Chapitre 489: Chapter 490: Renegotiation
[Chapter 490: Renegotiation]
The day after the all-night meeting, the newly opened European Disneyland unexpectedly announced a temporary closure. The news shocked all of Europe and quickly spread worldwide.
Constructed over seven years and costing a staggering $5.5 billion -- an amount that rivaled the annual fiscal income of some small European countries -- Euro Disneyland was undoubtedly a world-class project during the strong dollar era of the 1980s.
On the same day the announcement was made, Disney issued a clarification and apology statement on the front pages of several of France's leading newspapers, including Le Monde, L'Union and Le Figaro. The statement explained that a series of problems had arisen following the park's opening, and in light of its responsibility to visitors, the management had made the cautious decision to temporarily close Disneyland for necessary reforms.
However, very few people believed this statement, which accurately followed the truth. Most media and the public preferred to think that something major had occurred at Euro Disneyland. Some irresponsible tabloids published fabricated stories claiming that an accident at the park had resulted in dozens of casualties. This completely made-up report gained traction among the public, with some misinformed newspapers even reprinting it.
Within just a day of the news breaking, after confirming it wasn't a prank, countless reporters from television media and newspapers around the world boarded flights to Paris, eager to uncover the truth.
On the same day, the French government expressed strong concern through a press conference. Jacques Chirac, the then-Mayor of Paris, promptly arranged a meeting with Eric Williams, Chairman of Firefly Films, and Jeffrey Katzenberg, CEO of Disney, to personally inquire about the reasons behind Disneyland's closure.
After leaving the Mayor's office, Eric and Katzenberg jumped into a black sedan. After two hectic days, even Katzenberg -- known for his boundless energy -- showed signs of exhaustion. Eric reclined in his seat and squinted his eyes.
Suddenly, Eric heard the sound of a soda can being opened next to him. He forced himself to open his eyes and saw Katzenberg cracking open a can of energy drink. Remembering a joke about Katzenberg, he couldn't help but smile slightly.
"Eric, would you like some?" Katzenberg quietly asked.
Eric shook his head. Even if offered an energy drink, he couldn't muster the spirits. Since the night before, the two had hardly rested, and Eric felt like his biological clock had imploded. He envied Katzenberg's stamina; whenever he felt tired, he could just chug a beverage and seemingly come back to life, far more effective than an energy potion in a video game.
The decision to temporarily close European Disneyland resulted from their careful deliberation together. The issues at the park had become quite severe. The return on a conservative approach of continuing operations while making corrections seemed uncertain and lengthy. In this situation, they thought a bold action would be better. Even if it didn't entirely solve the problem, the attention it attracted could serve as a world-class promotional marketing tool at no extra cost. When European Disneyland reopened at some point, it would surely garner even more attention than its initial launch.
Katzenberg quickly finished his drink and said, "Eric, if you are too tired, I can handle the negotiations with the French investors myself. You can go back and rest."
Eric hazily nodded in agreement.
Based on surveys and first-week revenue projections, even after adjustments, it would be exceedingly tough for European Disneyland to achieve the initial profitability. The $5.5 billion in construction funds primarily came from bank loans, which needed to be repaid through the park's operations. The average amount of principal and interest due per year reached a staggering $200 million.
Additionally, severe budget mismanagement in the early stages had led to an array of superfluous projects being built, causing the operational costs of European Disneyland to far exceed those of Tokyo Disneyland. The scale of the two parks made this evident; European Disneyland spanned nearly 5,000 acres, whereas Tokyo Disneyland covered only 504 acres -- just a tenth of the former.
Faced with this, Disney had no choice but to renegotiate terms with the French investors to discuss profit redistribution. Given the current situation, Eric had little expectations that European Disneyland would contribute profits to headquarters. He merely hoped the park could achieve a break-even status and not become a burden for the parent company.
Feeling reassured about handing matters to Katzenberg, Eric returned to his hotel, too tired to even shower, and collapsed onto his bed. He lost all sense of time, waking again to darkness outside.
...
After washing up, he picked up the phone in his room to make a call and then headed downstairs to the restaurant. He spoke a few words to the waiter and chose a booth for himself, ordering dinner.
Before he finished his meal, Katzenberg arrived, guided by the waiter.
"Duplicate my dinner for Jeffrey," Eric casually instructed the waiter as Katzenberg took a seat across from him. Clearly, Katzenberg hadn't eaten either, as he only requested the waiter to refill his milk.
"How did it go?" Eric asked, wiping his mouth with a napkin.
Katzenberg pulled a folder from his briefcase and handed it over. "Louis Bartolo read the documents and expressed no objections regarding the temporary closure for adjustments, but they want to take back operating rights. I declined."
If they were to relinquish control over European Disneyland, the project would spiral out of control, and Eric had little faith in the French investors' operational capabilities.
Eric nodded, supporting Katzenberg's decision, then opened the folder to review a draft contract. The terms generally aligned with the limits he and Katzenberg had discussed. Disney would waive the patent licensing fees for the first five years and reduce the fees by half after that. In exchange, the French investors needed to inject an additional $300 million into the project as operational funding.
While waiving patent licensing fees meant Disney wouldn't recover its upfront investment for a long time, it wasn't necessarily a loss. If European Disneyland were to suffer losses, the pressure of repaying billions in loans could lead to its bankruptcy. At that juncture, Disney would have no other path besides willingly releasing the patent licensing fees. This was because Disney had taken a domineering position during earlier negotiations, securing 49% of shares with just under 15% of the total investment, much of which came from loans approved by the French government. If the park didn't meet expected profitability, Disney's stronghold would reverse, and the French investors might stop providing funds, possibly forcing Disney headquarters to inject capital into the project.
Now, by relinquishing patent licensing fees and securing an additional $300 million in operational funding, Disney could be seen as making a significant gain.
After quickly glancing through the new contract, Eric continued eating his dinner as the waiter brought Katzenberg's meal.
Once they finished eating, neither of them left; the waiter cleared the plates and brought coffee. Eric turned to Katzenberg, saying, "Even though we can't transfer operating rights to them, we must involve them in the management adjustments as much as possible. The report from that manager shows many issues that should have been obvious, yet our team clearly overlooked them."
"I know," Katzenberg responded, watching the waiter pour coffee into his cup. He absentmindedly pushed it aside, clearly feeling the effects of too much coffee in the past two days. "Eric, I will personally stay here to steer things until the park reopens and gets back on track. All the films for the end of the year in the U.S. have been locked in. Though Frank can be a little overly cautious, he won't make any major mistakes while temporarily managing Disney until I return."
"Right, I wanted to talk to you about that yesterday, but with everything going on, I forgot. Your presence here is perfect. However, I've also been thinking about something else -- the possibility of renaming the park."
Katzenberg looked puzzled and jokingly said, "You're not really considering renaming Disneyland to Firefly Park, are you?"
"Of course not," Eric shook his head with a laugh. "Disney is already a very established cultural icon. I wouldn't make such a stupid move. What I meant was, how about renaming Euro Disneyland to Paris Disneyland?"
Katzenberg slightly shook his head. "I don't understand, Eric. Is that really necessary?"
"I think it's crucial. The survey revealed that a significant portion of Disneyland visitors were still French. Moreover, the so-called three hundred million potential visitors from the two-hour flight radius now seem unrealistic. Those three hundred million people don't appear as eager about Disneyland as we initially thought. In fact, besides the French, most visitors during the first week came from neighboring countries. Given this, we should focus on effectively catering to domestic French visitors with strong buying power. If the French take pride in their identity, let's cater to that. The name change is just a part; we've also agreed that to appeal to the French, we'll use the French language as the park's primary language, while English will be secondary. Additionally, park projects and activities must integrate French culture, just like that photo of Mickey Mouse I showed you the other day."
Katzenberg was somewhat persuaded by Eric's rationale but still asked, "Would renaming the park seem too abrupt and too obvious about our intentions?"
Eric chuckled. "It depends on the media relations skills of the operations department."
"I'll have them draft up a proposal as soon as possible," Katzenberg nodded. "What about you, Eric? When do you plan to head back? Jurassic Park is still in post-production -- you can't be away for too long, right?"
"I'll stay a few more days. Stan is directly in charge of post-production. He was involved throughout much of the production process. He knows exactly the effects I want, so there shouldn't be any issues. If he could step back from managing Digital Domain, I might even consider letting him direct the sequel."
Katzenberg was aware that Firefly intended to produce three Jurassic Park films and seemed surprised by this remark: "You're not planning to direct the sequel yourself?"
Eric shrugged. "It depends on the situation; I'm not sure myself."
As they casually chatted, they heard rapid footsteps approaching. Just as Eric turned his head, Allen arrived at his side.
Allen quickly nodded at Katzenberg before addressing Eric, "Mr. Williams, phone call from New York. It's urgent."
"Jeffrey, hold on a moment. Let me take this call, and we'll continue our conversation," Eric told Katzenberg, standing up to follow Allen out.
Katzenberg, though curious about what was so urgent in New York, didn't pry further and simply nodded in understanding.
More than ten minutes passed without Eric returning, and only Allen came back, hurrying toward Katzenberg. "Sorry, Mr. Katzenberg, Mr. Williams has already left for the airport. He has a flight to New York tonight. I was told to inform you."
"What happened?" Katzenberg asked, rising with a serious expression.
Allen shook his head and thought for a moment before replying, "I'm not entirely sure, but it doesn't have to do with the company; it's... it's Mr. Williams' personal matter."
Katzenberg noticed Allen's hesitance, but since it was Eric's personal matter, he relaxed slightly and refrained from pressing further. "Aren't you heading back with Eric?"
Allen replied, "Mr. Williams asked me to stay here for now, to keep him updated on the ongoing adjustments."
Katzenberg nodded. "In that case, stay close to me for now. By the way, did Eric leave any messages for us?"
"No," Allen opened his mouth but then didn't continue. After that last call, Eric had rushed off without the chance to relay anything.
*****
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