Will Bob Iger End Investments in Disney World?
During the Q&A of this week’s quarterly earnings call, CEO Bob Iger was asked about the company’s “fight” with Florida and how that could impact the future of Walt Disney World. This post shares his response about the lawsuits, investments in the state, plus our commentary about the legitimacy of the threat.
It’s impossible to succinctly summarize what precipitated these comments, as the saga has now stretched out over a year, beginning with Bob Chapek making comments about Florida legislation that even Iger concedes were not handled very well. That resulted in the state replacing the Disney-controlled Reedy Creek Improvement District (RCID) board, with one hand-picked by the governor. Prior to the new board taking control, Disney and RCID entered agreements that made national news for use of the “King Charles Clause.”
This handcuffed the new board, leading to more legislation by the state to void the aforementioned agreements and more. That has resulted in two lawsuits, one with Disney Suing DeSantis in federal court and another with the governor-backed Central Florida Tourism Oversight District Board Suing Disney in state court. Earlier this week, the company amended its federal court complaint to include new allegations pertaining to monorail regulations and recent interviews given by DeSantis. That more or less brings you up to speed, and sets the stage for Iger’s latest comments during the investor call…
The lengthy block quote below is Disney CEO Bob Iger’s response to the question: “Florida is such a big part of the value of the company, but you have this political issue that only seems to get more press. It seems like you’re stuck with this fight. So, how should investors think about the risk, both the near-term and long-term business for Disney?”
The case that we filed last month made our position in the facts very clear, and that’s really that this is about one thing and one thing only, and that’s retaliating against us for taking a position about pending legislation. We believe that in us taking that position, we are merely exercising our right to free speech.
Also, this is not about special privileges or a level playing field or Disney in any way using its leverage around the state of Florida. Since there’s been a lot said about special districts and the arrangement that we had, I want to set the record straight on that, too. There are about 2,000 special districts in Florida, and most were established to foster investment and development. We were one of those. It basically made it easier for us and others to do business in Florida. We built a business that employs, as we’ve said before, over 75,000 people, and attracts tens of millions of people to the state.
While it’s easy to say that the Reedy Creek special district that was established for us over 50 years ago benefited us, it’s misleading to not also consider how much Disney benefited the state of Florida. Also, we’re not the only company operating a special district. I mentioned 2,000 others. The Daytona Speedway is one; so is the Villages, which is a prominent retirement community. There are countless others.
So, the goal here is not leveling the playing field. If the goal is leveling the playing field, then a uniform application of the law or government oversight of special districts needs to occur or be applied to all special districts. There’s also a false narrative that we’ve been fighting to protect tax breaks as part of this. But in fact, we’re the largest taxpayer in central Florida, paying over 1.1 billion in state and local taxes last year alone. And we pay more taxes, specifically, more real estate taxes, as a result of that special district.
There was no concerted effort to do anything to dismantle what was once called the Reedy Creek special district until we spoke out on legislation. This is plainly a matter of retaliation while the rest of the Florida special districts continue operating basically as they were. It’s also important for us to say our primary goal is always to be able to continue to do exactly what we’ve been doing there, which is investing in Florida. We’re proud of the tourism industry that we created, and we want to continue delivering the best possible experience for guests going forward.
We never wanted and certainly never expected to be in the position of having to defend our business interests in federal court, particularly after having such a terrific relationship with the state as we’ve had for more than 50 years. And as I mentioned on our shareholder call, we have a huge opportunity to continue to invest in Florida. I noted that our plans were to invest 17 billion dollars over the next 10 years, which is what the state should want us to do. We operate responsibly.
We pay our fair share of taxes. We employ thousands of people. And by the way, we pay them above the minimum wage — substantially above the minimum wage dictated by the state of Florida. And we also provide them with great benefits and free education.
So, I’m going to finish what is obviously kind of a long answer by asking one question: does the state want us to invest more, employ more people, and pay more taxes, or not?
Before turning to commentary, we often start by offering the same caveat to begin each of these posts about Disney vs. DeSantis: do not take anything at face value. This is more about political posturing and theater than it is anything substantive. What the actors involved say is not necessarily what they actually believe.
I’d also caution against drawing any premature conclusions. In part, this goes back to the ‘team sports’ nature of the standoff, and people wanting to believe their ‘side’ is in the right and will prevail in the end. There have been tons of the twists and turns in the Reedy Creek saga to date, and no one has gotten this completely right from the beginning. The only thing that’s predictable here is unpredictability.
Commentary-wise, Iger’s framing of this again struck me as savvy. Although this battle will be fought in courts of law, it will also be waged in the court of public opinion. Chapek did a truly abysmal job of that. His fumbled response managed the remarkable feat of alienating people on both sides of the aisle. It was truly a remarkable feat when you consider how polarized people are today–and yet, we all more or less aligned against Chapek. (Albeit for different reasons.)
Fast-forward over a year later. Chapek is gone, Iger is back, and the original comments giving rise to all of this are in the rearview mirror. As DeSantis has boasted, Disney has “not made a peep” about Florida legislation or issues since the skirmish over a year ago. The only ongoing issues involve the special district and how that’ll be governed.
When it comes to public opinion, it’s fair to say that some minds are already made up, and nothing anyone says will sway them one way or the other. It’s almost certain that applies to anyone reading this; you’re either personally invested in this or have followed it closely. It’s also fair to say those in the pro-Disney “bubble” may underestimate just how well this is playing with Republican primary voters, with a clear majority supporting DeSantis in this battle against Disney per polling from March and April.
That’s not everyone, though, and Iger’s answer here is a savvy one. Spinning the state’s approach as being anti-free speech, anti-business and anti-Florida is a sound strategy to sway undecideds. It’s also smart to directly address the special district status and taxes, as there are a lot of misconceptions about both.
Finally, Iger’s answer concluding with a question of his own was masterful. This essentially puts the ball in DeSantis’s court, who will now be asked by the media whether the fight is “worth it for Florida” when at stake is $17 billion in investments, 13,000 new jobs at Disney, thousands of indirect jobs, and billions of dollars in tourism and tax revenue.
Even when framed that way, it’s hard to imagine DeSantis deescalating at this point. Instead, he will likely have a good answer to Iger’s question, and one that’ll play well with the base. He’ll probably spin that as Disney trying to “hold Florida hostage,” an example of Big Business trying to steamroll the state or subvert the will of voters, and again reiterating that he will win over Disney. There will undoubtedly be more to his answer–DeSantis will be prepped well for the question with an answer that hits the right notes, just as Iger was for the question on the investor call.
That’s a good reminder that so much of this is posturing. We usually offer the above preface about political theater as it relates to Governor DeSantis and his presidential aspirations. However, it also applies to the Disney side of this standoff and Iger’s remarks.
DeSantis wants red meat for the base; Iger wants DeSantis to back down. Since those two goals are incompatible, and Iger’s overtures for a sit-down to deescalate have been rebuffed, his next least-worst option is trying to reframe DeSantis’s actions and statements in an anti-business way that’ll be harmful to the state of Florida and its residents. That, too, is posturing.
Nevertheless, even before Iger’s thinly-veiled threat to reduce investments at Walt Disney World, we were hearing regular reader questions about whether that would happen. Now, based on Bob Iger’s straightforward statement, it would appear that there’s an answer to that question.
However, our answer is still the same. It’s unlikely that the company will actually end investments in Walt Disney World based on the standoff with the state. Let’s break down why…
First, no one needs a reminder that Disney is a business. We’ve all had this reinforced time and time again in the last few years with the replacement of free FastPass with paid Lightning Lanes, proliferation of DVC, price increases, and elimination of Disney’s Magical Express. (I maintain that last one was poor and shortsighted even as a business decision, but not the point of this post!)
You’re also probably well aware that Walt Disney World is the company’s cash cow. This has also been reinforced time and time again, most recently on several consecutive earnings calls that discussed record-revenue and per guest spending up 40% of the parks & resorts segment, all while streaming services lost about $1 billion per quarter as they sought to achieve profitability by 2024, tentatively.
It should also go without saying that the company doesn’t build park expansions on a whim. As we point out with the release of every discount, nothing is done out of benevolence or at random. Just as there’s a reason for releasing deals (increase resort occupancy), there’s a reason for building new attractions, lands, etc. All of those projects are expected to offer a return on investment, prompting millions more people to visit Walt Disney World–spending on souvenirs, park tickets, food, hotel stays, and more.
This is mutually beneficial for Disney and Florida. The state collects tax dollars, and tourism to Walt Disney World have spillover effects benefitting other businesses in Central Florida and throughout the state. The ‘Disney Bubble’ is not truly impermeable. This is precisely why the company and the state have had such a good working relationship in the past.
Whether the company invests in Walt Disney World hinges upon whether there’s a business justification for doing so. If it makes sense and they’ll see ROI to expand the existing parks and build new attractions, they will. If not, they won’t. Same as it’s always been, same as it’ll always be.
If there was a plan a few months ago to invest $17 billion over the next decade at Walt Disney World, it’s very difficult to see that changing based on the recent lawsuits, legislation, and public comments. Maybe Iger was posturing then when teasing that investment, or perhaps he’s posturing now by pretending to withhold it. But the company cannot withhold investments out of spite–Iger isn’t Larry David. Doing so would arguably be a breach of its fiduciary duties to shareholders. In short, this is almost certainly a hollow threat.
The only way the company would pause or reevaluate investment is if the latest legislation or public comments have had a material adverse effect on Walt Disney World’s future performance potential or ability to conduct business in the state. Here, it’s theoretically possible that the company views the new CFTOD board as too much of a wildcard, or the potential for future draconian legislation restricting or regulating it as too great.
My personal opinion of the new CFTOD board is not very high. As I’ve written repeatedly, they are not serious people with sincere motivations. However, I also don’t think they have the capacity or convictions to cause a material adverse effect on Disney’s business. I don’t think that’s the end game, either. Again, this all boils down to political theater and presidential aspirations.
Beyond the unpredictability and uncertainty of this circus, the company might contend there’s irreparable brand damage caused by the fight. That this has alienated a certain segment of its core audience, which will now forever forsake its films and theme parks. This has undoubtedly occurred to some degree, but probably not on any meaningful level. No matter what the chronically online might think, most consumers are not that invested in culture wars and won’t deny their kids rite-of-passage vacations over their grievances.
As for what is likely to happen, we’ve actually seen this story play out before–and in the last decade. It didn’t garner nationwide headlines because it wasn’t as provocative, but there was a somewhat-similar standoff with the City of Anaheim. After years of Disney-backed candidates prevailing in elections and supporting business-friendly proposals, the composition of the City Council changed.
Suddenly, the company was receiving much more resistance to its project proposals and sentiment towards previously-approved development incentives soured. As a result, the company cancelled an announced resort and the Eastern Gateway project. It’s unquestionably true that development at Disneyland Resort was set back by several years a result.
Disney’s solution there was to work on repairing strained relations with the community, and also do everything possible to see its preferred candidates prevail in the next election. That’s also arguably what gave rise to DisneylandForward; in the most reductionist terms possible, that proposal essentially seeks to do for the company what Reedy Creek did in Florida. (That’s a very imperfect comparison, but DisneylandForward is not a substantive expansion plan; it’s about autonomy for Disney to build without so much red tape.)
Something similar is likely to happen with development at Walt Disney World and in Florida. Just as they had to “wait out” a then-hostile Anaheim City Council until the next election, the current standoff is presumably over when the Republican primary ends or the pending litigation is decided, at the latest.
It’s possible that the company will enter a holding pattern, hoping that the threat of reducing its investment “reminds” state leaders that the relationship is mutually-advantageous. That doing so convinces everyone that it’s best to drop the bluster and move on to some different culture war. (It’s highly doubtful that’ll work with DeSantis, but it could give statewide politicians pause. Do they want to risk facing a Disney-funded opponent and having to answer questions about this in the next Florida election? The calculus is different for those not running for president.)
The most likely outcome is pausing development of the Imagineering Lake Nona Campus. The company is investing $864 million on that and it’ll bring 2,000 high-paying jobs to the state. This has already been delayed and may have trouble meeting its current target date as-is. Formally hitting the brakes on that and leaving those jobs in California would signal that Disney is “serious” about its investment threat for Florida.
Another possibility is that Walt Disney World delays future announcements until this standoff ends. In Bob Iger Reveals Plan to Invest $17 Billion on Walt Disney World Expansion, we predicted that Animal Kingdom expansion would be announced at the Destination D23 event this fall. If this is still a hot-button issue, I would not expect that announcement to occur. To the contrary, I would not expect any major announcements for Walt Disney World while this battle brews.
To make a long story short, what’s most likely to happen is delayed announcements and timelines potentially pushed back as a result. (It’s also unlikely that anything already under construction is going to be paused. Tiana’s Bayou Adventure, Moana’s Journey of Water, and all the DVC additions will likely proceed as planned.)
However, there are real obstacles to the company commencing construction at Walt Disney World in the near-term that go beyond this. Specifically, Hulu and ESPN need to be sorted out (bought and/or sold), the streaming segment needs to attain profitability or at least stops hemorrhaging ~$1 billion per quarter, and some of the company’s debt should be paid down.
Some or all of those things pretty much have to happen before meaningful CapEx can be spent on Walt Disney World. That alone puts the start of this work in late 2024 or 2025. So in short, the standoff could impact the announcement timeline and might delay some projects slightly, but the bigger impediment to actual construction is all of the above.
Admittedly, this all assume the best case scenario with the standoff continuing to play out mostly in courtrooms. There’s always the possibility that the fight could escalate or the relationship between Walt Disney World and Florida could deteriorate further. If you told me a year ago that Chapek’s hamfisted handling of this would snowball into Bob Iger and the state filing competing lawsuits against one another, that would’ve been a surprise. (Not the Iger returning part–that’s the least surprising bit of this all.) There have been so many twists and turns in this saga that it’s impossible to predict the eventual outcome. However bad it might seem now, there’s always the possibility of the situation worsening.
Ultimately, about the only thing we can safely predict is that Walt Disney World will continue to exist in Central Florida. The company is not going to pack up its flagship theme park complex and move to another state–this isn’t Theme Park Tycoon. That would cost tens (if not hundreds) of billions of dollars that the company does not have, and would not spend even if they did. The governors of California, Colorado, Georgia, South Carolina, etc. don’t think they will, either.
As with so much of this, that’s just more theatrics or political posturing. The company is playing the long game with an eye towards its long-term future in Florida. Walt Disney World will outlast Governor DeSantis and every statewide politician in Florida; if worst comes to worst, they’ll work to get more friendly politicians elected. Wouldn’t be the first time.
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YOUR THOUGHTS
What is your reaction to the latest developments in the battle of Florida v. Disney? Think Bob Iger hit the right notes during the earnings call, or do you agree with the governor’s approach? Think the company really will withhold investments in Florida, or is this a hollow threat? Is this one of this no-win situations where everyone loses the longer it’s drawn out? Keep the comments civil, and avoid personal attacks or perpetuating pointless culture wars. Respectfully debating the change is totally fine, but don’t attack others or troll for controversy. That’s why Facebook was invented.
As much as I hate what’s going on, I do love reading your analysis Tom! While I understand that in the end this is just DeSantis “playing to the base” I think he underestimates just how big that base actually is. It’s not big enough to peel off a significant number of voters from Trump and it will be a small rate of return for his misguided anti-woke strategy. Should it even come to a debate, Trump would clean his clock on the issue and easily pick off DeSantis as being anti-business, and ultimately anti-jobs for Americans. I will bring my popcorn for that one That leaves DeSantis with his term limited governorship and no where to go, except to Fox, I suppose. Or maybe Newsmax. Where he will no doubt excel considering his charismatic on-air personality…
I think part of Tom’s analysis comes from his not living in Florida. Disney has been irritating many of its neighbors for a while. So there’s quite a bit of feeling that Disney is reaping the rewards of its actions that drives some of the undercurrent of support here.
This is exactly DeSantis’s problem and also why his fight with Disney has turned into a lose-lose for him. There’s no amount of anti-woke rhetoric he can spew to push the needle that much with those who support Trump (and it’s becoming increasingly clear that outside of extremely online political circles the whole “anti-woke” thing isn’t really a big issue for many GOP voters, especially when you consider they live in relatively homogenous communities, like most Americans, and “wokeness” really isn’t a day to day problem) and Trump can use this fight to portray DeSantis as anti-business. On the other hand, DeSantis is too far down the rabbit hole to back down at this point or else Trump will portray him as “weak.” For this second reason, I don’t see DeSantis backing down, but I still see it hurting him in the primaries more than helping.
Also, @Aaron, the voters of Florida might be frustrated with Disney throwing its weight around, but that won’t register with primary voters in the other 49 states.
Disney is a pretty safe choice for a man running for president to turn into a boogeyman. If he becomes president, what will he care about the Florida economy, at least until reelection time 4 years later.
Disney in Florida has been there through 12 other governors before the current guy. No matter how you feel about the issues here, one Governor is unlikely to be able to topple the Mouse. Disney holds its own against the CHINESE GOVERNMENT for crying out loud. They also thrive in Tokyo, Paris, and Hong Kong. And some elected official in Florida is going to win this petty fight?
Today DeSantis was undermined by the Governor’s own state officials when the Department of Agriculture said that Florida does not, in fact, have the right to March into the Magic Kingdom and shut down rides on a whim.
If Covid could not break Disney, they will survive this. Remember that every single Disney park in the world closed for a significant chunk of time not too long ago. And they are once again thriving.
Recent studies have shown that Disney contributes to more than $5.8Billion dollars a year in money spent in Florida. Not just the parks and the cruise lines, but also the tens of thousands of businesses that take care of Disney, visitors, Disney employees. The employee families, the people who build buildings and roads as well as the other theme parks and beaches and towns all able to thrive because Disney brings that $5.8 worth of business into the state.
What if Igor declares that they are done playing games. The shareholders wouldn’t be happy, but Disney can survive shutting it all down in Florida for a year or two, putting all of those people out of work, forcing business after business to close, lay off all employees. The state of Florida would quickly collapse under the governor’s hubris.
Disney would survive. Not well, it would cost billions, upon billions. The company outlasted 13 Florida Governors already.
Legal articles I read before posting almost universally say that if this court fight continues, Disney has the US Constitution on their side.
Dem the state of Florida had no issues with Disney until :
“The governor and state lawmakers immediately responded to the criticism by revoking Disney’s 55-year-old rights to self-govern the land encompassing Disney World. That was not in play until Disney issued its statement.
The cause and effect was clear. Disney expressed its opinion and the state used its power to punish Disney and discourage other corporations from taking a stand – about anything.”*
My
Personal feeling is that Disney taking a stand against discrimination and hate is good. It has no impact at all on the business of the State of Florida.
*Free Speech Center MTSU
Here’s the problem Disney has. The State of Florida didn’t do anything to Disney. Nothing. Unless, of course, you want to argue that RCID is Disney. If you take that line, then Disney has a bigger problem, namely it violated state and federal law.
People think that Disney is going to win this one, it isn’t. RCID was given much greater powers than any other special district. Disney used RCID as its own personal government. There’s no way for Disney to win this legally.
It’s sad when companies fail to realize that 50 percent or more of their customers do not mirror their social values. Case in point is how AB destroyed an iconic beverage brand simply by a woman VP belittling the AB’s customer base. These companies think their brands are impenetrable but they are not. So. if Iger wants to destroy Disney World by not reinvesting, it’s on him. Think of it this way, if you build, they will come, if you let it rot, they will not!!
Most brands will weather perceived missteps, and AB will do the same. Proven by the rebranding and rehabilitation of companies like Hugo Boss, Adidas, Volkswagen, BMW, Bayer, and even Coco Chanel – whose ties and outright complicity with Nazi Germany are barely ever mentioned. What AB did is literally a blip.
Joe- EXACTLY. I’d be willing to bet it’s far more than 50%!
I know folks feel strongly about certain issues. And I know that we are all CONVINCED that our view is the majority view on the issue. Sometimes we are right and sometimes not. But it does not really matter that much. Does it really matter if WDW sells rainbow Mickey ears at the parks? Love is Love. A family comes in every size shape and color.
Does it really matter if Chick-Fil-A owners donate to right wing causes? They make good chicken too.
A boycott of a beverage, or a company like Disney, or any other company or product because the corporate stance of the company is not in line with your beliefs fine for you your money goes where you want it to go. But a big boycott is not effective beyond maybe some immediate press coverage and an immediate corporate badly worded response. We get mad, then we get over it.
A person only has so much outrage to go around. The biggest customer boycotts in 2018-19 on both sides of politics were for Chick-fil-A, Wendy’s, Amazon, Uber, Fitbit, Walmart, Nike. All of these companies are doing just fine, and have been fine, despite huge customer disputes and big boycotts.
I vaguely recall a few of these, but not really why.
So much more comes at us from every direction all the time. New outrages are always around the corner. The intensity of protest can not survive year in and year out. Next football season, when a party is planned and a certain beer brand is cheap enough, it will be purchased and consumed without outrage.
The Disney situation was created as an effective political ploy. It will soon outgrow being useful, and political candidates will go back to raging at the latest bank failure or candidate scandal or obnoxious sports guys doing obnoxious things.
Big media is still here despite outrage, sexist Hollywood jerks are still out there despite the outrage. Kids are still murdered by other kids with guns despite all efforts make it stop. Too many young people are seriously mentally ill without available help. There are too many assault rifles. Whatever is the latest, we just can’t protest the bad away.
The courts will decide this. It’s Friday, time gor fish fry or better yet, heading down to the Union for a brat and beer!
Tom, you’re obviously much more tied in to all of this than I am (or want to be really) but I recently started watching a YouTube channel, “Legal Mindset”. His legal expertise is/was specifically Florida special district issues. I’ve found him to be very interesting and illuminating. I hope there’s a legal resolution sooner rather than later.
I have not watched that. I browsed the YouTube channel, but it seemed to lean heavily into culture wars and inflammatory content. His analysis could be incredibly insightful and accurate–I have no idea. I try to avoid content that is clearly partisan (in either direction), which is next to impossible…but I still try.
The “Legal Mindset” is the legal equivalent of an ambulance chaser. He uses a fake name and sells access to videos on how to get out of a DUI under the name “Pimpcast”.
The top legal experts in the country, like professors at the Harvard Law School, are saying one thing, while Mr. Esquire is saying the opposite. I suppose that acknowledged experts offering professional opinions under their real names could be completely wrong, and the guy with a fake name selling tips on how to weasel out of a DUI is right, but that seems unlikely.
This is an unprecedented, complicated case, and who knows what complications will arise in court, but the Legal Mindset says it’s all so straightforward. To paraphrase a common saying, “for every complex problem is a solution that’s straightforward, easy to understand, and wrong”.
Makes me wonder whether the Disney imagineering staffers being asked to move their families from cushy SoCal to mushy Central Florida are secretly rooting for DeSantis to prevail (or at least draw out the battle for the next year or so).
Was wondering the exact same thing. Wouldn’t cost much, would be a substantive if likely temporary tangible result of Florida’s, action, and would be welcome by those who didn’t want to move. Can definitely see that.
I was excited and a little perplexed when Iger announced the $17 billion investment plan with such a vague project outline. Some sort of something beyond Frontierland and a thing of some kind in Dinoland were pretty unsatisfying teasers, but I figured it made good business sense to throw a premature bone towards consumer/fan sentiment and grow the legend of “Iger the Savior.” The moment Disney filed their lawsuit, however, it seemed obvious to me that $17 billion was never a real number, rather a prop upon which to stand an actual harm legal argument. I’m sure, as Tom has so articulately laid out, there will be business benefits to multiple investments, but it won’t hurt Disney’s case one bit to allow those 5th gate rumors and $5-$10 billion of totally-solid-until-this-happened investment to fall victim to Florida’s business unfriendly environment.
I agree, those are marketing numbers, not solid plans, BUT in the recent past Disney has made significant park improvements: Tron, Guardians, Ratatouille, Avatar, Galaxy’s Edge, etc. Looking at the broader picture over the past 50 years I daresay Disney’s investment dwarfs the contributions from any other company both in terms of construction and contributions to the economy.
Why not both?
I think it’s likely true that Disney intends to invest $17 billion in Walt Disney World over the course of a decade. Wall Street is souring on streaming and the parks segment has been a reliable source of growth.
I think it’s also true that Iger put that $17 billion number out there prematurely for the purpose of posturing in this fight. Given the company’s debt and streaming profitable, we’re likely not looking at any major projects actually starting until 2025, anyway. So that decade is probably 2025-2035, not today through 2033.
What’ll be interesting is whether there’s still an announcement for DAK this year. I think something concrete there is what’s “needed” to throw fans a bone. In light of this, I think there’s a very strong possibility that we’re denied that.
Tom, I’m sure your interpretation is closest to the truth. There is too much evidence that parks investments pay off – look at how steadily attendance has grown following new Fantasyland, Pandora and Galaxy’s Edge, etc… I just won’t be surprised if any reductions or delays are blamed on the RCID situation. I also agree that this spat will likely delay a DAK announcement. I’m trying to hold onto a tiny ray of optimistic thinking in hoping that the pause will only be public facing, giving Imagineering additional time to flesh out some really cool ideas.
Ugh, this whole thing is like two children fighting. Hopefully they can just reach an agreement and let people enjoy the parks without this black cloud.
The biggest surprise in all of this is that comments are enabled on this post. 🙂
Thanks as always for your analysis, Tom!
When I’m editorializing and presenting something that’s not entirely neutral (although I strained myself to maintain that here), I leave comments open until things go off the rails. I think that’s only fair.
With that said, if everyone could please refrain from bringing up the underlying legislation (HB 1557) from last year, that would be great. I understand that was the catalyst for what has transpired since, but there’s no need to relitigate that legislation (or its follow-up) to discuss what has arisen since that is germane to Walt Disney World. The standoff has evolved well beyond HB 1557. For reasons that should be understandable to all sides, things become heated when that comes up.
Great article. Re: “Spinning the state’s approach as being anti-free speech, anti-business and anti-Florida is a sound strategy to sway undecideds.”
For what it’s worth, I don’t think you need too much spin to cast the state’s approach in that light. Their approach is kind of exactly that (even some Florida legislator’s w/ R’s after their names have conceded as much). I will be curious to see if they announce a pause on the Lake Nona project…seems like that would be an easy card to play.
I don’t mean spinning as a pejorative term. I had already used framing and Iger used position several times, so I went with a different–and alliterative–term.
Makes sense. I am biased towards that word only having a negative connotation.
They’re not going to pause Lake Nona project. They just got approval last month and are close to final approvals and permitting. The real reason for the delays that only people here seem to grasp is this:
industry challenges, such as high construction costs, the shortage of building materials and labor, and rising interest rates, have slowed the progress to a crawl.
Iger mucked it up, once again. This would be an easy fight Disney MIGHT have won quickly if not for their horrible treatment of guests and APs (FL residence who vote) the last 10 years, especially the recent 3 years. IF Disney had focused more on their customers than stockholder wealth, BlackRock standing and paying their Board and CEO’s billions in wasted compensation then even I would support their fight against my own state. Disney needs to focus on their guests again and NOT these measly crumbs they’ve tossed us the last 6 months. If Iger was really smart, and not greedy with short term ego driven decision making, he would throw a bunch of incentives at WDW, APs (cause we vote in the state of Florida) and DVC. But he isn’t. It’s long time for a new CEO, and Iger isn’t it. He just mucks everything up worse. 2 years of goodwill makeup with APs, DVC and WDW and he would have won this fight without a single shot being fired. We would all have stood by him. But Iger is too shallow for that. He needs to play the long game, keep his mouth shut, make real and huge improvements for APs and wait for the Disney fans as a WHOLE, not the niche, to stand up and support Disney. I support Disney, not Iger.
Eh, I dunno about all that. From my perspective, there are three distinct groups that matter (in terms of public opinion) to different politicians invested in this, and potentially at different timelines:
-Florida voters
-Republican primary voters (nationwide)
-General election voters (nationwide)
Disney fans are a small subset of the second two groups; it’s hard to imagine that all of us are in any way outcome determinative in this. I think it’s possible to have grievances about the way Disney has conducted itself in the last few years and still realize that those complaints are separate from all this and independently addressable.
Disney has recently done too much that. is not in the favor of long term customers. APs, DVC, DCL members are all on the short end of the stick
I am not pleased with the company’s attitude
I disagree with this. Ignoring the politics entirely, as Florida resident who was a long time AP holder, and spent over $20k a year from 2014 to 2019 at the parks and hotels, I was extremely disillusioned with the way WDW was going for a while – unfriendly cast, rising prices, nickel and dining, poor service. Covid came right in time because we had decided not to renew and spend money on any number of other ways.
That said, we have little kids and went back here and there the past three years. There’s been a massive change in my opinion since Iger came back on all of those fronts. I spent last weekend at the Polynesian. A cast member in dining who was remarkably rude in April 2021 (I never forget) was incredibly helpful this time. Parking was free (one thing that drove me nuts was that Disney properties made it so easy, I hated place like B hotel getting hit with fees). Just little stuff all over. I think the morale has improved too down, and so has the micro decision making that had turned me off so much under Chapek.
“I think the morale has improved too down…”
It has.
Cast Members aren’t shy in sharing how they felt about Chapek and what they think of Iger’s return.
Sorry for the spelling errors! Top down, not too down; money in, not money on … stupid phone keyboard
It’s still all crumbs…Iger (or a better CEO) could do so much better to improve the brand’s image. Yeah, torture the CMs and fans with Chapek to lower the standards for an Iger reentry but still, it’s mere crumbs. Disney should play the long game of good will with fans, APs and DVC…most of us live here and vote. Right now Disney is a damaged brand, the sharks are circling the easy target and Disney only has itself to blame.
A great and nuanced look at this never-ending debate. If this is a case of mutually assured destruction as Tom notes, then only one side will ultimately lose in that case, as the State will remain regardless of whether Disney exists or Iger remains as CEO. Iger has a fiduciary duty/obligation to Disney’s shareholders and if he cuts investments in WDW as a result of a silly feud with DeSantis when WDW is the current Disney cash cow, he’s subjecting himself to shareholder suit (not to mention loss of investors) if he’s sacrificing the cash cow for this feud.
Take the $17 billion and buy the Angels from Moreno, the Angel Stadium land from Anaheim and build a Disneyland third gate…and keep Imagineering in California. I feel like this would bring in more $$$ in the long run and be a nice slap to DeSantis.
If this means that Shohei and Trout can stay together, have a franchise built around them, and win a ring together instead of languishing in Anaheim, I think that would be a great outcome.
Oh, and having a third gate in Anaheim would be nice too, I guess. 😉
“If this means that Shohei and Trout can stay together, have a franchise built around them, and win a ring together instead of languishing in Anaheim, I think that would be a great outcome.”
Yes!!! Such potential with the Angels. Time for a refurbishment.
No No No it’s Shohei to the Mets next year. Uncle Steve knows what we need and has the money to make it happen.
So glad this conversation has finally turned into something important.
DeSantis’ narcissistic little ego driven hissy fit in retaliation for someone suggesting that he might be wrong should show us all just how shallow, narrow minded, and frankly unintelligent he and his Republican minions really are. Florida, you can do better than this!
Agree
No offense but this is not appropriate to the topic at hand.
The state of Florida passed legislation and Disney came out and said they are going to lobby to get it overturned. I don’t see in any way why people blame DeSantis for this. Disney brought all this on themselves. Stay out of public politics. They are going to lose and lose bad and it’s their own fault and any consequences they have coming they deserve.
What an insightful, balanced analysis of the nuances of a complicated situation.
The CFTOD board members are indeed comically unqualified to manage a special district, and were obviously picked for their enthusiasm for keeping the culture war against Disney in the news.
Their latest tactic appears to be making up code violations to “fine” Disney, which has the potential of creating an uproar every week or so.
The next big question in my mind is what happens when the board tries to shut down a Disney construction project. Will they invalidate existing construction permits? Will they refuse to issue new ones?
DeSantis also has shown he is unwilling to bend one iota and has continually escalated the fight with the complete backing of the Florida legislature.
What would Disney do if DeSantis ordered a surprise inspection of the monorail that would shut it down during peak season?
Any attempt to materially affect how Disney operates will obviously result in some sort of emergency action from Disney. Still, it’s unclear if the Federal lawsuit would move quickly enough to stave off more DeSantis shenanigans.
“The next big question in my mind is what happens when the board tries to shut down a Disney construction project. Will they invalidate existing construction permits? Will they refuse to issue new ones?”
Even with this escalating way further than it ever should’ve, I still have a hard time seeing that happen. Thus far, everything the state has done has been aimed at scoring a win in the culture war and ‘putting the big bad business’ in its place. What you’re describing would go a step further, and adversely impact in tangible and identifiable ways. That should be a bridge too far.
I believe more of what comes out the Disney camp than I do out of the DeSantis camp. It’s tit for tat situation. Perhaps if Florida lost it’s easy $1.1 Billion in taxes per year, the supporters would think differently once they see the state slip. Would love to have a list of all of the companies/areas in Florida that have the special status. Bob is right, it is about changing the law, then all of those places would be affected. Not just the one that didn’t agree with your bill. It is sad to see this happening as the once great country continues to plunge further into the toilet bowl.
“Perhaps if Florida lost it’s easy $1.1 Billion in taxes per year, the supporters would think differently once they see the state slip.”
I agree that this would be perceived differently if this ended up hurting the state, but how is that going to happen without it also hurting Disney?
In the end, this is a lose-lose, mutually assured destruction situation for both sides.
Hear hear Tom that is exactly what I was going to write.
If Disney is paying over a billion in taxes how much are they generating in order to owe that much?
It’s mind boggling.
This is one of the reasons all this back and forth is so absurd. Prisons outside MK and moving elsewhere
Can you say mutual nuclear destruction?
Not going to happen
Now Ohtani to the Mets…..
I have a relative who works in Disney Parks Management, and she said Disney would probably not end all investments in Disney World, but they would certainly cut back on the amount they were planning on investing. In fact, according to her they have already placed some projects on hold until this problem is resolved.
You are giving DeSantis way too much credit. And if you follow politics he is, basically, only like by the people of Florida. He also falls apart on stage. As for Bod Iger’s threat who can say? But I highly doubt it was an empty one
Also Disney has really good lawyers.
This post doesn’t address how DeSantis will perform on the national stage or the literal debate stage, nor does it speak to the strengths of Disney’s legal case.
I have opinions about all of those things, but I don’t think that’s immediately relevant to the question of Disney pausing/delaying/ending investments at Walt Disney World. 😉
I am surprised the board is taking on the governor. I don’t think will end well for Disney. Nothing that Florida is doing is illegal. They have the right to make all these changes. I think Disney is making a major mistake here. Businesses should keep politics internal. Taking on a state sue to legislation that passed legally by its citizens elected officials (largest gubernatorial margin win in the country ) is a slippery slope. What happens when they lose their lawsuit? Then What? Escalate further? No bueno.
You are surprised a private business is defending itself against government officials passing laws specifically targeting that company because the government officials did not like the fact that the company publicly disagreed withblaws passed? I mean, come on.
Also, you are assuming laws passed by the government are always legal simply because elected officials passed it and that’s not the case. And let’s not pretend like this is the will of the people. Many Republicans who voted for DeSantis do not agree with this and that’s not even discussing the overall voter turnout issue.
Actually, it IS illegal for the Sate of Florida to directly retaliate against a Corporation for simply exercising their First Amendment rights that have clearly established thru the Supreme Court. How do we know this is retaliation? DeSantis said it himself! Dumb move but too late to retract.
Honestly, shut the hell up, there would be
any major announcements for Walt Disney World in the near future, the governor of Florida is just one big piece of dog poop, and he needs to step down now, so all of this can end