Disney Parks Chairman Josh D’Amaro noted the closure of the Star Wars: Galactic Starcruiser will allow Disney to accelerate ~$150 million in depreciation later this year
The Star Wars Galactic Starcruiser, a highly anticipated immersive experience at Walt Disney World, is closing its doors later this year. While no one is glad to see it go, Disney Parks Chairman Josh D’Amaro did note one significant silver lining: a $100-150 million tax savings via accelerated depreciation.
The depreciation comments came about during D’Amaro’s notes at the JP Morgan 51st Annual Global Technology, Media & Communications Conference. Depreciation is an accounting method that allows businesses to spread out the cost of an asset over its useful life, reflecting its diminishing value over time. By claiming depreciation, Disney can reduce its taxable income and, subsequently, its tax liability.
Since the Galactic Starcruiser is closing in September, Disney can account for the expected depreciation of the resort during Q3 and Q4 of this year, resulting in an expected tax savings of ~$150 million. The Galactic Starcruiser project represents a substantial investment by Disney, encompassing the construction, theming, and technological advancements required to create an immersive Star Wars experience for guests. The costs associated with these endeavors are significant, justifying the substantial depreciation write-off that Disney plans to claim.
The exact impact on Disney’s bottom line will depend on Disney’s tax rate and other factors, making it challenging to determine the precise amount of tax reduction they will achieve. The appreciated depreciation, however, will certainly serve to improve Disney’s bottom line as we head into the end of the year.
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