This paper has for main objective to calculate the costs and benefits of the Euro Disneyland project signed between the Walt Disney Company and the French government in 1987. The Euro Disneyland project was the most ambitious project for any French government under the 5th Republic and coincided with a decade of economic turmoil. As we shall analyze, the French government accorded many benefits to the Walt Disney Company in order to have the park built in France, with the hope that the French version would be as attractive as its Japanese and American counterparts.
Although the reports conducted by the French government and the Walt Disney Company are not public, enough has filtered to calculate a basic benefit-cost analysis. Thus, this paper regroups the available data and forecasts made in 1987 by the company and the government, calculates the benefits and costs, and then analyzes the government incentives to pursue this project. In addition, the paper discusses both the importance of the forecasting failure from the Walt Disney Company in the results of the analysis and the important data that we could not include in the analysis but would have to be added if available.
Table of Contents
Introduction
The Project
The 1987 Convention
Literature Review
Calculation of the benefits of Euro Disney
The Benefits Included in the Analysis
The Benefits not Included in the Analysis
Calculation of the Costs of Euro Disney
The Costs Included in the Analysis
An Estimation of the Environmental Costs of Disneyland Paris
The Cost not Included in the Analysis
Final Results of the Analysis
Did the French government really benefited?
The impact of the failure
Conclusion
Bibliography
Objectives and Core Themes
This paper aims to perform a comprehensive cost-benefit analysis of the Euro Disneyland project initiated in 1987, evaluating the financial implications for the French government, accounting for forecasting failures, and incorporating environmental costs within the analysis period of 1987 to 2004.
- Financial assessment of government investments vs. generated economic benefits.
- Impact of forecasting inaccuracies on project revenue and economic viability.
- Evaluation of employment creation and socio-economic outcomes.
- Integration of environmental externalities into the traditional cost-benefit model.
Excerpt from the Book
The 1987 Convention
Although the official document is still not publicly available, the information on the engagement taken from both sides has now filtered. The construction of Disney was divided into three different phases. The phases were divided as follows:
Phase 1 (1987-1997) included the construction of the Park Disneyland, Disney Village, hotels for a total of 5165 rooms, a camping complex with 595 bungalows, a golf course, 700 units of residences of employees, and 1577 housing units. Concurrently, the French government committed to the construction of two highway exits to the Park Disneyland, the RER railroad to the Disneyland Park, the RER railroad station, a High-Speed Line (TGV), a train station, provided a competitive loan, implemented lower taxes, and ensured the fiscal involvement of the region.
Phase 2 (1997-2006) involved the Walt Disney Company constructing a shopping mall of 100 000 m², 1847 housing units, 31 000 m² of office space, the second theme park: Walt Disney Studios, and partner hotels. The French government focused on the construction of a RER station in Val D’Europe.
Phase 3 (2003-2010) saw the company proceed with the construction of new rides, the extension of the Disney Village, construction of new partner hotels, 1875 housing units, 120 000 m² of office space, and the extension of the shopping mall, while the French government contribution was virtually nothing.
Summary of Chapters
Introduction: Provides the historical background of the Marne-La-Vallée development and the initial political motivations for the French government to partner with the Walt Disney Company.
The Project: Outlines the formation of Euro Disneyland SCA and the specific negotiated shareholding structure involving the Walt Disney Company and French banking institutions.
The 1987 Convention: Details the multi-phase construction agreements and specific infrastructure obligations undertaken by both the Walt Disney Company and the French government.
Literature Review: Discusses existing research on the topic, highlighting the focus on the company's financial troubles and the limited academic analysis of the original government agreements.
Calculation of the benefits of Euro Disney: Estimates the economic gains for the French government through employment creation and tax revenue, while adjusting for tourism trends.
The Benefits not Included in the Analysis: Critically evaluates external arguments regarding the diversion of existing employment and the limitations of data regarding currency inflows and hotel revenues.
Calculation of the Costs of Euro Disney: Quantifies the government's direct infrastructure investments and estimates the environmental costs associated with the theme park's operations.
An Estimation of the Environmental Costs of Disneyland Paris: Analyzes the carbon footprint of the theme park based on corporate emissions reporting and projected emission prices.
The Cost not Included in the Analysis: Discusses indirect costs such as low-interest loans and tax concessions granted to attract the project.
Final Results of the Analysis: Presents a comparative table of costs and benefits across different discount rates, demonstrating the economic impact of the project.
Did the French government really benefited?: Synthesizes the quantitative results to conclude that the government likely experienced significant financial losses when accounting for realistic metrics.
The impact of the failure: Examines how the disparity between forecasted and actual attendance negatively affected the expected return on public investment.
Conclusion: Summarizes the findings, noting that while the park succeeded as a tourism destination, it failed to provide the projected financial benefits to the state.
Keywords
Euro Disneyland, Cost-Benefit Analysis, French Government, Walt Disney Company, Marne-La-Vallée, Infrastructure Investment, Public-Private Partnership, Employment Creation, Economic Forecasting, Environmental Costs, 1987 Convention, Tourism, Fiscal Policy, Theme Park Economics, NPV.
Frequently Asked Questions
What is the primary objective of this paper?
The paper aims to calculate the actual costs and benefits of the Euro Disneyland project to the French government, evaluating whether the investment was financially sound based on the 1987 agreement.
What are the central themes of this work?
The central themes include the financial negotiations between Disney and the French state, the impact of large-scale infrastructure projects, the accuracy of business forecasts, and the integration of environmental externalities into financial models.
What is the core research question?
The research asks whether the French government actually benefited financially from the Euro Disneyland project when adjusting for realistic attendance figures, environmental impacts, and the true cost of public concessions.
Which scientific method is used?
The author uses a Cost-Benefit Analysis (CBA) approach, incorporating Net Present Value (NPV) calculations with varying discount rates (1.11%, 3%, and 7%) to assess the long-term financial outcomes.
What is addressed in the main part of the analysis?
The main section evaluates specific benefits like employment and tax revenue, compares them against infrastructure costs and environmental externalities, and discusses the repercussions of significant forecasting failures.
Which keywords best characterize this work?
Key terms include Euro Disneyland, Cost-Benefit Analysis, public investment, economic forecasting, environmental impact, and the 1987 convention.
How did the discrepancy in visitor attendance affect the findings?
The study reveals that forecasted attendance was significantly higher than actual results, which caused a drastic reduction in anticipated tax revenues and rendered the project a financial loss for the government under realistic discount rates.
Why are environmental costs included in the analysis?
Environmental costs are included to provide a more holistic evaluation of the project's total impact, reflecting the modern understanding of the ecological footprint associated with large-scale theme park operations.
Did the French government lose money on the project?
The study concludes that, particularly when accounting for environmental costs and using standard infrastructure discount rates, the project represents a significant net financial loss for the French government.
- Citar trabajo
- Alexandre Aubard (Autor), 2018, Euro Disneyland. A Cost Benefit Approach, Múnich, GRIN Verlag, https://www.grin.com/document/465022
