Saturday, June 1, 2013

PI Update: How the Closing Of Pleasure Island Has Cost Disney $Millions!

There are plenty of people out there that hated Pleasure Island and were glad to see it shuttered.  Those are the same people who without the benefit of access to Disney's accounting books are quick to tell you that Pleasure Island was an expensive operation and lost money every year.  So to them it only made sense that leasing the club spaces to outsourced shops and restaurants was justified and would be far more profitable.  As we approach the 5 year anniversary of the clubs closing, one only needs to walk around PI to see all the success!

Of course Disney knew that by closing Pleasure Island that they would lose most of the evening entertainment dollars of their adult guests.  They decided that they were willing to give that up.  And they even knew that most of those lost entertainment dollars would be going to their biggest competitor, Universal's CityWalk. And they were still willing to do that.  But their analysis was flawed. It was a decision that has ended up costing them far more millions of dollars than they ever anticipated!    

If there was any doubt about whether Universal CityWalk would go after Disney's adult guests, that doubt was erased on August 8, 2008 when CityWalk included advertising stickers in the Orlando Sentinel that could be redeemed for a free CityWalk Party PassUni was going after locals with this offer because it was only included in home delivery editions of the paper, not in newstand editions.  They repeated the stickers on August 15th and September 5th.  And things got even wilder when Universal announced, just 3 days before Pleasure Island's "final night", that they would honor Pleasure Island Annual Passes through March 31, 2009.  "Bring us your PI AP and we'll give you a CityWalk AP!"

Pleasure Island and CityWalk were / are similar beasts.  Both had / have shops, restaurants.....and multiple dance clubs.  Both drew / draw similar crowds at night.  One can argue about which was better but that's not the point.  Anyone thinking PI was a money-loser would have to think CW was a money-loser too.  Of course neither were money-losers.  Both were profitable and with PI closed, CityWalk began raking it in!  I can remember asking management at CityWalk what it was like not having any competition from Disney.  He never answered my question but the huge shit-eating grin he gave me answered it anyway.  CityWalk was not only more profitable than ever, they were rolling in money!

And that's where Disney's horrible miscalculation came into play.  I had questioned CW management about why none of these profits were ever being put back into the clubs.  The Groove in 2008/2009 was nearly exactly the same as it was when I visited it several times around 2000/2001.  The answer, as it turned out, was that Universal was using CityWalk's profits to fund something called The Wizarding World of Harry Potter!

And that is how Disney has lost more millions of dollars than they ever expected.  They knew and were willing to give up Pleasure Island's revenue.  They knew and were willing to give up Pleasure Island's profits.  But what they didn't anticipate was by freely giving all that money to their arch rival, that the arch rival would use the money to fund something so fantastic that it's caused many Disney guests to spend 1-2 days of their 7-day vacation at Universal instead of at Disney!  And that is the $Millions that Disney has lost forever and continues to lose.  All because they closed Pleasure Island


Anonymous said...

No doubt they lost countless millions. Agreed 100%. But to connect it to Potter is the only thing wrong with this article. The first phase of Potter was officially announced for Islands of Adventure on May 31, 2007. Clubs were still very much open. Potter was coming whether PI was open or not.

Anonymous said...

I think he's right though. I don't think any construction began until early 2008 and if I remember right most of that had to do with retheming the 2 rides already there. The big castle building wasn't built until 2009 and the whole Land did not open until mid-2010.

Anonymous said...

The article was very interesting and well written.
It's true though City Walk is getting all the adult buisness, too bad P.I. is not.
Hopefully they'll wake up.

Anonymous said...

again PEOPLE! THEEE Disney company did NOT want PI to BE! it was Michael Eisner who DID! so HE did! and when he was out so was PI but they would not JUST shut it down they RAN IT INTO THE GROUND so they could close it and say LOOK it is losing money! THEE years after Michael Eisner! was the worst!
you can believe this or you can not! don't care either way! BUT if you go look at the facts you will see the downfall at the time of his leaving!

Anonymous said...

All I know is from personal experience. I spent years not going to CW (or Universal at all.) Until Disney closed the clubs. Since then, I've been to Citywalk countless times, stayed at the ridiculously expensive hotels, etc.

I'd love to have TWDC called on the carpet before stockholders to explain why they choose to ignore the revenue.

Anonymous said...

Thanks Bob!
Yeah, Potter was moving in regardless of PI. But it sure does provide Uni some nice capital to work with.

KingBob said...

Thanks for everyone's comments.

I agree that Potter was coming but all that cash flow allowed them to add so many enhancements and detail that Uni could never have otherwise afforded without that CityWalk cash and without PI being closed first. I will stand by my sources on that information.

(Examples abound throughout Hogsmeade, the ride queue, etc.)