What is it about Hong Kong's Disney theme park which makes the government lie, misinform and dissemble at every possible opportunity? Could it be that there is a need to cover the tracks over what has turned out to be the biggest sucker's deal in a long history of government officials being outmanoeuvred by wily companies?
It has now been confirmed that the local Disney park will face competition from a new, and bigger, Disney project in Shanghai. As ever, the government airily dismisses this problem, with Chief Executive Donald Tsang Yam-kuen rushing out another lie: 'Who is the greatest stakeholder in Hong Kong Disneyland?' he asked students this week. 'It's the Disney company, right,' he answered. Wrong; it's the Hong Kong government, which started out with 57 per cent of the park's equity and allowed this to be diluted to 52 per cent; by any measure this still makes the public 'the greatest stakeholder'.
Playing with figures has been a feature of government statements since the inception of the scheme when officials regularly trotted out the claim that public investment in the project amounted to HK$3.25 billion whereas Disney was investing HK$2.45 billion.
The truth is that public investment amounted to a staggering HK$22.45 billion, once site formation, infrastructure provision and an unsecured loan of HK$6.5 billion is taken into account. This excludes the HK$798 million given to the MTR Corporation to help pay for a rail link to the park. And a far greater amount was given to Disney in free land.
The net result was that Disney put up something like 10 per cent of the investment and was granted 43 per cent of the equity in return. But the sucker's deal did not end there because Disney's negotiators secured an agreement to get an upfront 5 per cent royalty payment for all food and merchandise sold in the park and a 10 per cent royalty on the gate. Plus, it is paid 2 per cent of revenue as a management fee and receives incentive payments ranging from 2 per cent to 8 per cent of the operating profit - which is not to be confused with actual profit, because this money is sliced off before we get to that figure.
Recent negotiations, which reached crisis point as business declined and Disney pressed for more government cash to expand the park, resulted in some clawing back of these generous provisions. However, the public remains in the dark about how its money is being spent here because the government routinely blocks requests for information. The only source comes from briefings that Disney gives to its own investors, which paint a rather gloomy picture of the park's financial performance.