View From City Road: Uncle Walt's outrageous deal

Euro Disney's bankers are in an awkward position. Disney was allowed an outrageously favourable deal. The professionals involved in the creation and flotation of Euro Disney should be ashamed for failing to make clear the over-generous return if the park was a success, and the problems that this might cause if it failed.

Nigel Reed, an analyst at Paribas, has shown that at an improbably high admission level of 16 million visitors a year, Disney's payback would be around Fr1,699m. The ordinary shareholder would receive just Fr264m.

Yet instead of tempering this potentially high reward for Disney with an equally high degree of risk, the American group was allowed by the French government, the bankers, the brokers and the stock exchanges involved, to have the whip hand if it failed.

Just look at the licensing agreement. At Disney's option, Euro Disney may lose its 30-year licence to use the Disney characters in a whole range of circumstances. These include the failure of the Euro Disney company or the park ceasing to be managed by the US corporation.

In other words Euro Disney's shareholders and bankers probably cannot sack Disney without risking the loss of the licences, a key asset. That is despite the fact that the US giant, as designer and manager, must be held primarily accountable for the park's troubles.

Nevertheless, the bankers should steel themselves to take just such a risk. They have Fr20bn of loans outstanding on the project (Disney's investment in contrast is only dollars 160m). It seems they are being required to write off at least half that amount, while Disney takes a much smaller hit.

If Uncle Walt will not renegotiate, perhaps Alton Towers or Smurfland could be persuaded to put their stamp on the Parisian wonderland.