Progress City, U.S.A.

There was something I intended to write about upon my return from the D23 Expo, but it wound up gathering a bit of dust on the shelf along with about two dozen other stories I still need to tell from that time. This one is about Disney and labor relations; what would have otherwise been a brief mention of the Union protests outside the Anaheim Convention Center in September, which I found to be uniformly mild and inoffensive, now necessitates a full story for a couple of reasons.

First there’s the fact that the issue has continued to evolve since those protests, with a couple of widely-posted stories in the media. What really spurred me to talk about this, though, was a pretty high-profile Disney podcast I was listening to recently. It was one of the many post-D23 recap episodes that flooded the blogosphere after the Expo, and when the subject of the protests came up I was irritated to find that the commentators were being – you must pardon the expression, but it’s definitely apropos – incredibly dickish about the whole affair. In fact, I’ve seen a few instances since of Disney fandom being taken aback that anyone would dare protest against poor Mickey and the dream-filled wish-scape of Disney magic ™ in search of better working conditions.

Disney’s well-publicized conflicts with labor go back to 1941, when the animators’ strike tore the company in two. Despite the fact that both sides seem to have had reasonable grievances, outside agitators on both sides used the incident to further their own goals and escalate the conflict. It was one of the most significant turning points in Disney history, and changed the company and its animation department forever.

The current labor troubles stem from contract negotiations with the Disneyland Resort’s hotel union, Unite Here 11. The union covers most of the front-line staff at the hotels, from bellmen and housekeepers to cooks and dishwashers. The sticking point in the negotiations has been the very timely issue of health care. Currently, Disney pays into a trust that covers the cast members’ insurance costs. To cut costs, the company has transitioned the rest of Disneyland’s unions to a new plan, which requires employees to pay for a certain percentage of their premiums. The cost of these premiums would be automatically deducted from cast members’ paychecks. The hotel workers’ union is the last remaining holdout from the plan after nearly two years of negotiation.

Disney says that their plan, which phases in employee payments over a five-year period, would only cost new members around $60 a month. The union counters by pointing out that once the payments are fully phased in, cast members under the new plan could be stuck for as much as $500 a month.

The dispute now seems intractable, with neither side willing to concede further ground. The union doesn’t have to accept a new contract, and Disney will be forced to continue paying into their current insurance plan, but the workers will also be stuck with the pay scales from their previous agreement. Disney insists that the workers are missing out on pay increases that they would otherwise receive, but the union believes that any raises achieved under a new contract would be more than offset by new health care expenses.

As time passes, the situation becomes increasingly difficult for union members. In June, the amount that Disney pays into the insurance trust could not keep up with rising health care costs and the union was forced to cut the part of their plan that covered employees’ sick days. Left without a safety net should they become ill, and with their finances already stretched to the limit, cast members were forced to come in to work regardless of their condition. The result was a number of unflattering news stories about severely ill cast members working in the Disney hotels during the height of the H1N1 season.

Union members have stuck to their guns, though, rejecting the Disney proposal with a 92% majority in August elections. They’ve even upped the ante by staging their first walkout last Sunday morning. As of last report, there are no negotiations scheduled.

Labor negotiations are tricky by their very nature. One side usually asks too much at first, and the other side offers too little. It’s negotiation, after all, and a good negotiator won’t cede the field before talks begin (something certain people in Washington need to learn, but I digress). One thing that I can’t believe, though, is that Disney fans wouldn’t have a measure of sympathy for the people who work their tails off for next to nothing to make the “magic” that fanboys laud so rapturously. If your main source of income is an $8-an-hour job getting abused by tired tourists, you might not think it unreasonable that your health care be covered. You might also wonder why Disney can’t afford to take care of its hard-working cast members when they can shell out $4 billion for a few thousand comic book characters, most of which they’ll never use for anything.

Cast member compensation is something that has long concerned me, and that I’ve wanted to write about several times. It’s a big problem. You can’t expect to retain the best people when you pay lower than most other service-sector jobs in your area. Al Lutz has long written about this problem at Disneyland, where they’ve had many years of issues with retaining employees because kids can get better money working at McDonald’s than making Dole Whips in Adventureland. This is also the same reason we’ve had the College Program explosion at Walt Disney World, because aside from Disney die-hards, it’s hard to get someone to move to Florida to work for minimum wage and no benefits.

Walt, of course, was smart and had the solution figured out – EPCOT. By offering your employees subsidized housing in your city of the future, you’d be able to attract quality workers for long-term employment despite their modest wages. Even when his successors dropped the ball on EPCOT, Disney at least offered some other benefits to mitigate their rather low pay scale. But now cast members are overworked and underpaid as never before, and even the most loyal and hardworking Disney devotee can only take that for so long.

Obviously, Disney is never going to have a work environment like Google or SAS. But Disney owes it to their employees and to their customers to make some real reforms in this area, and it’s up to fans to hold them to that. At the very least, we can refrain from deriding union members who are trying to make their case in a peaceful and non-confrontational way.

Seriously. What??

Oft-maligned (by me) Disney Parks chief Jay Rasulo becomes Disney’s Chief Financial Officer. Fair enough, he cares way more about money than theme parks anyway, and fans have wanted to see him gone for years. But current CFO Tom Staggs takes his place as chairman of Walt Disney Parks and Resorts? A switch?!

Seriously. Did anyone see this coming? Again, the year of bizarre executive shakeups continues. Jason Garcia at the Sentinel says that this might signal that Staggs is being groomed to become president of the entire Disney empire, but what in heavens name indicates that he knows anything about the parks? From his bio on Wikipedia:

Joining Disney in 1990, Staggs rose from his role as a manager of strategic planning to senior vice president of strategic planning and development in 1995. Staggs became executive vice president and chief financial officer in 1998, and was appointed his current title in January, 2000.

Staggs was born in Illinois and received a B.S. in business from the University of Minnesota and an MBA from the Stanford Graduate School of Business. He began his career as an investment banker for Morgan Stanley & Co. before joining Disney in 1990.

Seriously, that resume is like a burning hot fork in my eye. America’s already had its Death Panel, and it was called Disney “Strategic Planning” in the 1990s. Please, someone at least tell me he’s ever been to a theme park…

UPDATE: Gird your loins, it’s a press release:

THE WALT DISNEY COMPANY ANNOUNCES EXECUTIVE CHANGES

BURBANK , Calif., November 12—In line with The Walt Disney Company’s goals of advancing its global businesses and brands while providing new opportunities and challenges to executives, Disney President and Chief Executive Officer Robert A. Iger announced today that two of the company’s most senior leaders would assume new roles at the end of the year.

Thomas O. Tom Staggs, Senior Executive Vice President and Disney’s Chief Financial Officer and 20 year Disney veteran, will become Chairman, Walt Disney Parks and Resorts. In his new position, Staggs will preside over the company’s vacation businesses, which span three continents and include five-world class destinations, a top rated cruise line and the most popular resort locations in North America, Europe and Asia.

James A. Jay Rasulo, Chairman of Disney Parks and Resorts and a 23-year Disney veteran, will become Senior Executive Vice President and Disney’s Chief Financial Officer. In his new role, Rasulo will oversee the company’s worldwide finance organization, corporate strategy and development, brand management, corporate alliances, investor relations, treasury and risk management activities, controller functions, information systems, corporate responsibility, real estate and taxes.

Both will remain members of the senior management group reporting to Iger.

“Jay and Tom are both dynamic and versatile executives, who have done a great job over the last several years and have helped me to shape Disney’s strategic direction,” Iger said. “By giving them exciting new challenges that build on both their strengths at a time when each of their respective areas are on the right strategic track, the change is good for them and good for the company.”

As CFO, Staggs has helped guide Disney through one of its most important periods of expansion and financial success while steering it effectively through two sudden global economic downturns in 2001 and 2008. Throughout, he’s been praised by Wall Street for his financial and communication skills and has consistently been voted the country’s top entertainment industry CFO by analysts polled by Institutional Investor magazine.

Working closely with Iger, Staggs has played a critical role in a wide variety of Disney’s strategic and operating initiatives, including the acquisitions of Capital Cities/ABC, Pixar and the pending acquisition of Marvel Entertainment. As CFO, he spearheaded Disney’s realignment of its performance goals toward a combination of profit growth and strong long term capital returns and free cash flow. He has also led company efforts to drive greater cost and capital efficiency throughout the organization and to put in place well-received company-wide environmental and healthy food policies.

“For over a decade, I’ve had a unique opportunity to build our business by collaborating with a group of great executives running a wide range of media and travel businesses,” said Staggs. “Taking the operational reins of one of our biggest and most complex businesses during the period of rapid global expansion launched by Jay is tremendously exciting and a challenge I’m really looking forward to.”

Under Rasulo’s leadership, Parks and Resorts has built on its traditional strengths as the world’s preeminent theme park operator to create a range of businesses that have made Disney a global leader in the family vacation industry.

As part of this growth strategy, Rasulo has overseen a major expansion of Disney’s California Adventure at Disneyland Resort, which culminates with the opening of Cars Land in 2012, and of Hong Kong Disneyland, where work is underway on the creation of three original new lands. He has also led negotiations with the Chinese government to begin development of a new theme park in Shanghai.

In addition to park expansion, Rasulo has been the principal architect of the growth of the award-winning Disney Cruise Line, which is currently adding two new ships, Disney Vacation Club and Adventures by Disney. Prior to becoming head of Disney Parks and Resorts in 2002, Rasulo greatly improved the operating performance of Disneyland Paris, now the number one tourist destination in Europe.

By emphasizing innovative marketing, strategic investment and financial discipline, Rasulo has also deftly managed the Parks and Resorts businesses through difficult periods, first as the unit’s President after tourism plummeted globally in the wake of 9/11 and later as Chairman during the 2008-09 economic downturn. Throughout, he’s been an important advocate for the tourism industry, serving as Chairman of the Travel Industry Association of America in 2006 and 2007. Rasulo was inducted into the Travel Industry Hall of Leaders in 2008.

“It’s been a tremendous honor to lead the almost 100,000 Cast Members, Crew Members and Imagineers during a period of unprecedented investment at Disney Parks and Resorts ,” said Rasulo. “I look forward to building on Tom’s success as CFO by working with Bob to advance Disney’s growth strategy, while continuing to strengthen our balance sheet and create shareholder value.”

Both Rasulo and Staggs are longtime Disney executives and both serve on the board of Euro Disney S.C.A., the French parent company of Disneyland Paris.

Rasulo joined Disney in 1986 as Director, Strategic Planning and Development, advancing to more senior positions there, and later became Senior Vice President, Corporate Alliances. He then led Disney Regional Entertainment before moving to Paris as President, Euro Disney before eventually becoming its Chairman and CEO in 2000. A native New Yorker, Rasulo has a degree in economics from Columbia University and both an MA in economics and an MBA from the University of Chicago. Before joining Disney, he held positions with Chase Manhattan Bank and the Marriott Corp.

Staggs joined Disney in 1990 as Manager of Strategic Planning and soon advanced through a series of positions of increased responsibility, becoming Senior Vice President of Strategic Planning and Development in 1995 before becoming CFO and Executive Vice President in 1998. Born in Illinois, Staggs received a BS in business from University of Minnesota and an MBA from Stanford University. He worked in investment banking at Morgan Stanley & Co. before joining Disney.

Previously, on As the Eisner Turns…

Ambitious young Michael Eisner and his boon companion Frank Wells took over control of Walt Disney Productions, which was struggling to make its way in the modern film industry. Disney began to cash in on underexploited assets, and the eyes of management shifted from theme parks to film and television production.

As Eisner ramped up production, the money started to roll in. Yet many of the company’s promising new initiatives, aside from the marked price increases that Eisner levied on the parks, stemmed from programs that had started under the previous management – Touchstone Pictures, The Disney Channel, and plans for Euro Disneyland. Still, Eisner was capitalizing on unused assets, and getting Disney back into the network and syndicated TV markets. But would it come at the expense of the theme parks?

Then, in our last episode, Eisner was fully in charge. Having seized sole authorship of the annual letter from Wells, he was free to spin us yarns of his children’s antics and oh-so-relateable escapades. Profits were taking off, and a series of low-budget adult comedies were about to get Disney back in box office clover.

I suggest that you take a moment and read the comments by our esteemed Another Voice under the previous article. They’re a very instructive encapsulation of the dynamic at Disney at the time, and one can see how the Eisner-Wells-Katzenberg trifecta held things somewhat in check. Eisner’s aspirations of moguldum were reined in by Wells’s assumption of the Roy O. Disney role, and Katzenberg assisted by producing a series of modestly-budgeted minor successes that would soon and often be referred to with baseball metaphors (better to have several solid singles and doubles rather than swing for a home run and strike out!). Eisner was kept from literally selling EPCOT Center to underwrite a series of cinematic escapades, and Disney was in turn rewarded by success and growth in the theatrical division.

Eisner’s aspirations weren’t all entirely misplaced; they allowed him to be convinced of the need to resuscitate Disney feature animation and they eventually enabled the grand plans for projects like Euro Disney. It was a dynamic that worked fairly effectively until 1993-94.

But now we’re back in 1987, so let’s see what was brewing at the House of Mouse.

TO OUR OWNERS AND FELLOW DISNEY EMPLOYEES:

This year I am having trouble writing my letter for our annual report, and Frank Wells (our president and my partner) told me this morning if I do not complete it on my present airplane flight back to Los Angeles, our printers will be forced into overtime. One sets policy by example, so if Jeffrey Katzenberg, our chairman of The Walt Disney Studios, can
be on budget and schedule with Disney and Touchstone films and television shows, I can get one letter completed on time.

I would like to say that the only reason for delay in writing this letter is my difficulty in communicating how well we have done without sounding too cocky, too confident and certainly too proud. How does one present an 80 percent increase in net income and pretend such improvement is nothing special?

But honestly, my delay has been caused by the numerous ice hockey games in which my 14-year-old son has played over the last two weeks in Southern California (four in one weekend, each 50 miles from the previous one) plus college interview time in four cities for my 17-year-old high school senior.

I now have no excuses. I am over the middle of our country looking down
upon cornfields and thinking about the idea of Dick Nunis (our president of Walt Disney Attractions) and Jack Lindquist (our executive vice president of Creative Marketing Concepts) about renting a large field and cutting the crop to create the face of Mickey so that every person who flies over will be reminded about Mickey’s 60th birthday. Have we gone too far? Jack, I don’t think so.

The next few paragraphs, which outline Disney’s accomplishments, are directed to Frank Wells’ mother, Betty, and my mother, who must have wondered in 1955 how their sons would ever earn a living. Of course, Frank was at Oxford University as a Rhodes scholar, with reasonable prospects, while I was a 13-year-old sports fanatic. The answer, of course, is to get lucky and find a team of people . . . each much better than you . . . and pray. Then you’ll earn a good living.

We really have done well this past year, with dynamic growth and progress in every area of our business: parks and resorts, film and TV, and consumer products.

Our figures are remarkable. The filmed entertainment segment achieved a 153 percent increase in operating income during the year. Consumer products had a 34 percent increase. Operating income from our theme park and resort operations at Walt Disney World and Disneyland was up 36 percent in 1987, contributing to a 34 percent compounded annual growth rate in operating income over the last five years.

We had record revenues of approximately $2.9 billion for the year, an increase over 1986 of 33 percent, and record net income of $444.7 million, an increase of some 80 percent (which I now have pointed out for the second time), all of which added up to earnings of $3.23 per share compared to $1.82 per share a year ago.

More significantly, we also showed a return on equity of 27 percent,
compared to eight percent in 1984.

While we are sure Betty Wells and my mother are proud of these numbers and the countless individual achievements they represent, I hasten to add that Frank Wells, Gary Wilson and our entire management team are aware that the task we originally set for ourselves some three years ago has only just begun.

A number of people (I was on the top of the list) troubled by the so-called stock market “meltdown” in October have asked what impact, if any, recession would have on our plans or future performance. My answer in every case is that the fundamentals of our company are stronger than they have ever been and our past experience and current surveys encourage me to be optimistic about the future.

I am supported in my confidence by the views of several prominent industry analysts (professionals whom I admire enormously when they agree with me) that Disney is “recession resistant” if not “recession proof.” One who summarized it best said, “Disney represents a haven of quality.”

We plan to continue on our charted course, which calls for the aggressive and pragmatic pursuit of growth in stockholder values. I suppose I should outline the records we broke in 1987, although the essence of our company is the feeling we get walking through Epcot Center and seeing families having the time of their lives . . . or laughing and crying during an episode of “The Golden Girls” . . . or sitting at Thanksgiving and watching 10 kids enjoying a Mickey and Donald cartoon on The Disney Channel . . . or feeling and sensing enormous pleasure and amusement with an audience at our smash hit movie “Three Men and a Baby.”

But records do say something: Our theme parks topped the 50 million mark for the first time ever; our movies were third in total box office gross, moving swiftly toward second (if “Three Men” continues to do well), all the way up from 12th among the major studios in 1984; in home video we moved to second in the industry (up from sixth in 1985); at The Disney Channel, we continued to be the fastest-growing pay-TV service.

Meanwhile, in consumer products, we extended our worldwide lead, increasing the number of licensees to more than 3,000 covering 14,000-plus products in more than 50 countries.

In addition to these broad gains, 1987 will be recorded as the year we repositioned ourselves strategically to best grasp the opportunities of tomorrow.

Our long-range strategic plan consists of two elements: continued dramatic growth and success of our existing businesses (naturally) plus selective expansion into new related business areas.

With that as a backdrop, I believe 1987 will be remembered long into the future as the year in which we:

Signed our agreement with the French government to proceed with the development of Euro Disneyland (for those of you who plan to be stockholders into the 90’s, and I assume that’s everybody, our French project is very important, and for those of you who are studying French like I am, our park will be a great place to visit);

Sold Arvida Corporation, a community development operation (a good company but a business we should leave to others); we are in the entertainment, recreation and leisure-time business;

Agreed to purchase KHJ, Los Angeles, a major independent television station, our first venture into the realm of TV broadcasting outside The Disney Channel (a business we should be in and not leave to others) and one that we hope will be approved by the FCC;

Jointly agreed (with Industrial Equities, Ltd.) to acquire the Wrather Corporation, owner of the Disneyland Hotel (buying what most people thought we already owned) and contiguous Anaheim acreage;

Signed a 10-year strategic alliance with Sears, Roebuck and Company’s Merchandise Group covering development of new Sears/Disney products, Sears promotion of Disney animated films and Sears sponsorship of major attractions at the Disney-MGM Studio Tour opening in 1989;

Developed a year-round program of tie-ins with McDonald’s, which has agreed to be our partner in jointly beneficial promotional programs involving all parts of our business;

Opened our first three Disney retail stores outside theme park environments in preparation for a nationwide rollout (to use show business terms, “a boffo opening with good legs”).

My experience in the entertainment industry is analogous to the sports world, where interest in last season is minimal. Anybody can win once, but the true champion wins over and over again. As a result, my Disney philosophy is simple:

We would rather be the Boston Celtics than the New York Giants. For the record, I was born in, lived in and worked in New York City. I was and still am a Giants fan. Since I now live in Los Angeles, I’ve become a Laker loyalist. So please, no letters!

Some of the seeds of growth sown over the past few years will come to fruition in 1988 and should help keep us a contender (to continue my sports reference) for growth. I’m thinking particularly about the opening of four major new facilities and attractions at Walt Disney World: The Grand Floridian Beach Resort (900 rooms and fantastic), the Caribbean Beach Resort (750 rooms in the first phase and our first moderate-priced facility), Pleasure Island (a most exciting nighttime Disney-style entertainment complex) and the Norway Pavilion at Epcot Center (the best and only backward-moving themed Disney ride – trust me).

All of these will add to the overall attractiveness of what is already the world’s number one destination resort and will contribute substantial new revenue.

In addition, 1988 will witness at least six new Disney retail stores and many movies and television shows. I will not talk specifically about our movies for 1988 because talking or bragging about movies brings bad luck . . . but remember the name Roger Rabbit.

And on into 1989, we will have other new wonderful Disney projects that we hope will continue to place us in the Super Bowl – the Disney-MGM Studio Tour, Typhoon Lagoon, retail stores, movies, TV and some surprises we have not thought of yet.

Your company was the recipient of a number of honors and overly kind evaluations during the year, which I will list in case you missed the original press releases.

As part of a continuing survey among its readers, the marketing research department of The Wall Street Journal issued a “corporate report card” in June that ranked leisure and entertainment companies in four categories: familiarity, quality of management, reputation and investment merit. By every measure, Disney surpassed all competitors,
whose names will go unlisted because of prior, present and future friendships with our competitors.

In October, Business Week searched what it calls its top 1,000 American companies to determine which are America’s most competitive in terms of use of labor, use of capital and “the bottom line.” Disney ranked third overall in use of labor and fifth overall in the bottom line category.

No other entertainment company made the list of 42, which the magazine dubbed “America’s Leanest and Meanest.”

I consider this ranking a major tribute to all the Disney cast members, the dedicated and talented employee force that constitutes our company’s greatest strength, but I would emphasize that Disney may be “lean” . . . but never “mean.”

In December, we were named one of the five best-managed companies in the United States by Business Month magazine.

These honors are not directed at one individual. If Disney is one of the best-managed companies in America, it is because the entire management team and cast have blended their dreams, talents and dedication to the advancement of the enterprise we call Disney.

This past year has been a good one for The Walt Disney Company, and we are working to make next year even better. The foundation is set, the Disney name and consumer franchise are strong, the strategies are in place and we are ready to move forward to even better tomorrows.

But I do want to point out that managing a successful company, like managing a happy family, is difficult. It is easier to have children than to bring them up. It is easier to change diapers than to change schools.

We are, as corporations go, very young . . . in our adolescence, if you will . . . with much ahead of us.

I speak on behalf of Frank Wells, Roy Disney, Gary Wilson and all our cast members when I say I sincerely appreciate your past support.

December 8, 1987

Michael D. Eisner
Chairman and Chief Executive Officer

There you go – 1987. First of all, we need to stop and bow our heads in tribute to the very first mention of the young Eisner’s hockey games. And the other young Eisner is going to college! And Michael Eisner and Frank Wells both have mothers! Who are proud of them! Oh, I mock because I love. Seriously, though – hockey.

I was amused that they divested Arvida because they wanted to stay just in the entertainment business, but in almost the same breath he mentions the Disney Stores. Soon they’d be buying sports teams and heaven knows what else. They finally managed to get a hold of Wrather, though, after decades of trying to obtain the Disneyland Hotel.

It’s hard to argue with those profit increases, though; it’s also fascinating to watch Disney ride from the absolute Hollywood cellar to become one of the top grossing studios. I always thought that Eisner’s biggest problem was that he expected this kind of exponential growth to continue, well, exponentially. Disney went from making a few pictures each year that no one saw, to making several pictures that did pretty well – and some that did very well. Statistically, it looked like a miracle. But it was insane to expect that kind of growth to continue.

Sadly, Wall Street never met a reality it liked, so in later years those massive annual gains were still expected. At that point, the cuts began. But that’s several years off, and now we have Roger Rabbit and the Disney-MGM Studios Theme Park Tour to look forward to!

Disney put out a press release this evening, which has already led to an article in the New York Times, trumpeting the fact that a deal has been approved for Shanghai Disneyland.

But wait a minute.

No doubt pushed to show their hand by my shocking exposee from two days ago, Disney has done nothing but confirm things we already know. Of course, putting out such a visible and definite statement serves to emphasize the feeling that all but very minor details remain in the final negotiations between Disney and the Shanghai Government. If things still looked iffy after the approval came from the central Chinese government, one doubts that Disney would step out on that limb. For Disney to comment on anything anymore is notable. This could be coming to a head very, very soon.

The only real news from the release is that they speak of the new park as a Magic Kingdom type park. While they might just be speaking in generalities, it could mean that the rumors of a less traditional park layout might come to naught.

This could be an interesting week.

For nearly two decades, beginning with Frank Wells wining and dining Chinese officials in 1990, the Disney corporation has danced around the possibility of building a theme park in Shanghai. China’s largest city was long a target destination for former Disney CEO Michael Eisner, but despite frequent negotiations during the 1990s the park was never built. Some sources claim that Disney themselves delayed the plans, unsure that the city was ready to support such a project. On the other hand, in the wake of the Tiananmen Square massacre the Chinese government was keen to stem the tide of western cultural influences in their territories.

Map of the future Shanghai Disneyland site, zooming from a global view (top) to the site itself (bottom). Click to enlarge.

By the turn of the century, Disney’s attention was diverted to the planning and construction of Hong Kong Disneyland and Shanghai was put on the back burner. Work continued on the project; Disney signed a deal to build a park on the Chinese mainland in 2002, and, rejecting bids for the park by Beijing and Tianjin, contracted with Shanghai’s Lujiazui Group to develop a site there. But when the park in Hong Kong opened to poor reviews and seriously underperformed financially, Disney was forced to enter into years of intractable negotiations about the hundreds of millions of dollars needed to enhance that resort and progress stalled again on the Shanghai project. These delays were compounded further by a 2006 corruption scandal within the Shanghai government, which implicated local Communist Party chief Chen Liangyu. Still, Shanghai remained one of Disney’s key initiatives; the now-famous rendering from the 2006 Disney annual report shows a “new Disney theme park” that many believe to be a concept for the Shanghai park.

Possible rendering of Shanghai Disneyland concept, 2006

The rendering, shown above, depicts a new type of layout for a Disney park. Surrounding a central lake, it more resembles Universal’s Island of Adventure. Various lands that can been seen in the illustration; one resembles Tokyo DisneySea’s Mermaid Lagoon, there’s a futuristic area visually reminiscent of the original DisneySea’s Future Research Center, a fairytale castle sits atop a hill with a rollercoaster in the distance behind, there’s a South American temple straight out of Indiana Jones, and a European village surrounding the castle. Despite the prominent placement of this image in a widely-distributed publication, little else was seen or heard stateside about the Shanghai efforts.

In the Asian press, though, gossip about the park continued over the years. In March of 2006, Shanghai’s mayor had announced “preliminary preparations” for the park. Two years later, in March 2008, Mayor Han Zheng announced that the city had officially applied to the Chinese central government to build the park. Negotiations ground on.

This year, though, the wheels of progress began to slowly turn once more. A series of approvals, leaked in the state-run and local media, traced the slow but steady development of the resort plan. Since January when Mayor Han Zheng announced that the city had signed a nonbinding agreement and project report with Disney, and Disney themselves confessed to the plans, all parties have been waiting for word from Beijing. In June, it’s believed that the project was approved by the National Development and Reform Commission, the Chinese government’s economic planning agency. Earlier this week, the state-run Securities Times reported that the central government in Beijing had given its final approval to the plan earlier this month, and that it was now up to Shanghai officials and Disney to finalize the details of the deal.

According to Reuters, they may finally have a deal. Sources are speculating to the wire service that a deal may be announced during U.S. President Barack Obama’s visit to China from November 15th-18th. A front-page editorial this week in the state-run Shanghai Securities News called for such an announcement, giving a great deal of credence to the notion. News stories anticipating an “upcoming” announcement have popped up frequently over the years, but the recent string of significant advances suggest that the rumors might finally be true. Stocks in construction companies and other related local industries spiked on the announcement, at least the second time this year that has happened. Leaked quotes over recent weeks insist that all that remains to be negotiated are small details, and those are insignificant in the grand scheme of the deal.

Another piece of the puzzle has come this weekend, when the ever talkative Mayor Han Zhang announced he’d hold a press conference this week to discuss the project. According to the Mayor, since he apparently gets asked about the Disney project at every press conference, it’s now time to discuss the issue and there are so many aspects of the subject to discuss that it requires its own press event. Other reports echo that a deal is near, with many of the few remaining points of discussion surrounding various trade and media deals that accompany the park agreement. Disney is using the Shanghai park as its major entry into the Chinese entertainment market, and so the eventual deal will have a far greater scope than the park itself. It also hinges, in part, on the continuing progress of Sino-U.S. trade negotiations.

Rumors about the resort itself have flourished over the years; most recent reports peg it as a $3.6 billion development, of which Disney will own a 43% stake and a local government-owned holding company would own 57%. While the Shanghai government originally suggested that Disney build on the underdeveloped Chongming Island, Disney rejected that site and opted to build on the mainland. The park will now occupy an 8-10 acre site in the town of Chuansha, on the southern edge of Shanghai’s Pudong district. It is currently slated to open in 2013. While the delay in an actual deal might have proved frustrating to fans, it has also allowed the Chinese government to make the necessary infrastructure upgrades to the fairly rural area. Shanghai Disneyland, when built, will benefit immediately from high-speed rail links and direct connections to major highways.

Rumored “leaked” site plan for Shanghai Disneyland development. First phase of development is outlined in red; the theme park area is circled in pink. Note how the C-shaped lake resembles the park’s rendering from 2006. Also note the MagLev depot to the north of the park. Personally, I think the Piggery will be a definite E-ticket. Click to enlarge.

What the park’s attraction lineup will resemble has been a source of great speculation recently. While a leaked site plan, allegedly by the ARUP development corporation, contains a water feature that greatly resembles the 2006 park rendering, it’s unknown if the eventual park will match any of these designs. After all, Hong Kong Disneyland itself differed greatly from even its early official press releases, and the pirate land concept for Hong Kong that was also featured prominently in the 2006 annual report was eventually abandoned.

Much of the discussion online has been about how Disney’s new franchise mania will affect the park’s aesthetic. Many expect pirates, princesses, pixies, and Pixar to rule the day, and if fans think the current park attractions are character-heavy then they haven’t seen anything yet. The latest gossip, featured on Screamscape and elsewhere, brings up the possibility that the Shanghai site will be Disney’s first park to include characters from Marvel Comics. Others expect the park to receive Hong Kong’s rejected pirate land, although that is sheer speculation.

Nevertheless, this will be the first Disney park to fully reflect CEO Bob Iger’s oft-stated push for “franchises” and “properties.” The sole purpose of this park, from management’s perspective, often seems to be to fully inject Disney’s intellectual property into the subconscious of billions of young Chinese. Regardless of Imagineers’ sincere efforts to build a quality theme park, some fans are concerned that the real purpose of Shanghai Disneyland is not to create a great park but to capitalize on all those viewers of the new Disney cable and satellite channels and of millions of hopefully non-pirated DVDs. The final product’s makeup can be deduced by the occasional comments by management over difficulties in Hong Kong; they often speak of how Chinese children are unfamiliar with western fairytales and are thus unaffected by the traditional Fantasyland attractions. Unless they’re planning on basing Shanghai Disneyland on traditional Chinese stories, which I doubt, or letting quality attractions stand on their own merits, which I also doubt, one fears that the order of the day will be Pixar, Pixar, Pixar.

But again, this is all speculation. It appears that Disney is trying to build a new kind of Disney kingdom, which is good considering that there are already two traditional Disneyland-type parks within the region. There’s certainly room for innovation, and hopefully in the shadow of Hong Kong Disneyland’s difficulties the Imagineers will be given wider leeway to really build something that impresses. We still have no idea when we’ll ever actually find out something substantive about the project, but all signs indicate that it will be sooner rather than later.

UPDATE: It looks like land expropriation for the resort has begun. Apparently, for several years the Shanghai government has been filing preparatory expropriation plans for something called “Buenaland Shanghai”. Very clever, guys. Apparently the Shanghai press, who didn’t pick up on this at all, needs to hire some Disney nerds.