Disney Hopes European Kingdom Is Just as Magical : Tourism: Theme park and resort opening outside of Paris next week is a gamble for the entertainment giant.

Ask a Walt Disney Co. executive for the time these days and he might glance at both wrists.

Strapped to one arm is the standard, corporate-issue Mickey Mouse watch; affixed to the other, a special, neon-pink digital timepiece ticking off the seconds until the Euro Disney Resort opens April 12 outside of Paris.

It is a reminder that “we’re not going to rest until this is over,” said Martin A. Sklar, president of the company’s Imagineering division that designed the Euro Disneyland theme park.

The Burbank-based entertainment giant is gambling that the $4.4-billion theme park and hotel complex will bring in millions of dollars in profit and mountains of publicity, boost the international operations in the key European market and return the company to double-digit earnings growth.

While analysts and observers generally agree Euro Disneyland will be successful, it remains unknown whether Europeans will digest a Disney theme park’s unique brand of schmaltz. Fairy-tale castles may be novel when they they crop up in the midst of California orange groves or Florida swamps, but Europeans accustomed to real parapets and drawbridges may not be as amused.

“Left-of-center European intellectuals would love to have this fail,” said Richard Cochrane of Protective Group Securities Corp. in Eden Prairie, Minn. But, he added, mainstream Europeans “are not that different than us.”

Disney is confident 11 million Europeans annually will climb aboard rides linked to Disney classics, such as Dumbo the Flying Elephant, and meet the characters from Goofy to Snow White they know from books or movies. Many will stay at one of the 5,200 rooms at six Disney hotels, eat at one of the many Disney restaurants and choose from countless Disney souvenirs.

The timing for exporting this proven Disney formula to Europe could not be better. International operations have been increasingly important to the company. Disney’s international business rose from 10% of total revenue in 1987 to 22% in the 1991 fiscal year which ended Sept. 30, countering the impact of the U.S. recession.

With Euro Disneyland’s opening, the company will have spread its theme parks to the three key centers of the industrialized world--the United States, Japan and Europe.

Disney already has a significant global presence. While the domestic box office was flat for most movie makers last year, three Disney features--”Pretty Woman,” “Three Men and a Little Lady” and “The Little Mermaid”--collectively grossed $400 million in overseas markets in 1991, according to the company.

Compared to the United States and Japan, Europe is yet to be saturated with the Disney mystique. Particularly with the opening of Eastern Europe, the continent is considered the most ripe for expansion, executives say. The “Walt Disney Presents” television show reaches 135 million viewers in Russia and three other former Iron Curtain countries.

Already, two of the four Disney Stores in Europe--in London and in Glasgow, Scotland--rank second and third respectively as top sellers in the 167-store chain, behind the one in Honolulu. Overall, European retail sales of Disney apparel and trinkets reached $2 billion last year.

“Euro Disney creates a growing surge of excitement everywhere,” said Chuck Champlin, a spokesman for Disney Consumer Products.

Disney may generate most of its publicity from its movies, but it is the theme parks that stoke the financial engine. In fiscal 1989 and 1990, the parks--principally Disneyland in Anaheim and Walt Disney World in Florida--contributed better than 60% of the company’s operating income.

But when the nation was socked by recession beginning in mid-1990, fewer families were willing to make high-priced sojourns to Disney’s parks. The theme park portion of operating income fell to 52% of the total in 1991. Overall, the company’s profit fell to $636.6 million, down 23% from $824 million the previous year.

The Euro Disney Resort will provide a needed shot in the arm. It will likely earn $20.4 million in 1992 and $52.7 million in 1993 for stockholders of Euro Disney SCA, the French company that Disney created to build and run the park, forecasts Richard Simon of Goldman Sachs & Co.

“It will do gangbusters,” Simon predicted.

The analyst, however, cautioned that investors in Euro Disney have been paying too much attention to the publicity surrounding the opening and too little to financing arrangements that will give the Walt Disney Co. a larger share of the profits in a few years.

The stock price, therefore, is too high and he suggested that his clients should sell. His report sparked a wave of selling and Euro Disney stock closed at $27.20 on the Paris stock market, down 9% from a 12-month high of $29.80 per share two weeks ago.

Cochrane said he, too, believes that as far as the popularity is concerned, Euro Disney will be a winner. He said he became a believer when he saw the frenzied buying at a visitor center on the Euro Disney construction site. ‘They couldn’t keep $100 Mickey sweat shirts on the rack,” he observed.

Virtually all Disney watchers, however, are interested in whether the park can maintain its popularity after the initial publicity fades.

Euro Disney represents the next step in an evolution that began when Walt Disney created Disneyland in 1955. That park set a standard for cleanliness and combining elements of a world’s fair and fantasy exhibits along with thrill rides.

The next phase came in 1971, when Walt Disney World debuted. Disney showed that several theme parks could be clustered on a remote suburban site, enticing guests to stay for several days and to shy away from competing attractions outside its borders.

Then came Tokyo Disneyland in 1983, the company’s first amusement park venture with a foreign partner.

The company is now planning to reinvigorate Disneyland by building a $3-billion second theme park next to it in Anaheim. It is also mulling construction of a second theme park in Tokyo.

Despite this proliferation, Disney officials say Euro Disneyland will not detract from the substantial number of foreign tourists at its domestic parks. At Disneyland, for instance, officials say that they expect more visitors who have seen the European park to show up to quench their curiosity about the company’s original theme park.

And Euro Disneyland is being built as a multi-day attraction, while Disneyland caters mostly to one-day visits. At Marne-la-Vallee, France, Disney has built not only a resort, but plans to create a modern city around it. On about 5,000 acres, a fifth of the size of Paris, Disney includes sites for a second theme park, more golf courses, high-rise offices, light industrial buildings and housing that is yet to be built. They would be surrounded by trees and lakes--a kind of Irvine outside of Paris looming under the gables of Le Chateau de la Belle au Bois Dormant (Sleeping Beauty’s Castle).

A $3-billion working movie studio, similar to the MGM-Disney Studio attraction in Florida, is already planned for the project’s second phase, with completion scheduled for 1994.

The resort gives Disney “a strong base of operations in Europe,” said Paul Marsh, who tracks Disney for the Kemper Securities brokerage in Los Angeles. With the film and merchandising, “it all fits together.”

Added David Schmitt, a former Disney executive who is a partner in Management Resources, a Tustin exhibition consulting outfit, “A good piece of revenue comes out of merchandise sales and their ability to promote movies.” Disney’s consumer products division alone accounted for one-fifth of the company’s operating income last year.

Disney is also learning from past mistakes. In Japan, for instance, Disney built Tokyo Disneyland with a Japanese partner and today receives just 10% of the gate and 5% of food and souvenir concessions. Euro Disney Resort will certainly prove more profitable.

For starters, Disney pitted Barcelona, Spain, against France in a competition for the site and its 12,000 jobs. It was the same strategy that the company employed last year when Anaheim and Long Beach were vying to become the site of the company’s new Southern California park.

Spain has sun, France has rain--Marne-la-Vallee averages 100 days of rainfall a year. But France had the better location--about 109 million people are within six hours’ driving time. It was literally at the crossroads of Europe. The French government promised loans of up to $655 million and vowed to extend both the standard and high-speed rail links to the park.

That deal in hand, Disney then created a new French company, Euro Disney SCA, and negotiated a good financial arrangement for itself. The project has required little upfront money from Disney. Instead it has been financed by bank and government loans, private investments and corporate sponsorship of companies such as Kodak, IBM, Coca-Cola and European companies including Nestle, Esso and Renault.

Disney will receive management and incentive fees, along with nearly half the park’s profits. In addition, it will receive a cut of Euro Disneyland ticket and merchandise revenue at the same rate as Tokyo Disneyland.

“The return on investment is phenomenal,” Marsh said.

In true Disney fashion, the company is counting on free publicity to do much of its marketing. The park is being thrown open to thousands of reporters. CBS plans to air a two-hour, prime-time “Grand Opening” special the night before the park’s debut, produced in conjunction with Disney’s Buena Vista Productions and hosted by Don Johnson and Melanie Griffith.

Disney has already signed up tour operators to sell packaged deals to the park from around the world. But a day in the park will be pricey by American standards: $40 for an adult, compared to $27.50 for Disneyland. And the Disney hotels are also premium priced. Two nights at the mid-priced Newport Bay Club hotel, along with three days’ worth of Euro Disneyland tickets, will cost $560 for two people through next October.

Analysts aren’t put off by the prices in making their forecasts. “They are experts at marketing and promoting and giving the consumer the feeling they have received value,” said Harold Vogel of Merrill Lynch Global Securities.

Disney has no plans to add any additional cities to its roster of theme park sites. As much as it would like to tap into the Eastern European market, most people there do not earn enough to afford a visit to a Disney park. And likewise, there are few other countries around the world that could support another Disney park spinoff, analysts say.

“I think they can make a lot more money opening a studio tour in Europe than a theme park in Bombay,” said John Robinett, who conducts theme park marketing analyses for Economics Research Associates in Los Angeles.

* L’INVASION DE MICKEY: In today’s Times Magazine, staff writer Rone Tempest tells how French view park. Page 26

A World of Disney Euro Disney Resort Marne-la-Vallee, France (20 miles east of Paris) Opening Day: April 12 Acres: 5,000, of which 1,544 acres have been developed Rides, attractions, entertainment venues: 30 Themed lands: Seven Hotels: Six; 5,200 rooms Annual visitors: 11 million projected for first year Disneyland Anaheim Opening day: July 17, 1955 Acres: 80; parking lot, 102 acres Rides, attractions, entertainment venues: 60 Themed lands: Seven Hotels: 158 properties in Anaheim; 17,927 rooms Annual visitors: 13 million; welcomed 300-millionth visitor September, 1989 Walt Disney World Orlando, Fla. Opening day: Oct. 1, 1971 Acres: 28,000, of which 6,600 have been developed; 7,200 acres are designated wilderness preserves; developed acreage includes Magic Kingdom, Epcot Center, Disney-MGM Studios Theme Park, two water parks, a nightclub theme park, five golf courses and island zoo Rides, attractions, entertainment venues: 45 at Magic Kingdom; 24 at Disney-MGM Studios; 19 at Epcot Center Themed lands: Seven at Magic Kingdom; two at Epcot Hotels: 19 Annual visitors: More than 25 million Tokyo Disneyland Urayasu, Japan (15 miles southwest of Tokyo) Opening day: April 15, 1983 Acres: 114; parking area is 63 acres Rides, attractions, entertainment venues: 33 Themed lands: Four, plus World Bazaar Hotels: None on property; five close by; 3,162 rooms Annual visitors: 16 million; welcomed 100-millionth visitor 1991 Source: Disneyland, Walt Disney World, Disneyland International Researched by DALLAS M. JACKSON / Los Angeles Times