Disney hopes Europe is mad about Mickey

April 05, 1992|By Chris Woodyard | Chris Woodyard,Los Angeles Times

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

Strapped to one arm is the 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 next Sunday outside Paris.

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

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

Few analysts and observers doubt that Euro Disney will be successful, but they wonder whether Europeans will digest Disney's unique brand of schmaltz. Fairy-tale castles may be novel when 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 characters, from Goofy to Snow White, that they know from books or movies. And, Disney hopes, they will stay at Disney hotels, eat at one of the many Disney restaurants and buy Disney souvenirs.

Compared with 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 ripe for expansion, executives say.

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

Dave Schmitt, a former Disney executive who is a partner in Management Resources, a California-based exhibition consulting firm, said, "A good piece of revenue comes out of merchandise sales and their ability to promote movies." Disney's consumer products division accounted for a fifth of the company's operating income last year.

Disney is also learning from its mistakes. In Japan, Disney built Tokyo Disneyland with a Japanese partner and today receives just 10 percent of the gate and 5 percent of food and souvenir concessions.

Euro Disney has required little up-front money from Disney. Instead, it has been financed by bank and government loans, private investments and corporate sponsorship by companies such as Kodak, IBM, Coca-Cola and Nestle.

Disney will receive management and incentive fees. In addition, it will receive a cut of Euro Disney ticket and merchandise revenue at the same rate as at Tokyo Disneyland.

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