Strike better deal with Disney, NPP deputy chair urges Hong Kong government

Lawmaker Michael Tien threatens to withhold support for theme park’s HK$10.9 billion expansion plan

PUBLISHED : Tuesday, 29 November, 2016, 12:56pm
UPDATED : Tuesday, 29 November, 2016, 12:56pm

New People’s Party deputy chair Michael Tien puk-sun says he will not support Disneyland’s HK$10.9 billion expansion plan in the Finance Committee unless the government negotiates a better deal.

This came a day after lawmakers from across the political spectrum grilled the government and demanded justification for injecting HK$5.8 billion of taxpayers’ money into Hong Kong Disneyland’s expansion project.

A non-binding motion submitted by Tien to delay the expansion plan was passed by members of the Legislative Council economic development panel – a bipartisan feat which Tien said he was “surprised” to see happen.

Speaking in a Commercial Radio interview, the fashion chain owner said the theme park had on the whole been beneficial to Hong Kong, but an “unequal treaty” between the park and the government – its biggest shareholder –had to be renegotiated.

At issue was the failure of the government over the years to achieve more bargaining power with its 53 per cent stake, including on operational matters such as pricing.

“There is a very high chance I will not support it, but as to whether I will abstain or vote against, I haven’t decided,” Tien said. “I must see what they get from negotiations with Disney. I believe they should at least get something in return.”

Lawmakers across political spectrum grill administration on HK$11 billion expansion for Hong Kong Disneyland

Tien also believed the HK$50 million in management fees the park paid – revised in 2009 to six per cent of its earnings before interest, tax, depreciation and amortisation or EBITDA – was too disproportionate to the royalties paid to the Walt Disney Company, estimated to be in the area of HK$200 million.

Hong Kong Disneyland has never disclosed the amount of royalties paid to the Burbank, California-based global media and entertainment conglomerate.

“Royalties are not linked to profit but linked to turnover. If there are more visitors, this will go up. But who will gain most from this $11 billion investment? It has to be Disney,” he said.

Tien urged the government to bargain for a cap on the management fee and royalty payments, which would be deferred to balance the books in the event of a loss. He also said there was no rule that the government always had to have more than 50 per cent of the park’s shares and suggested lowering its stake progressively.

“Should they refuse to change the terms, I would recommend the government halt investment. Disneyland will most likely not be able to get it past their board and will have to wait for another day,” Tien said, adding that it was questionable to make expansion plans when the economy and tourism industry were in a downturn.

“If we don’t expand Disneyland today, I’m pretty sure many other areas of Hong Kong could use these few billion dollars.”

On Monday, commerce minister Greg So Kam-leung insisted that the authorities must “have a say” in the park’s future development and that the administration had no plans to reduce its stake or exit the investment.

“The future development of Disneyland will have to be coordinated with the government’s policies to promote tourism,” he told lawmakers.

The six-year mega upgrade will see the park increase the number of attractions from 110 to 130 between 2018 and 2023, and is expected to create 5,000 to 8,000 jobs across the tourism industry.

So estimated that the expansion, together with the completion of the cross-border bridge to Macau and Zhuhai, would help attract up to 9.5 million visitors a year by 2025 – up from 6.8 million in 2015.