Those Darn Accountants

[hobie16]

From MiceAge

…a former Team Disney Orlando finance manager was kind enough to send me the following note:

Al, I just wanted to comment on your latest update regarding WDW and the management running the company. I think you hit it dead on and it added a lot of credibility to the reports I read about Disneyland (I don't know much about California). You have some good sources.

WDW management is extremely bloated. I was in Finance for about five years as a Finance Manager from the late 90's into the early 00's. I had access to the financial results and was witness to the inner workings of the Team Disney Building.

The place is run like Washington. Politics rules. Each VP or Director makes sure to look out for their own area or kingdom. Spread responsibilities or blame out and no one can point a finger. The Executives at WDW continue to be the Kings and Queens of the castle and exploit the guest and shareholder. (I won't comment too much on Hourly CM's. I can't draw any conclusions about their state since I was removed from their problems.)

I know this could be a rant, so I wanted to share some stories.

1. Personal Pork - I personally analyzed the spending at Disney for two years (Expense reports, PO's, P-cards, Capital) and charted the results. The results were amazing, The spend spiked up 30-40% in the last month of the fiscal year, September. People were spending to their budgets, not what was needed. And the spend was wasteful, new furniture (expensive furniture for Team Disney or other offices, new cars, vans, etc... Very little for new rides or maintenance)... The reason, of course, is if they don't spend it, some Finance Executive might not give them the same budget for the next year.

2. Marketing and Sales rules WDW. You hit this one right on. I performed a review of their organizational set up, spending controls, and reporting controls. Marketing and Sales budgets run between $300 - $400 million dollars at WDW (at least a few years ago). I have been told that is what drives business.

They see Disney as "a leaky bucket, and if you don't pour $$ into marketing, then the bucket will empty and people won't come". Direct quote from several Executives. Another was "that WDW was like a pepperoni pizza, and if you keep pulling off pepperoni, it will be a cheese pizza" Translation, if you keep trying to cut the Marketing and Sales budget, WDW will turn into Six Flags or Universal - Marketing and Sales it what keeps Disney Disney.

I asked why we don't spend more on maintenance and new attractions. I said I loved the product and what kept bringing me back were new or improved offerings, not marketing. Capital investments have been scaled back in Orlando in favor of Marketing.

3. Inexperienced Executives. Disney runs at a 30-35% margin. On about $4-5 billion in revenues, that is over $1.2 - $1.5B in margins. WDW is a cash cow. You can hide A LOT of problems with those margins. Back in 1999/2000, WDW was at record attendance and record profits. Executives did not plan on any bad times. They were not prepared. Once the recession followed by 9/11 hit, the Executives were caught with their proverbial pants down.

One VP told me, he was in a planning meeting and they discussed occupancy. Disney was running over 90% (on 20,000 rooms, that is unbelievable). Orlando was running in the mid-70's. When asked what would happen during a recession and WDW went to the mid-70's, he was laughed out of the room. He was told this is WDW, that would not happen. the worst would be 85%. The hotels on I-drive or 192 would suffer first.

Well after 9/11, Disney hit occupancy in the 50's and 60's. WDW Executive arrogance runs deep.

I could go on, but you are so right. They have taken a great product and built their own "Kingdoms" full of large salaries, bonuses, and perks (like free golf and recreation for all WDW Directors and above). Many Executive's and their spouses have standing tee times, displacing Guests.

It's their private country club.

After speaking with some contacts about this letter, they glumly admitted that Anaheim isn't all that much different from Orlando when it comes to administrative waste and mistaken priorities.

Particularly when it comes to the issue of pork, the two Disney properties work with unbelievably mismanaged agendas fiscal year after fiscal year. Most departments routinely horde capital and resources all year like squirrels burying nuts for the winter that they'll likely never find again. And then once summer ends and there's only a few weeks left in the fiscal everyone goes on wild shopping sprees buying equipment and supplies they think they might need next year, or worse, hosting fancy dinners at trendy Orange County restaurants under the guise of September "team building" and "reward and recognition" just to get rid of some of the cash they didn't spend when the parks were busy and the lines were long.

Most Disneyland departments do this because their executives and senior management are so bad at properly budgeting capital expenses throughout the year, and then middle management is trained that if you don't spend it all this fiscal year they'll take it away from you next fiscal year.

Meanwhile, out in the Parks and at the Hotels, projects and upgrades that would directly improve the experience of the paying customer are underfunded or cut completely because there is "no money" allocated for all of the front line needs. Bizarre little TDA departments that no paying customer will ever make contact with, run like archaic fiefdoms, almost throw money out the windows in September in a frantic race to spend-spend-spend at the end of the fiscal year. But if the dishwasher at the Plaza Inn needs to be replaced in June the manager is told by his superior to make do with it and put the customer's salads and deserts on paper plates for the summer until they see what kind of money is left in September.

[darph nader]

Nothing but the 'good-old-boy system. There was a an article in the local paper months ago about how the ceo's 'deserve' their big bonuses. This gal stated "We need to pay them well to keep them". Two paragraphs later we find out she's on something like three board of directors,AND most of the ceo's she is voting for are 'her' board of directors. ( she's a ceo btw)
Yeah,who's sucking whos?
An article in the WSJ said basically the same thing,screw the 30 yr employees out of their retirement,but give the suits their 'Golden Parachutes" :twisted: