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PaperclipPerfector  11mo ago (text post)   3751 thread views

Friday Fun Thread for December 8, 2023

Be advised: this thread is not for serious in-depth discussion of weighty topics (we have a link for that), this thread is not for anything Culture War related. This thread is for Fun. You got jokes? Share 'em. You got silly questions? Ask 'em.

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I would not dispute, of course, that their numbers have increased greatly over time. I think the increase in prices and wait times along with the variety of schemes (fast pass, fast pass+, genie, apps, etc) to bypass these wait times has led to a lot more people planning their visit in the sort of obsessive, regimented way that those "Disney Moms" were in the 90s-early 2000s rather than just showing up and making their way through the parks, which used to be how almost everyone handled it. I think once you've spent however-much-time looking into different attractions and prioritizing them it's a lot easier to put disproportionate importance on the parks themselves.

It's obvious Disneylands are too scarce a resource, but I wonder where the sweet spot is. On the one hand, all these tiered priority schemes are basically free money. On the other hand, if the parks are so full, why not build a few more? Right now, there's one park in Europe and two in the US, you could build one in Texas, one in Italy and one in Turkey and all of them would be full.

Well, unless the operating costs of a park are so high right now that you have to incentivize people to buy priority passes to stay profitable, but this only makes me wish we could divorce the management of the parks from the IP somehow and let multiple competitors manage them. Doctorow was right, there are people out there who understand what make Disneyland great better than Disney itself does.

Right now, there's one park in Europe and two in the US, you could build one in Texas, one in Italy and one in Turkey and all of them would be full.

Disney has the name recognition but there is some competition. Portaventura in Spain was just as good as Eurodisney Paris when I visited as a kid, and Gardaland in Italy is apparently also a world class theme park.

EuropaPark in Germany as well.

Theme parks are just not a great business. For comparison, look at the stocks of Cedar Fair (FUN) or Six Flags (SIX). While obviously a tier below Disney, these companies have massively underperformed the market over a long period of time.

We used to go on family vacations to Cedar Point and my dad was so impressed by the high prices and massive crowds that he bought stock. But what he didn't see was high up front capital costs and huge maintenance expenses. Want to be cash flow negative while still paying high taxes? Build something in America.

If you want to make money, just make software bro. The tax system in America is biased against brick and mortar, even the ones that sell $12 hot dogs.

What does the tax system have to do with it? US software companies have profit margins of ~100%, at least for SaaSs. I’d go so far as to say that basically 100% of productivity gains between 1990 and today are from computers and that the tech industry itself captured the vast majority of that value. Are theme parks more productive than they were 30 years ago? What have they innovated?

What does the tax system have to do with it?

Glad you asked. If I pay you to make software, 100% of your salary is deductible immediately. If I build a factory, I have to depreciate it over decades and can only deduct a little each year.

For this reason, software will have great cash flow relative to paper earnings while capital intensive real world businesses the opposite is true.

For an example, take a look at the earnings and balance sheet of Micron (MU) for the last 10 years. They have, on paper, made great profits. Where has it all gone? Dividends? Buybacks? Sadly for investors no. All the money gets dumped back into capital investment (Property, Plant, and Equipment). Warren Buffett warned against buying these type of companies where all the profits go back to equipment. The balance sheet of Micron grows apace, but investors get little.

Are theme parks more productive than they were 30 years ago? What have they innovated?

This isn't how business works. Innovation is not necessary or sufficient to have high earnings. What have cigarette companies innovated? And yet they were the world's best investment of the 20th century. How about Lululemon? Are they innovators? Because their stock is a rocket ship to the moon.

Meanwhile Micron (MU) has been extremely innovative. Yet the stock has done nothing for 25 years.

To make money you need pricing power. You need a moat.. That's another reason software is a great business. Changing your payroll system is a pain in the ass, so when Gusto raises their prices 25% you just pay. Theme parks have no moat. If they charge too much, I can just take my kids somewhere else.

Right now, there's one park in Europe and two in the US, you could build one in Texas, one in Italy and one in Turkey and all of them would be full.

It may be worthwhile to look into all the problems Disney had opening Disneyland Paris and the problems they've continued to have there. That's likely a factor in not expanding more into Europe.

For Texas, geographically it makes a lot of sense, but given the problems they've been having in Florida lately I can understand their hesitancy.

To your point:

but this only makes me wish we could divorce the management of the parks from the IP somehow and let multiple competitors manage them.

Would solve this, but would be anathema to Disney itself. The modern vision for Disney parks is very clearly not Walt's, but the company is still highly attached to it.

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