When the Walt Disney Co. opened Disneyland Paris 20 years ago, many French people wouldn't have bet 10 centimes that the theme-park resort 20 miles east of the French capital would be a success. Critics lambasted the government for striking a deal with Disney that seemed to benefit the U.S. company far more than it did the French state. They mocked Disney's obsessive attention to detail, its ban on wine and its choice of rainy Paris over sunny Barcelona. And they wondered how such quintessentially American entertainment could thrive in the land of Molire, Cocteau and Sartre. Disney's implantation in France, Ariane Mnouchkine, a theater director, famously declared, was "a cultural Chernobyl."
How wrong they were. This year, to mark the 20th anniversary, the French state issued a report card that is an eloquent response to the critics. Disneyland Paris, which attracts as many visitors as the Louvre and Eiffel Tower combined, has created 55,000 jobs in France, and the return on the French state's investment has been stellar: $8.5 billion in taxpayers' money has turned into $61 billion in added value for the French economy through additional tourism revenue and taxation. "I can say without ambiguity that it has been a big success," enthuses Vincent Pourquery de Boisserin, director of the government agency that works with Disney and is charged with development of the region surrounding the park.
If only the Walt Disney Co. could say the same. Disneyland Paris may have been a boon to France, but as an investment for Disney, based in Burbank, Calif., the venture has been a dog--and not of the fluffy, lovable variety usually associated with the company.
Despite being one of the top tourist destinations in Europe, attracting 15.6 million visitors last year, Disneyland Paris continues to struggle financially. It's run by Euro Disney SCA, a French company that is 40% owned by the Walt Disney Co. and that has had to negotiate a restructuring of its finances with bank creditors not once but twice. Disney was supposed to receive a steady annual revenue stream from royalty payments and management fees from the park. But for more than half of the 20 years of the resort's existence, it has had to abate those fees because of the troubled financial situation. Meanwhile, Euro Disney has reported a loss for 12 of those years, including every year since 2009.
The reason? After the wild success of the Disney theme park in Japan, Euro Disney got overambitious, taking on more debt than the French resort could handle and overestimating the size and spending habits of its new audience. Those miscalculations explain why Disney, unlike France, hasn't capitalized on the sea of visitors the park brings in.
Disney finally lost patience this fall. Facing the likelihood that the resort would continue reporting net losses for the next few years until it could finally bring its $2.2 billion in debt down to a more manageable level, Disney announced in September that it is mounting a new rescue attempt. This time, it is providing $1.7 billion under a refinancing deal. The move will cut the interest the Paris resort has to pay on its debt by almost $60 million over the next five years.