expense, reduce the value-added tax on goods sold from 18.6%, to 7%, and
provide over $700 million in loans (over $960 million was committed by
the end of the project) at the subsidized rate of 7.85%, with no repayment
for five years. In addition, France agreed to artificially value the land at
$5,000 per acre, its value as agricultural land in 1971, and it guaranteed the
valuation for tax purposes for 20 years.^48 This would lower the amount of
taxes Disney would pay to local government for services it would provide,
such as maintenance of the water supply and fire protection. A portion of
the site had been expropriated from local farmers by the French govern-
ment.^49
Euro Disney was 49% owned by The Walt Disney Company (42% after
adjusting for a convertible bond issue outstanding) and 51% owned by a
separate company called Euro Disney S.C.A., which traded on the French
Bourse. In accordance with an agreement between Disney and the French
government, all shares of Euro Disney were initially offered to European
investors. The Walt Disney Company had invested a reported $160 million
in the equity of Euro Disney,^50 in which it had three revenue streams in
addition to its equity position. These were management fees of 3% of gross
revenues for the first five years and 6% thereafter, royalty fees of roughly
7.5% on gross revenues, and a hefty incentive management fee based on
the cash flow of the park. One analyst estimated that Disney would capture
75% to 80% of the pre-tax income of the complex.^51
Euro Disney financial goals for the first year of operation included
attracting 11 million visitors and achieving operating income of $373
million at April 12, 1992 exchange rates^52 (Table 5.2.4). Euro Disney’s finan-
cial projections were based upon a detailed study conducted by the con-
sulting firm of Arthur D. Little (“ADL”).^53 ADL developed attendance
projections and tested the reasonableness of pricing and operating
assumptions. Cost estimates largely were determined by comparison with
the experience of the other Disney theme parks.
Admission to the park cost $41 for adults and $27 for children at April,
1992 exchange rates. Hotel accommodations ran from $130 per night to
$350 per night during the peak season, and roughly 25% less during the
off-season. Camp sites cost roughly $47 per night. The Walt Disney Travel
Company offered discount travel packages to the complex. The company
anticipated visitors would spend roughly $30 on food, merchandise, and
parking, per person, per day, growing by 5% annually.^54
The capacity of the park was 50,000 visitors, and admission gates were
closed after this figure was reached.^55 As visitors left the park, then, addi-
tional visitors would be admitted for the balance of the afternoon and
evening. For instance, on one occasion in the opening three months the
gates of the park were closed from 11 A.M. to 3 P.M. because the park had
reached capacity, and a large number of additional guests subsequently
were admitted.^56 In fact, a Euro Disney spokesman reported in May of
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