PORT CANAVERAL – After more than a year of negotiations, Disney Cruise Line and Port Canaveral struck a deal Wednesday that will keep Disney ships sailing out of Brevard County for the next 15 years.
Under the agreement, Disney will station the two new cruise ships it is having built in Germany at Port Canaveral for at least three years after they begin sailing in 2011 and 2012. Each of the ships will carry 4,000 passengers, or 1,300 more than the existing Disney Magic and Disney Wonder liners.
The agreement also ensures that some combination of Disney’s four ships will remain based at Canaveral until at least 2023, making a combined 150 calls every year.
For its part, Canaveral will spend as much as $10 million to build Disney a 1,000-space parking garage. The port will borrow an additional $22 million to finance further upgrades to Disney’s custom-built terminal, work that will include extending docks, expanding check-in space and installing environmentally sensitive technology.
The construction work must be complete by Oct. 1, 2010.
The debt ultimately will be paid off by a new, $7-per-round-trip charge on Disney Cruise Line tickets. A Disney spokeswoman said the charge would begin in 2010.
Stan Payne, Canaveral’s chief executive officer, said the deal gives the port the assurance it needs to embark on the multimillion-dollar upgrades required to accommodate the next generation of ultra-sized ocean liners.
Disney’s new ships, for instance, will each be three decks taller, 150 feet longer and 15 feet wider than its existing ships.
“Our key objectives during the negotiations were balancing Disney’s needs for flexibility . . . with our need for a commitment,” he said.
He projected that the agreement would generate at least $200 million in revenue for the port in the next 15 years.
Disney Cruise Line President Tom McAlpin called the promise to keep the new ships in Brevard until at least Dec. 31, 2014, “a pretty big commitment on our part.”
But he also said it was vital that Disney have the freedom to begin deploying some of its ships full-time to new locations all over the world.
The company is increasingly experimenting with far-flung itineraries, sending the Magic to the U.S. West Coast during the summer of 2005 and to Europe last summer. The ship will return to the West Coast this summer.
“When you invest hundreds of millions of dollars in an asset, you’d like to maintain flexibility,” McAlpin said. “The benefit of our industry is that our assets our mobile.”
Disney is expected to send ships even further afield in the coming years.
The company views the cruise line as a way to introduce consumers in new markets to the Disney name and spark demand for its other parks and products.
Disney Co. Chief Executive Officer Robert Iger has called the cruise line “an important brand-builder.”
McAlpin would not discuss where Disney might station the Magic and another ship, the Wonder, once the new ships arrive.
“We’re still studying that,” he said.
Disney’s inaugural 10-year deal with Port Canaveral was set to expire this summer, and the negotiations on an extension haven’t always been easy. Disney executives suggested, publicly and privately, that they were considering moving ships to rival ports in Miami or Fort Lauderdale. They toured the Port of Tampa last year.
The talks “reached a pinnacle on Christmas Eve when my wife wanted to know what I was doing standing in my front yard without shoes on, talking on my Blackberry to Tom McAlpin,” Payne said.
Port officials were still scrambling to finalize the deal as late as Wednesday morning, just hours before Canaveral Port Authority members voted to approve it.
Payne said the port faced an extra hurdle because the nation’s credit turmoil made finding a way to finance the construction improvements difficult.
“This is a complicated deal,” McAlpin said.
Port officials also announced Wednesday that they have reached a tentative agreement with Royal Caribbean Cruises Ltd. in which the Miami-based cruise operator will station its Freedom of the Seas liner at Canaveral beginning in May 2009.
The Freedom-class vessel, which will have room for more than 3,600 passengers, will become the largest ship home-ported at Canaveral when it arrives.
It will replace the roughly 3,100-passenger Mariner of the Seas, which Royal Caribbean plans to send to Los Angeles in early 2009, and ensure that the company continues to have two ships stationed in Canaveral.
Payne said he expects to sign a five-year contract with Royal Caribbean for the ship soon.