Finance and Sales of Disney

Some people are asking the question: “How will this new ride affect Disney financially?”  This is a very important question because installing a new ride is very costly.  Not only is it the ride that will cost Disney money, but also the production of the souvenirs and merchandise to go along with it.  So the honest question is, can Disney afford this?

The most recent annual reports for 2008 showed that Disney has experienced a decline in attendance at Disney World (5%) over the past year despite offering financially enticing vacation packages.  Therefore, what is needed is a way to increase the attendance at Disney World so more money is being brought into Disney Company.  We will support this unfulfilled need with the evidence found in Disney’s annual report from 2008.  This annual report shows how much money Disney makes each year and how much of the money is made from the amusement parks.  As shown in the charts,the Free Cash Flow of Disney has decreased since 2006, but it is still very high.  This money is more than enough to cover how much the ride will cost.  With this new roller coaster being similar to that of Cedar Point’s The Maverick, we are looking at it costing around $21 million dollars.  While this seems like a large amount of money to most, Disney is financially very stable.

From Walt Disney Company's 2008 Financial Report

Disney World is the most popular destination park globally.  In 2007, Disney World brought in over 47 million people.  Being one of the leading amusement parks in the world makes more and more people want to come visit.  Disney has made so much money through their films, parks, resorts, and additional products.  This makes it easier to find the money needed to add this ride to the amusement park because these products are distributed worldwide.  Disney is very strong in the advertisement industry and has really expanded across the globe. This strength has helped make Disney financially stable.

Disney also owns 80% of ESPN as well as ABC Television Network and SOAPnet, which allows them to advertise through these channels.  The Disney Channel brings in the celebrity aspect of Disney, which helps hook individuals of all ages because many of these celebrities are now popular singers/actors.  This broadcasting really helps extend Disney’s many products and services to those throughout the world.

Despite the decrease in attendance at the parks, Disney’s profit has continued to grow in other areas such as media.  The Disney-Pixar film Up brought in over $293 million dollars worldwide.  Since the economy is going through a rough patch right now, we may experience a revolutionary growth with some risks, but for the most part this should be a success.  With the high attendance rate for the movie, the ride should also be a hit.

Judging by the attendance on a regular yearly basis, the realistic market potential should be into the millions.  These are customers are fans of the incredible movie and the parents of those who love the movie.  When a child falls in love with a character, they will want anything with that character on it.  This will cause a huge increase in the Up product sales.  Also, many people travel to Disney when a new attraction is added.  When this attraction is added, more people will be willing to come to Disney World.  This vacation spot in comparison to many others is much cheaper because Disney offers better family packages.  This makes the opportunity better for this attraction because the movie has just been released, and this ride will raise the attendance once again.

So again, the question asked by many is, “Can we afford to put in this new ride?”  As shown by the statistics above, Disney is more than ready to fully support and finance this new attraction.  Let’s make more dreams come true!

Resources:

Box Office Mojo. (2009). UP. Retrieved November 8, 2009, from http://boxofficemojo.com/movies/?id=up.htm

Disney Corporate . (2009, November 3). The Walt Disney Company Reaches Another Major Milestone On Shanghai Theme Park Project. Retrieved November 7, 2009, from http://corporate.disney.go.com/news/corporate/2009/2009_1103_shanghai.html

Disney Investor Relations. (2006). Annual Report 2006: Financial Highlights. Retrieved November 8, 2009, from http://corporate.disney.go.com/investors/annual_reports/2006/int/fh.html

The Walt Disney Company. (n.d.). Company Overview. Retrieved November 8, 2009, from http://corporate.disney.go.com/corporate/overview.html

The Walt Disney Company (2008, November 20). The Walt Disney Company 2008 Annual Report. Retrieved November 10, 2009, from http://amedia.disney.go.com/investorrelations/annual_reports/WDC-AR-2008.pdf

Westerman, A. (2008, September 15). Cedar Fair Report Attendance and Revenue. Retrieved November 12, 2009, from http://www.thrillnetwork.com/news/2304/cedar_fair_reports_attendance_revenue.html

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