Disney Resort Goes Back on the Drawing Board : Development: Company confirms it’s considering scaling back $3-billion project that is already two years behind original schedule.
Walt Disney Co. Chairman Michael D. Eisner confirmed Friday that the company is considering scaling back its $3-billion Disneyland Resort because the project appears to be too costly, especially in the state’s uncertain economic climate.
Eisner declined to offer specifics, but said the resort might be built in phases or that Disney might have to reduce its “appetite slightly.”
“It’s a very complex issue,” he said. “It can mean reducing in size, it can mean reducing in scope, it can mean changing the mix of the product. We’re looking at all the different ways to make the project viable.”
Eisner’s comments were the first public concession by Disney that the company is seriously considering downsizing the ambitious project, which, as proposed, would include a 1,800-room hotel district, a lushly landscaped shopping area, a 5,000-seat amphitheater, a six-acre lake and a new international-themed park called Westcot adjacent to Disneyland.
“We’re looking at all sorts of different opportunities and prospects,” said Eisner, who was in Santa Ana on Friday for the grand opening of the Walt Disney Gallery at MainPlace mall.
“We’re looking at how to do a project like this in an urban environment and still have it be fiscally responsible.”
The company’s chairman said he still feels the financial sting from more than $550 million in losses from the Euro Disneyland debacle in France and is trying to make sure the same thing doesn’t occur in Anaheim.
“I’d just as soon not have the (Euro Disney) pain, even though I know that pain will turn to pleasure in any other part of the world, so we’re trying to judge our appetite versus the economy and California has had a rather tough time recently,” Eisner said.
Eisner said the recent decision to abandon the Disney’s America project in Virginia will not affect any decision in Anaheim. He also said the company is committed to developing other tourism projects in Orange County, will continue to put money into Disneyland and plans to decide on the Disneyland Resort “very soon.”
Disney’s internal review of the plans, however, has further postponed the much-delayed project, which is at least two years behind its original groundbreaking schedule. Furthermore, Disney officials have refused to commit to building the project until they receive as much as $800 million in financial support from the city of Anaheim, Orange County and state and federal agencies.
Earlier this week, Anaheim city officials said their negotiations on a development agreement with Disney have been temporarily halted because the company’s planners and financial analysts are trying to re-evaluate and possibly downsize the project.
“This is just a time for re-evaluation and reassessment of the magnitude of the project,” City Manager James D. Ruth said. “We think it’s fine and makes perfect business sense. We’re still very optimistic about this going forward.”
Meanwhile, city officials say that regardless of Disney’s plans they are still committed to move forward on a $172.5-million project to overhaul the urban clutter surrounding Disneyland and beautify the area by widening streets, burying utility lines and planting tropical landscapes.
Nonetheless, the possibility of a scaled-back project has caused some concern among those in the local tourism industry, who are starting to see diminishing returns on a project that was once hailed as creating tens of thousands of jobs and generating $2.4 billion a year in economic activity statewide.
“Certainly, any downsizing could have some impact on our city as a destination,” said Ned Snavely, the general manager of the Anaheim Marriott. “We’ll have to wait and see what they mean by downsizing. It could take a number of directions. . . . The chances are that it might not be as exciting for those who would be coming into the area.”
Bill O’Connell, general manager of four Stovall Best Western motels near Disneyland, said most hotel and motel owners are still optimistic about the project going forward and hope it “will be the boost in the arm” that the local tourism industry needs.
“We’d like to see the very best thing that Disney can do, but we understand it has to work within their budget,” said O’Connell, noting that Disneyland was a much smaller theme park when it opened than it is today.
“Even if they start with a smaller project, it can grow into something bigger,” he said. “Obviously, I wish it would happen today.”
Eisner said he appreciates the support Disney has received from city officials and the business community and hopes to “make a decision sooner rather than later.” But “the worst thing we could do,” Eisner said, is put “the whole project at risk” by moving ahead before the economics of the resort make better sense.
One plan under consideration, he said, is constructing the project in “phases” over a longer period of time than originally projected. “We’ve had a thousand different ideas,” Eisner said.
Regardless of whether Disney builds the project, Eisner said, the company will continue to make improvements in and around Disneyland, its 39-year-old flagship theme park.
Currently, the company is building two new ice rinks in Anaheim for its Mighty Ducks hockey team and community skating programs. Disney also is building 650 Mediterranean-themed time-share condominiums in Newport Beach. At the park, the company is building a new administration building and is almost finished with a new thrill ride themed after the Indiana Jones movies.
“Disneyland itself has never been better,” Eisner said. “No matter what we do we’re never going to let Disneyland become an aging theme park. I still think it’s the happiest place on Earth.”
