'Disneyland Will Never Break Even Under This Deal'

Pro-government lawmaker Michael Tien has warned that Hong Kong Disneyland will never be able to break even under the current terms and the government, which is the major shareholder in the venture, should renegotiate the payment clauses.

"Last year we had HK$6 billion of total revenue. Of which, between the management fee and royalties, Disney USA actually extracted HK$600 million – ten percent of our total revenue, leading to a loss," Tien said.

The theme park has been in the red for four years in a row, recording a net loss of HK$54 million in its latest fiscal year.

"If we do not do something about this, I have confidence that projecting into the future, the joint venture will never ever break even," he said.

He was speaking after the government, which is the major shareholder of the theme park, rejected calls to negotiate with the Walt Disney Company over how it charges royalties.

Speaking earlier in the day at a Legislative Council meeting, Tien had said that Hong Kong Disneyland could make a profit if it didn't have to pay hundreds of millions in royalties and management fees.

But Commerce and Economic Development Secretary Edward Yau skirted the issue, saying that during director board meetings, the government has raised the issue of cost control, adding that the amount of losses came down last year.

"Whenever we have a new review or a new agreement, the administration would do its best as a shareholder to strive for the most reasonable contract on behalf of the taxpayers in Hong Kong," the secretary said.

Yau also said that the 60 hectares of land that have been reserved for the theme park’s expansion cannot be used for housing purposes instead due to the contract terms.