By On the occasion of our 20th anniversary
By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
Photo by Keith MayWhat does Disney CEO Michael Eisner want, anyway?
Only to transform Disneyland—and all the land the Mouse owns around the 45-year-old theme park—into a miniature version of Orlando.
Is that too much to ask?
Eisner doesn't think so. He has already committed 10 years and $1.4 billion to his central Floridian dream. When construction is completed in February 2001, what was once Disneyland's parking lot will be a shopping and dining district, a 750-room luxury hotel and a brand-new theme park. This new park—Disney's California Adventure (DCA)—will supposedly celebrate the best that the Golden State has to offer.
Once these pieces are in place, Eisner believes, the revamped Disneyland Resort will become California's premier vacation destination. That prospect thrills Orange County's motel and hotel owners, who'd love to see millions more tourists pour into the area each year.
Unfortunately for Eisner, not everyone in the area is as upbeat about Disneyland's expansion. Many nearby residents have been vocal in their opposition to DCA, citing the additional traffic problems and noise the expanded resort is sure to create. Then there are the diehard Disney enthusiasts who—instead of embracing the idea of a second Disney park in Anaheim—complain that Eisner is ruining Walt Disney's masterpiece by putting a park full of carnival rides right next door to Disneyland.
The Mouse pooh-poohs most of the project's critics, saying that once the doors are open at DCA, everyone will marvel at how the Walt Disney Co. has reinvented the Anaheim vacation experience. But it's harder for Eisner and company to dismiss criticism of Disneyland's expansion when it comes from within.
Several veteran Imagineers have reportedly warned Disney management that DCA, as it is currently designed, is a seriously flawed theme park. When it opens next year—with not nearly enough rides and attractions to handle the huge crowds that are sure to surge through the gates—DCA is almost certain to develop a bad reputation. Worse still, it may take years and hundreds of millions of dollars to finally set the place right.
Does this sound like the "Happiest Place on Earth" to you?
The Weepy Movie Mogul
Disney's California Adventure should have been a no-brainer for the Walt Disney Co.:
Step 1: Build new theme park right next door to Disneyland.
Step 2: Make sure new theme park is similar in capacity and quality to Disneyland.
Step 3: Throw open doors.
Step 4: Collect buckets of money.
Instead, the new park has become the subject of bad buzz. To understand why, a little Orange County history is in order. Only when you understand the mistake Walt Disney made back in 1955 can you appreciate the problems Michael Eisner is having in 2000.
Before Disneyland opened, Disney had pumped every cent he had into building the theme park. But Disney didn't have the dough necessary to build a hotel next door. He knew that having a nice hotel right next to the park would play a crucial part in the project's success.
In desperation, he turned to an old friend, television producer Jack Wrather. Producer of two of TV's earliest syndicated hits (Lassie and The Lone Ranger), Wrather was flush with cash, which he invested wisely in real estate around Southern California, giving him huge holdings in oil and natural gas.
Using the excuse that he wanted to pick Wrather's brain concerning his Disneyland project, Disney invited Wrather out to Anaheim for a tour of the construction site. It was only after Wrather got there that he realized Disney didn't want to pick his brain; Disney wanted to pick his pocket.
There, among the construction footings, Disney described his dream for Disneyland, how it was going to be a different kind of family fun park—and how he'd need a clean, new hotel nearby for visitors to stay in.
Wrather listened. Smiled. Nodded politely. Then he said, "No."
Disney persisted. Wrather resisted. To Wrather, Disney's idea made absolutely no sense. Disney didn't need a hotel. He needed his head examined.
But Disney wouldn't give up. He sweetened the deal, first offering Wrather a 99-year lease on the property and then throwing in the Disney name, saying Wrather could use it on any other hotels he built in Southern California. At this point, Disney was near tears. Embarrassed at the sight of the weepy movie mogul, Wrather finally agreed to help his friend.
The Threatening Mouse
Flash-forward to 1984. Eisner and his new management team had just taken up residence at Walt Disney Productions. One of Eisner's first goals was improving the company's bottom line, which meant quickly increasing the amount of cash the company's theme parks produce.
To do this in Florida, Eisner okayed construction of two huge Disney-owned hotels at the Walt Disney World resort: the 900-room Grand Floridian Resort and Spa and the 2,100-room Caribbean Beach Resort. But when Eisner planned to do the very same thing at Disneyland, he discovered that (a) the Disney Co. didn't own any hotels in Anaheim; (b) it didn't have sufficient land to build any new resorts, anyway; and (c) only the Wrather Co. had the rights to use the Disney name on hotels built in Southern California.
Eisner was dumbfounded. He turned to his new chief financial officer, Gary Wilson, and told him to handle it. Eisner wanted Wrather's 99-year lease broken, he wanted the name, and he wanted the Walt Disney Co. to be the sole owner and operator of the Disneyland Hotel.
Wilson immediately began gathering intelligence about the Wrather Corp. He learned that—after years of rejecting Disney's offers—Wrather had indicated that he would finally consider selling the Disneyland Hotel back to Walt Disney Productions. But before formal negotiations could begin, Wrather passed away in November 1984.
Wilson also learned that—since Wrather's death—the Wrather Corp. had fallen on hard times. To keep the company afloat, Wrather executives first sold off the company's oil and natural-gas holdings and then its prized television-syndication rights. Finally, the Wrather Corp. allowed a New Zealand-based firm—Industrial Equity—to acquire 28 percent of the company's stock.
Run by corporate raider Ronald Brierley, Industrial Equity quickly made its intentions known. In papers it filed with the Securities and Exchange Commission, the company announced that it intended to buy at least half of Wrather Corp.
Sensing his chance to control the Disneyland Hotel slipping away, Wilson and his team moved quickly. They asked for a meeting with Wrather Corp. management. In that meeting, Wilson voiced Disney's disapproval that ownership of the Disneyland Hotel could potentially pass to a corporate shark like Brierley.
While Disney officially could do nothing to derail Wrather's deal with Industrial Equity, Wilson did point out that the hotel's monorail maintenance contract would soon be coming up for renegotiation. Those who know Disneyland know that the monorail is a ride with unusual utility: it actually functions as a transportation link between the park and the Disneyland Hotel—the only hotel with such immediate access to the park. Wilson told Wrather management that the Mouse was considering a slight hike in the monorail maintenance fee—to, say, $10,000 per day?
The threat was none too subtle but very effective. If Wrather Corp. tried to sell off its Disneyland Hotel holdings to anyone other than the Mouse, Disney would make operating the monorail so prohibitively expensive for the new owners that there was no way they could ever profit off the hotel. Wrather had no choice but to enter into negotiations to sell the hotel to the Walt Disney Co. It took several years and $161 million, but in January 1989—34 years after Disney made his desperate deal with Wrather—the Mouse regained control of the property.
The best part of the deal with the Wrather Corp. is that the Walt Disney Co. got back use of the Disney name. Now it was free to build a whole series of Disney hotels in Southern California, if it so chose.
Only Eisner didn't so choose. Not yet. He realized that Disneyland—as it was then configured—was strictly a one-day affair. Guests would typically drive out to Anaheim to see the park and then drive back home that same day. Consequently, there was no point in doing a Walt Disney World-style ramp-up of the number of Disney-owned hotel rooms in Anaheim.
Unless . . .
Unless there was a reason for people to stay additional days in Anaheim. Like, say, a second Disney theme park built right next door to Disneyland.
Excited by this idea, Eisner called in his Imagineers. He quickly outlined his idea for a second theme park in Anaheim and sent them back to Walt Disney Imagineering (WDI), telling them to come up with something that would amaze and astound him.
What the Imagineers initially came up with was genuinely amazing. They proposed spending $3.1 billion to turn Disneyland and the tired collection of independently owned motels and fast-food joints that surround it into a lushly gardened, brightly lit urban entertainment center. On top of the old Disneyland parking lot, WDI envisioned a West Coast version of Walt Disney World's Epcot Center, not-so-cleverly re-named Westcot Center. Nearby, an upscale retail, dining and entertainment area—Disneyland Center—would sit alongside a six-acre lake. There would also be three new hotels, adding 4,600 rooms to the resort. All this—plus a 5,000-seat outdoor amphitheater and two 10,000-car parking garages.
It was an ambitious plan. Perhaps too ambitious. But—thinking of the huge amount of money Epcot's shops and restaurants produce annually—Eisner immediately approved WDI's Westcot proposal. Anaheim and Orange County officials also heartily endorsed the Mouse's plan.
Local residents weren't so quickly won over, though. Some worried about the extra noise and traffic that an expanded Disneyland resort would create. Others voiced concerns about Westcot's icon, Spacestation Earth, a 300-foot-tall golden ball that would loom large over their neighborhoods.
Disney initially paid little heed to locals' concerns about the project—which, in the end, was probably a huge mistake.
Longtime Orange County residents Curtis Sticker and Bill Fitzgerald became so incensed by what they felt was Disney's cavalier attitude toward neighborhood concerns about Westcot that they decided to do something about it. In the spring of 1992, they formed the Anaheim Homeowners for Maintaining the Environment (Anaheim HOME). Sixteen hundred members strong, the neighborhood-rights group quickly became a force for Disney to reckon with.
Anaheim HOME did things that terrified the Mouse, forever changing the way Disney did business in Orange County. Take, for instance, the tickets scandal. For 38 years, free Disneyland tickets were among the nicest perks Anaheim city employees got while working in the mayor's office. You just told the mayor's secretary when you wanted to go, and she called Disneyland's City Hall. Your passes would be waiting at Guest Relations when you arrived at the park.
Since the people who worked in the mayor's office were obviously going to have some influence over the Anaheim planning commission (the folks who'd actually say "yea" or "nay" to Disneyland's expansion plans), couldn't giving free tickets to the mayor's staff be viewed as influence peddling by the Mouse?
Anaheim HOME got wind of this decades-old practice and tipped off the local media. In the firestorm that followed, hundreds of Orange County employees had their reputations sullied for allegedly taking illegal gifts from the Walt Disney Co. As a result of the controversy, Mayor Tom Daly was forced to hand down an official edict: no city employee would be allowed to accept free tickets—or free anything—from Disneyland ever again. It was the end of an era for the Mouse.
That was not, however, the end of Anaheim HOME's guerrilla tactics. Guests driving into the Disneyland parking lot during Christmas week 1993 had to roll through a picket line. As guests slowed, they were offered an Anaheim HOME leaflet detailing the less savory aspects of Disney's expansion plans. Staffers close to Eisner say he didn't have a very happy holiday when he heard about it.
By then, Eisner was used to bad news. Big problems were popping up around the Disney empire. Euro Disney —which many Disney executives had thought would be a surefire moneymaker —floundered almost immediately after its April 1992 opening. It took Walt Disney Attractions president Judson Green and a cadre of accountants until October 1994 to piece together an intricate financial-restructuring plan for that resort.
In the 18 months it took to set up the Euro Disney bailout, Eisner lost his enthusiasm for ambitious Disney theme-park projects. He saw how Euro Disney had been dragged down by the six luxury hotels that surrounded the theme park and vowed never again to overbuild another Disney resort.
So word came down in spring 1993 that Eisner wanted Disneyland's expansion plans scaled back. How much? Original specs called for 4,600 new hotel rooms. Westcot 2.0 would feature only 1,000. Spacestation Earth? Gone. In its place was a new icon: a 300-foot-tall, tapered white spike.
Even with these changes, the Disneyland Resort plan still met with strong local opposition. Tiring of the struggle, Eisner turned to Paul Pressler. A bright young executive who had worked wonders with the company's retail division, Pressler had recently moved over from the Disney Stores to head the Disneyland Resort project.
Eisner told Pressler that he was weary of the mess and bad press associated with Westcot. "Make it go away," Eisner allegedly said. So Pressler did.
On the day before Disneyland's 40th birthday, Pressler called a press conference to announce that the Walt Disney Co. was abandoning its plans to build Westcot as well as scaling back its Disneyland expansion project.
In the fall of 1995, Eisner and a team of Disney executives met at his home in Aspen to discuss the future of the Disneyland Resort. Chief among those in attendance were Pressler, senior WDI officials Marty Sklar and Ken Wong, and Imagineering rising star Barry Braverman.
Braverman had recently come to Eisner's attention because of his exemplary work in putting together the "Innoventions" project at Epcot Center in Walt Disney World. Armed only with a telephone, Braverman had persuaded many major American corporations to pay the Mouse to build and staff exhibits of their new products. He re-themed and redressed Future World's entire Communicore area for virtually no money.
Sure, Epcot's "Innoventions" looked more like a mall than a theme-park attraction. What did that matter? Guests seemed to like the place. More important, it had been inexpensive to build and even cheaper to run. In Eisner's eyes, that made Braverman a genius.
From the start of the Aspen meeting, the group agreed on the main problem with Westcot: in trying to create a theme park that equaled Disneyland, the Imagineers had simply gone too far. The original expansion plan had tried to be too many things to too many people. In the end, the Disneyland Resort project had collapsed under the weight of its own grand ambition.
This time around, the Mouse wouldn't try to top America's original theme park. Eisner wanted this new park to be a modest companion to Disneyland, rather than a flashy competitor. He also wanted Anaheim's so-called "second gate" to be something the company could build quickly and affordably. Most important, this second theme park had to generate a huge cash flow for the Walt Disney Co. from the day it opened.
Kill the Robots
During that weekend in the Rockies, Eisner and his Imagineers explored many possible themes for Disneyland's second gate. But it quickly became obvious that none of the concepts Disney had used for its other theme parks would work in Anaheim. So the team attacked the problem from another angle: What was missing from Disneyland? Why did guests leave the resort and continue their Southern California vacations elsewhere?
The answer seemed obvious: people left Disneyland because they wanted to see more of California. They wanted to walk the boardwalk at Venice Beach, hike through the redwoods in Sequoia National Forest, ride the roller coasters at Six Flags Magic Mountain, and take the tram tour at Universal Studios Hollywood. In short, these vacationers wanted to sample the rest of California.
For a moment, Eisner and his design team just sat there blinking at one another. The answer to their problem couldn't be that simple, could it?
A theme park that celebrated California. A place that re-created—in miniature—the very best of what the Golden State has to offer. Guests would no longer have to leave Anaheim to continue their California adventure. Everything they were looking for—and more—could be found right next door to Disneyland.
That's all Eisner had to hear. "That's it," he said. "Let's build it." Since Pressler and Braverman were the first to suggest a California-based theme park, Eisner put them in charge of developing the project. This, as events unfolded, appears to have been a mistake.
Braverman was determined to keep his star rising at the Walt Disney Co. Eisner wanted an economy-class theme park? Fine. Braverman would budget Disneyland's proposed second gate so tightly that the blueprints would squeak.
And Pressler, too, was an ambitious man. He was already plotting his next move up the Disney corporate ladder, hoping to parlay his position as Disneyland's president into something farther up the food chain. To do that, he'd really have to deliver the goods on Disneyland's second gate. So, insiders say, Pressler took Braverman's initial budget estimates . . . and slashed them by a third.
Pressler and Braverman's plan was to deliver their scaled-down version of the expansion project for just $1.4 billion—less than half the original Westcot proposal. While Eisner applauded their economies (and local critics approved of the new modest scale of the resort), many hardcore Disney fans expressed outrage with the constant cost cutting.
What particularly troubled Disney fans was the use in DCA of what Eisner liked to call "technology acquired from an outside vendor." What this meant was that the Mouse was purchasing off-the-shelf theme-park rides, lightly re-theming them, and trying to pass them off as Disney-quality attractions. DCA's Paradise Pier area—with its heavy use of carnival-type rides—particularly incensed core fans. Disney newsgroups on the Net were full of hostile chatter about the park, accusing Eisner and Pressler of selling out Walt's ideals just to make a quick buck.
But Disney dweebs weren't alone in their outrage. Imagineers also began voicing their concerns with the project. By making cost containment rather than show quality the most important aspect of Disneyland's expansion plans, they said, Pressler and Braverman had severely compromised the new park's chances of winning over the public.
Take, for example, the "Golden Dreams" show at DCA. The Imagineers had envisioned this attraction as the park's high point, a show that celebrated California's colorful history through the clever use of film, audio animatronics and in-theater special effects. According to WDI's original plans, "Golden Dreams" (then titled "Circle of Hands") was to have been presented in a building similar to Disneyland's "Carousel of Progress" theater (which now houses exhibits for Tomorrowland's "Innoventions" attraction). When an act in this proposed DCA show ended, the guests would have been moved to the next sequence by remaining in their seat while the show building rotated.
Neat idea, huh? Pressler and Braverman thought so, too—until they got the projected cost estimates for the rotating show building. They immediately decided that a revolving theater was too expensive, and they insisted that the Imagineers rework "Golden Dreams" so the show could be presented in a regular, non-rotating theater, using just audio-animatronic figures and film.
When they got the second revised estimate for "Golden Dreams," they announced that deeper cuts were needed. This time, Pressler and Braverman decided they really couldn't afford to have any audio-animatronic figures in the show. Now, keep in mind that audio-animatronic figures have been a standard feature in Disney theme-park attractions since 1963. But Pressler and Braverman wanted to bring DCA in on time and (more important) under budget. So kill the robots.
What was once supposed to be the centerpiece attraction of DCA—a multimedia extravaganza in a revolving theater that celebrated California history—is now just a movie. "Golden Dreams" will be narrated by Whoopi Goldberg (who has reportedly complained to Eisner about the cheapness of this DCA attraction) and may feature some in-theater special effects—provided, of course, they survive the next round of budget cuts.
This is typical of what worried Imagineers about DCA. By making the bottom line the top priority with the Disneyland expansion project (and, worse still, by being so blatant about it), Pressler and Braverman may have created a fundamentally flawed theme park.
What exactly are these flaws? Some point to Pressler and Braverman's decision not to develop many new rides and shows for DCA, opting instead for a lot of attraction recycling.
While it was undoubtedly more cost-effective to take shows that have already proved popular at other Disney theme parks (like Orlando Disney-MGM's "Jim Henson's MuppetVision 3D" and nearby Animal Kingdom's "It's Tough to Be a Bug") and tailor them a bit to fit DCA, is this really the best long-range strategy? Isn't it possible that using old Walt Disney World shows could actually have a detrimental effect on Disneyland Resort's attendance levels?
Eisner's main reason for building a second gate at Disneyland was to turn the company's Anaheim holdings into a vacation destination like Walt Disney World. But why would folks from the East Coast fly all the way out to California just to see shows they'd already seen years earlier in Orlando?
Then there are the capacity concerns many Imagineers raised about attractions featured in DCA's Paradise Pier area. Putting it simply, these old-fashioned carnival-style rides load and unload very slowly. Even with their expected painfully short ride times (example: guests will supposedly have just 90 seconds to spin around on the "Orange Stinger"), there'll still be huge lines over in Paradise Pier.
Why? Because on opening day, DCA will have only 22 rides and attractions. But Disney's own attendance projections show that, on a typical summer day, 30,000 guests will wander around DCA looking for things to do. Think about it: What guest is going to be happy about paying $40-plus to get into DCA, only to stand in a two-hour-long line to ride "King Triton's Carousel"?
This is what worries the older Imagineers: during that first crucial summer of operation, guests will undoubtedly exit DCA—having spent most of their day standing in very long lines for all-too-short attractions—and go home to tell their friends and neighbors what an awful time they had at Disney's new theme park.
The expanded Disneyland Resort can't afford to develop a bad reputation with Southern Californians. The Mouse is counting on these folks—who made up almost 60 percent of the 13 million guests who visited Disneyland last year—to fill DCA's shops, restaurants and shows. If the new park fails to catch on with state residents, it could be in for some real trouble.
This brings us to what many senior Imagineers view as DCA's biggest flaw: its potential lack of appeal to the very people Disney needs to drive up attendance at its new park. Realistically, how many real Californians will be willing to fork over $42 to visit a fake Golden State? More important, how many of these people will be willing to come back to DCA after their initial visit?
According to the Mouse's own attendance figures, the average Southern Californian visits Disneyland twice a year: once during the spring or summer and again during the holiday season. With its minimal number of rides and attractions, can Disney's California Adventure theme park expect anything approaching this level of guest traffic?
Realistically, no. Privately, Eisner has evidently acknowledged that Disneyland's second gate could be in for a rough couple of years. He is also reported to have said that he is aware the Mouse may be forced to spend millions of dollars soon after the park opens to increase DCA's ride capacity, thus erasing any savings Pressler and Braverman may have achieved by penny-pinching on the project.
That said, Eisner also reportedly claimed that he expects DCA to someday grow into a worthy companion to Disneyland, all the while making a ton of money for the company. Knowing that its second Anaheim theme park will be under intense media scrutiny, Disney officials have stated that should DCA get just 7 million guest visits during its first year of operation (just more than half of Disneyland's average annual attendance), they'll be very happy. That will provide more than enough bodies to fill the park's shops and restaurants.
And that, of course, is the whole point of DCA: to build, as cheaply as possible, an attraction that will not leak visitors—a mousetrap, if you will. In the old days, when parking was ample, guests were free to leave the park for off-site, non-Disney venues. No more. The expansion has chewed up nearby parking, leaving visitors in the park with a simple lunch-time choice: hike almost half a mile outside the park to the enormous parking garage (a six-story, 10,000-car-capacity monument to the auto that opens on June 27) or hang around inside DCA. At closing time, patrons will pour out of both parks, competing for trams ferrying them back to the garages, and then sit through the traffic crawl—or (Disney may be excused for hoping) hang around the nearby Downtown Disney Rainforest Cafe or House of Blues.
There's irony in this sort of planning: the city of Anaheim and Caltrans are spending nearly a billion dollars on road improvements and beautification of the area surrounding Disneyland in the expectation that patrons will lay out cash in surrounding businesses. But if Disney has designed the park correctly, that will not happen. Most of the cash will go right where Eisner always intended it to go: straight into Mickey's pocket. Oh, area hotels and motels will undoubtedly benefit from the large number of guests who will now stay overnight while visiting the Disneyland Resort. And Anaheim and Orange County will automatically get 15 percent of every dollar spent on lodging. So that will add up to a nice chunk of change. But area shops and restaurants may find cash scarcer—particularly after Downtown Disney opens on Jan. 12, 2001. That's the day we'll start to see the real impact the expanded Disneyland Resort has on the local community. And it ain't gonna be pretty.
So Anaheim city officials who spent last week celebrating the news that Disney might add a third park to its Orange County resort might want to rein in their enthusiasm a bit. It might be wise to see how the city deals with the initial effects of Disneyland's expansion before leaping blindly into Phase II. And soon we'll know the answer to the question residents have been asking for years: How big does a mouse have to get before it becomes a rat?