DLRP - Financial, Attendance and Employment Status

Financial, Attendance and Employment Status

In May 1992, entertainment magazine The Hollywood Reporter reported that about 25% of Euro Disney's workforce — approximately 3,000 people — had resigned from their jobs because of unacceptable working conditions. It also reported that the park's attendance was far behind expectations. However, the disappointing attendance can be at least partly explained by the recession and increased unemployment which was affecting France and indeed most of the rest of the developed world at this time; when construction of the resort began, the economy was still on an upswing.

Euro Disney S.C.A. responded in an interview with The Wall Street Journal, in which Robert Fitzpatrick claimed only 1,000 people had left their jobs. In response to the financial situation, Fitzpatrick ordered that the Disney-MGM Studios Europe project would be put on hiatus until a further decision could be made. Prices at the hotels were reduced.

Despite these efforts in May 1992, daily park attendance was around 25,000 (some reports give a figure of 30,000) instead of the predicted 60,000. The Euro Disney Company stock price spiralled downwards and on 23 July 1992, Euro Disney announced an expected net loss in its first year of operation of approximately 300 million French francs. During Euro Disney's first winter, hotel occupancy was such that it was decided to close the Newport Bay Club hotel during the season.

Initial hopes were that each visitor would spend around US$33 per day, but near the end of 1992, analysts reckoned spending to be around 12% lower. Efforts to improve attendance included serving alcoholic beverages with meals inside the Euro Disneyland park, in response to a presumed European demand, which began 12 June 1993.

In January 1994, Sanford Litvack, an attorney from New York City and former U.S. Assistant Attorney General, was assigned to be Disney's lead negotiator regarding Euro Disney's future. On 28 February Litvack made an offer (without the consent of Eisner or Frank Wells) to split the debts between Euro Disney's creditors and Disney. After the banks showed interest, Litvack informed Eisner and Wells. On 14 March, the day before the annual shareholders meeting, the banks capitulated to Disney's demands.

The creditor banks bought US$500 million worth of Euro Disney shares, forgave 18 months of interest and deferred interest payments for three years. Disney invested US$750 million into Euro Disney and granted a five-year suspension of royalty payments. In June that same year, Saudi Arabian Prince Al-Waleed Bin Talal Bin Abdulaziz Al Saud cut a deal whereby the Walt Disney Company bought 51% of a new US$1.1 billion share issue, the rest being offered to existing shareholders at below-market rates, with the Prince buying any that were not taken up by existing shareholders (up to a 24.5% holding).