Universal Orlando Resort Expansion (Part 1)

[Mr. EPCOT]

Easy for somebody to be a smart ass from behind a computer screen.

I find it pretty easy to be a smart ass just in general.

 

[IAmFloridaBorn]

At least we know Volcano Bay was practice for their next water project.

 

[JungleSkip]

At least we know Volcano Bay was practice for their next water project.

Pretty dang good practice, if you ask me

 

[IAmFloridaBorn]

Pretty dang good practice, if you ask me

Only water park in Central Florida I havent been to yet.

 

[Magic-Man]

I'm just waiting for Universal to throw a wrench in all this and announce that Dreamworks will replace Toon Lagoon, Zelda will replace Lost Continent, and Nintendo will still go into Kidzone.

 

[zg44]

The only problem is the whole 4th dry park could either be 100% or almost 0% depending on their plans for the layout of the new property. I wouldn't rule out a layout similar to the North Complex with 2 medium sized dry parks and a wet park rather than just one large park. With two parks, you get to charge more cause everyone needs hoppers. Thats a ~ 50% increase in ticket sales over putting everything in one park.

It's tough because the question of demand is important.

Based on economic projections for Orlando's tourism industry, I do think Universal can eventually support 4 dry parks if everything goes to plan.

We're probably at least 15 years away from that point, but generally if they do make space for a 3rd phase as I described there (220 acres for a 4th dry park and 3-5 new hotels), then it will probably get the greenlight as long as USF/IoA/3rd park have healthy attendance:


If you were to tell me this is what UOR's 5 year average annual attendance looks like over 2026-2030:
USF = 13.5 million (each of those 5 years around 13-14 million)
IoA = 12.5 million (each of those 5 years around 12-13 million)
3rd dry park = 10 million (would be increasing off its starting base so probably a sequence such as 2026: 9 million, 2027: 9.5 million, 2028: 10 million, 2029: 10.5 million, 2030: 11 million)


Then yeah, I'd feel confident saying that we'll see a 4th dry park built as long as the land is ready. It really depends though on how USF/IoA hold up and how the tourism market grows.

I'd feel pretty confident in projecting that there'd be demand for a 4th park if the above attendance levels are in place.

 

[fryoj]

It's tough because the question of demand is important.

Based on economic projections for Orlando's tourism industry, I do think Universal can eventually support 4 dry parks if everything goes to plan.

We're probably at least 15 years away from that point, but generally if they do make space for a 3rd phase as I described there (220 acres for a 4th dry park and 3-5 new hotels), then it will probably get the greenlight as long as USF/IoA/3rd park have healthy attendance:


If you were to tell me this is what UOR's 5 year average annual attendance looks like over 2026-2030:
USF = 13.5 million (each of those 5 years around 13-14 million)
IoA = 12.5 million (each of those 5 years around 12-13 million)
3rd dry park = 10 million (would be increasing off its starting base so probably a sequence such as 2026: 9 million, 2027: 9.5 million, 2028: 10 million, 2029: 10.5 million, 2030: 11 million)


Then yeah, I'd feel confident saying that we'll see a 4th dry park built as long as the land is ready. It really depends though on how USF/IoA hold up and how the tourism market grows.

I'd feel pretty confident in projecting that there'd be demand for a 4th park if the above attendance levels are in place.

I get what you are saying about demand, but I'm looking at it more from a perspective of one large park versus two small parks. If they are planning on building a 230 acre park with 30 rides, it almost makes more sense to build two 115 acre parks with 15 rides each. With that, you don't need to add 20 million people, just that same 10 million, as they will likely go to both parks. They can count them as 20 million then, as I'm certain they are doing that at the existing parks with same day park hopping.

That being said, I'd rather they just built one big park, but the business side of me thinks we will see two small parks.

 

[JungleSkip]

Only water park in Central Florida I havent been to yet.

I highly recommend it. Slides there are far and away the best in town IMO

 

[tielo]

As long as the airport keeps expanding 'm sure some of those visitors will want to visit the parks.

 

[zg44]

I get what you are saying about demand, but I'm looking at it more from a perspective of one large park versus two small parks. If they are planning on building a 230 acre park with 30 rides, it almost makes more sense to build two 115 acre parks with 15 rides each. With that, you don't need to add 20 million people, just that same 10 million, as they will likely go to both parks. They can count them as 20 million then, as I'm certain they are doing that at the existing parks with same day park hopping.

That being said, I'd rather they just built one big park, but the business side of me thinks we will see two small parks.

Yeah, I see what you're saying. For the record, I think the maximum size of the 3rd dry park is 150 acres. I can't imagine it being much larger than that given the success that Universal has had with its other parks all being somewhat smaller.

You can create a park that can max out around 15 million visitors with 100 acres, so going far beyond that doesn't make much economic sense unless you're trying to do something a bit more special that requires more acreage (especially when limited acreage is an issue).

Only Beijing is getting the supersize parks because land isn't an issue where they're building USB... and the Chinese government can make land available even when it's not normally purchaseable...

 

[quinnmac000]

I get what you are saying about demand, but I'm looking at it more from a perspective of one large park versus two small parks. If they are planning on building a 230 acre park with 30 rides, it almost makes more sense to build two 115 acre parks with 15 rides each. With that, you don't need to add 20 million people, just that same 10 million, as they will likely go to both parks. They can count them as 20 million then, as I'm certain they are doing that at the existing parks with same day park hopping.

That being said, I'd rather they just built one big park, but the business side of me thinks we will see two small parks.

If that was the case all Disney Parks would have the same level of attendance, but as TEA data has suggested that isn't the case at all. A big theme park gives way more room for details, back stage areas, and capacity, than smaller parks due.

Yeah, I see what you're saying. For the record, I think the maximum size of the 3rd dry park is 150 acres. I can't imagine it being much larger than that given the success that Universal has had with its other parks all being somewhat smaller.

You can create a park that can max out around 15 million visitors with 100 acres, so going far beyond that doesn't make much economic sense unless you're trying to do something a bit more special that requires more acreage (especially when limited acreage is an issue).

Only Beijing is getting the supersize parks because land isn't an issue where they're building USB... and the Chinese government can make land available even when it's not normally purchaseable...

I would argue it would be larger to fix issues that are currently hurting IOA and USF (the inability to shut down areas to keep capacity up as well as lack of expansion pads for things that later become big I.E JW). Add in the fact people are now complaining about lands only being 2-3 rides and wanting more bang for their buck, I think Universal would want to be able to advertise so many attractions in one park.

 

[Disneyhead]

I am notorious for throwing hand grenades out there.

But from Comcast's view, would you rather pay to have LotR in your resort? Or have WB pay you too have LotR at your bazillion $$$ resort?

 

[quinnmac000]

I am notorious for throwing hand grenades out there.

But from Comcast's view, would you rather pay to have LotR in your resort? Or have WB pay you too have LotR at your bazillion $$$ resort?

Would UC be designing the rides with an unlimited budget or would Warner Bros be dictating price and everything?

 

[Disneyhead]

Would UC be designing the rides with an unlimited budget or would Warner Bros be dictating price and everything?

Yes too everything but unlimited budget.

 

[zg44]

I could see some advantages to having the 4th gate be something like a Warner Bros. Movie Park.

1. A plethora of popular IP such as DC Comics, Looney Tunes, Scooby-Doo, Tom & Jerry, The Flintstones, LotR/Hobbit, Blade Runner, The Matrix, Mad Max, Mortal Kombat, Austin Powers, Gremlins etc.

2. It could be where the resort keeps it's BIG coasters.

3. More resources to move faster.

4. Recoup some investment costs through real estate lease, percentage of merchandise sales, etc.

I am notorious for throwing hand grenades out there.

But from Comcast's view, would you rather pay to have LotR in your resort? Or have WB pay you too have LotR at your bazillion $$$ resort?

The thing is that Universal would rather keep the vast majority of the profits and then just pay a licensing fee to outsiders. That's the most preferable structure because it keeps the highest value/percentage of profits with Universal (as well as control).

That being said, I can see a good argument for a "Movie World" approach to the 4th park. Maybe even bring Sony or CBS/Paramount on board with it to bring their franchises like Jumanji/GB or Star Trek along... Still, even if it's just a "Warner Bros Movie World", I think there are some basic parameters that will be kept in place:

Universal keeps 100% equity ownership and grants a licensing fee to the partners involved. If Warner's bringing DC (i.e. carves Orlando exception out of Six Flags DC agreement) and somewhere around at least a half the park's IPs, then maybe they get more of a percentage of profits instead of just licensing fees.

Why?

Because that's how the math works best for Universal. Universal would rather take on $1.5-2 billion in debt (or pay out of cash flow) to build a 100 acre park that generates $175 million in profit a year and then pay $50-60 million to Warner (and other studios) out of that profit, while still keeping $100 million+ for itself than any other possible arrangement.

That's the optimal financial arrangement for the "Movie World" concept.

 

[JungleSkip]

I am notorious for throwing hand grenades out there.

But from Comcast's view, would you rather pay to have LotR in your resort? Or have WB pay you too have LotR at your bazillion $$$ resort?

I have to figure the amount you'll pay for the rights in Orlando is probably less than what WB will take out of any park they pay to build, so if I was Uni I'd rather take more profit than some rent.

 

[Nick]

Something like this does not sound like something i'd expect a world class resort to do. Reminds me of that awful park in Dubai as far as ideas go.

 

[zg44]

Something like this does not sound like something i'd expect a world class resort to do. Reminds me of that awful park in Dubai as far as ideas go.

Well there's 2 reasons it could make sense.

1) Warner has the most important theme park franchises to Universal potentially (especially if LOTR and DC are involved)

2) Maybe a permanent or longer term arrangement can be worked out instead of just 15-20 year licensing arrangements, which become a bit problematic when you go to renegotiate them if they're extremely successful.

On that note good luck to the Universal guys that have to negotiate the next Harry Potter deal with Warner.

 

[shiekra38]

How much would WB be worth realistically? Could our mighty cable overlords just buy them out?

 

[zg44]

How much would WB be worth realistically? Could our mighty cable overlords just buy them out?

AT&T is trying to buy TW (parent of WB) at the moment. I think they'll win the antitrust case and takeover WB.

Too much of an anti-trust mess for Comcast to try to buy all of TW because of TW's Turner cable nets (CNN/TNT being combined with USA/Bravo/MSNBC/CNBC would never fly).

WB (just the studio) is worth around $25 billion probably.

If the AT&T-TW merger fails, maybe Sony and Comcast can work together to split up TW.

Sony would take over Turner for $45 billion while Comcast would pay $45 billion for WB and HBO and their 10% of Hulu.


Realistically these are all farfetched scenarios though.

On the plus side, if AT&T succeeds at taking over TW, they'll be a very debt heavy company that will be very happy to just take licensing fees for their franchise theme park rights.