The Not-So-Wonderful World of EuroDisney—Things Are
Better Now at Paris Disneyland
In April 1992, EuroDisney SCA opened its doors to European visitors. Located by the river Marne some 20 miles east of Paris, it was designed to be the biggest and most lavish theme park that Walt Disney Company (Disney) had built to date—Bigger than Disneyland in Anaheim, California; Disneyworld in Orlando, Florida; and Tokyo Disneyland in Japan. In 1989, EuroDisney was expected to be a surefire moneymaker for its parent, Disney, led by Chairman Michael Eisner and President Frank Wells. Since then, sadly, Wells was killed in an air accident in spring of 1994, and EuroDisney lost ...view middle of the document...
Disney management rapidly introduced a range of strategic and tactical changes in the hope of “doing it right” this time. Analysts are still trying to diagnose what went wrong and what the future might hold for EuroDisney.
A Real Estate Dream Come True. Expansion into Europe was supposed to be Disney’s major source of growth in the 1990s, bolstering slowing prospects back home in the United States. “Europe is our big project for the rest of this century,” boasted Robert J. Fitzpatrick, chairman of Euro Disneyland in Spring 1990. The Paris location was chosen over 200 other potential sites stretching from Portugal through Spain, France, Italy, and into Greece. Spain thought it had the strongest bid based on its year-long temperate, and sunny Mediterranean climate, but insufficient acreage of land was available for development around Barcelona.
EuroDisney (cont.) p. 2
In the end, the French government’s generous incentives, together with impressive data on regional demographics, swayed Eisner to choose the Paris location.It was calculated that some 310 million people in Europe live within two hours air travel of EuroDisney, and 17 million could reach the park within two hours by car—better demographics than at any other Disney site. Pessimistic talk about the dismal winter weather of northern France was countered with references to the success of Tokyo Disneyland where resolute visitors brave cold winds and snow to enjoy their piece of Americana. Furthermore, it was argued, Paris is Europe’s most –popular city destination among tourists of all nationalities.
According to the master agreement signed by the French government in March 1987, 51 percent of EuroDisney would be offered European investors, with about half of the new shares being sold to the French. At that time, the project was valued at about FFr 12 billion ($1.8 billion). Disney’s initial equity statke in EuroDisney was acquired for FFr 840 million (about $127.5 million). After the public offering, the value of Disney’s stake zoomed to $1 billion on the magic of the Disney name.
Inducements by the French government were varied and generous:
• Loans of up to FFf 4.8 billion at a lower-than-market fixed rate of interest.
• Tax advantages for writing off construction costs.
• Construction by the French government, free of charge, of rail and road links from Paris out to the park. The TGV (trés grande vitesse) fast train was scheduled to serve the park by 1994, along the road traffic coming from Britain through the Channel Tunnel, or Chunnel.
• Land (4,800 acres) sold to Disney at 1971 agricultural prices. Resort and property development going beyond the park itself was projected to bring in about a third of the park itself was projected to bring in about a chird of the scheme’s total revenues between 1992 an 1995. As one analyst commented, “EuroDisney could probably make money without Mickey, as a property development...