100 million to disappear from the balance sheet of Disney profits in this business cycle. So the coming year will see a downturn in projected revenue for Disney in regards to something it doesn't really own.
In the business world and the Disney world, it's an example of how mind share and forethought can be very expensive and have lasting repercussions...
Tuesday, March 29, 2011
The Cost Of Ownership, Or Not...
Posted by Honor Hunter at 8:25 AM
Labels: Business, Imagineering, Japan, Oriental Land Company, TDL, TDR, TDS, Tokyo, Walt Disney Company, WDI
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Deadline and ComingSoon.net is reporting that Disney is passing on the Joseph Kosinski Oblivion Project. I'm not surprised. But it leads to speculation about the future of TRON and Joseph Kosinski being attached to whatever future may come from the franchise.
What does the previous comment have to do with this topic? Does anybody bother to read anymore?
Anyway, I am hard-pressed to feel ANY sympathy for the disney company for their losses in franchise fees in the wake of that tragedy. Give me a break!
I do, however, feel horrible for the true victims of the terrible event in Japan and I do have some sympathy for OLC, which has one-thousand times the integrity of the disney company.
I personally would like to encourage all to donate to the relief effort for THE ACTUAL VICTIMS of that awful tragedy that happened to our friends across the Pacific.
Why all the hate for Disney? They have contributed to the relief effort and started employee contribution programs to send funds to humanitarian efforts. That is a great thing. It is what we ask of companies and the company should be applauded for it.
I don't think this post was about sympathy for Disney, it was simply a statement about what to expect on the earnings report this year. It was just to bring attention to something that a lot of people might not have thought about.
Oh, okay. And I just can't wait to avoid the special episodes of Extreme Makeover Home Addition where Mouschwitz rebuilds the homes of a few of the victims in Japan in which the cast and crew spend the entire episodes patting themselves on the back and stroke their own egos over the great thing that their doing. All the while the other 399,997 homeless families watch in despair, wishing they can just have a safe and secure home of ANY kind again while the "amazing" show producers and crew rebuilds the featured homes to overblown, bloated and sickeningly decadant, multi-million dollar specifications for those few featured, most-likely disney connected families.
The true disney agenda is blatantly clear in 90% of their actions. Disney is only about disney and hteir PR machine, while very skilled at fooling many, does not fool everyone.
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