Struggling Euro Disney gets one billion euro cash injection
Cash-strapped Euro Disney forced to ask for €1bn rescue package from Walt Disney Company as visitor numbers continue on a dramatic slide
PUBLISHED : Tuesday, 07 October, 2014, 11:08pm
UPDATED : Wednesday, 08 October, 2014, 4:07am
The Guardian in Paris
Visitors asked to pay €70 per adult and €64 a child. Photo: AFP
Mickey Mouse is in trouble again. Despite welcoming more than 275 million visitors through its wrought iron gates since 1992, Disneyland Paris has been forced to ask for a €1 billion (HK$9.73 billion) emergency rescue to save the Magic Kingdom.
Disneyland Paris has struggled under a mountain of debt and lost money almost every year since the gates first swung open. Now its main backer, the Walt Disney Company, is stepping in to save the park's parent business Euro Disney.
Euro Disney's finance director, Mark Stead, said the company's €1.75 billion debt burden had become so overwhelming it could not afford to keep the park looking fresh let alone invest in blockbuster rides to compete against Florida's theme parks.
Visitors asked to pay €70 per adult and €64 a child have noticed the lack of investment. The park, which was dubbed a "cultural Chernobyl" when it opened 22 years ago, is haemorrhaging visitors. It drew in 14.1 million over the past 12 months, a drop of 800,000 on the previous year and 1.5 million lower than 2012.
"We need to get away from tired looking assets and make them look new," Stead said. "We need to be ready for the 25th anniversary in 2017."
He said the park would bring in more Disney characters and trademarks although new blockbuster rides were unlikely. Its latest €150 million attraction, Ratatouille: The Adventure, which is based on the 2007 film about a rat who dreams of becoming a top chef, opened in July to less than rave reviews.
He said: "We will be revamping attractions, bringing in new ride technology, [and] new ride experiences. The look and feel will completely change. We hope to take technology from US parks and bring it here. We wanted to [do that in the past] and we needed to do that, but we haven't had the financial flexibility to do so."
Walt Disney owns 40 per cent of the business. In its third multi-million euro bailout of its French offspring, the US company is injecting €400 million into Euro Disney and swapping €600 million of debt into shares. The US company will also give Euro Disney breathing space on the rest of the loans until 2024.
If other Euro Disney shareholders decide not to back the emergency rights issue, Walt Disney committed to taking back control of the whole company. Euro Disney's second-biggest shareholder, Saudi prince Al-Waleed bin Talal bin Abdulaziz al Saud, who owns 10 per cent, has yet to decide whether to back the rescue.
While visitors are down, the park still pulls in more people than the Louvre and the Eiffel Tower combined, making it Europe's biggest tourist attraction.
But experts believe that to start making money - the park last turned a profit in 2008 and expects to lose €110 million to €120 million this year - it needs to draw in at least 15 million people a year.
While admitting he needs to do more to attract visitors in an increasingly competitive market, Stead blamed most of the decline in numbers on Europe's bedraggled economies with five out of the company's seven key markets in recession. Just over half of Disneyland Paris's visitors are French, followed by the UK accounting for 14 per cent, Spain 8 per cent, Netherlands, Belgium, Luxembourg 6 per cent, Italy and Germany 3 per cent.
Pierre-Yves Gerbeau, who ran Euro Disney before being poached to save the reputation of the Millennium Dome, said the park's management had "fallen asleep at the wheel" and failed to keep up with technical innovations and consumers' diverging interests. "They've been running that place since we left pretty much on autopilot," he said. "You walk around and it hasn't been maintained properly, it looks outdated and tatty. It needs a proper shake-up both in leadership and strategy.
"The customers are more sophisticated, more focused on how to spend their money and their time and [management] haven't kept up with that. Every other service business has reinvented itself to attract more customers. That theme park hasn't."
Gerbeau said Euro Disney, which consists of neighbouring parks Disneyland Paris and Walt Disney Studios Park, did not attract enough visitors to make it profitable. "They need 15 million visitors a year minimum," he said. "They have not progressed they have regressed.
"If you look at how aggressive Florida [theme parks] have become, it almost costs less to jump on a plane to Florida than go to Paris."
