Why Building A Fifth Theme Park In Florida Could Give Disney A Happy Ending In Its Battle With Ron DeSantis

Disney isn’t used to losing. Its fairytales are famous for good triumphing over evil and the heroes always save the day. However, real life is a little more complicated than that as the Mouse has found in a feud with Florida governor Ron DeSantis. It is using every trick in its spell book to gain an upper hand.

The dispute dates back to March last year when the Florida legislature passed an education bill which prohibits teachers of younger students from using instruction time to discuss sexual orientation and sexual identity. Known as the ‘Don’t Say Gay’ bill, it hit staff at Disney particularly hard as the company has long been a leader in inclusivity.

In 1996 Disney became one of the first major corporations in the United States to offer health coverage to the live-in partners of gay and lesbian employees. Thousands of its staff now take part in LGBTQ business employee resource groups every year and it donates profits from its pride-themed clothing and merchandise collection to organizations that support LGBTQ youth and families.

Crucially, the ‘Don’t Say Gay’ bill landed right on Disney’s doorstep. Its biggest base of operations is Walt Disney
DIS

DIS
World in Orlando, Florida which is home to four theme parks, two water parks, more than 25 hotels and roughly 80,000 employees making it the largest single-site employer in the US.

Given this backdrop it came as a huge surprise when Disney’s name was not on a list of 150 companies, including Marriott and American Airlines, which had signed a Human Rights Campaign letter opposing the ‘Don’t Say Gay’ bill. Instead of weighing in on the political battle, Disney’s then-chief executive Bob Chapek chose to try and soften the legislation behind the scenes. It didn’t have a magic touch.

During Disney’s annual shareholders meeting last year Chapek was called out over the corporation’s silence and its financial backing of Florida politicians who supported the legislation. Chapek’s staff then turned on him in messages posted on social media urging Disney to take a stand against the controversial bill. Even Disney’s prestigious Pixar animation division released a statement condemning the lack of action and said “we are calling on Disney leadership to immediately withdraw all financial support from the legislators behind the ‘Don’t Say Gay’ bill, to fully denounce this legislation publicly, and to make amends for their financial involvement.”

By the time Chapek did a volte face and apologized to staff, it was too late. Many of them saw it as a hollow gesture and began organizing protests at Disney’s campuses in Burbank, California, and Orlando through a website called WhereIsChapek.com. Even the announcers at Disney’s ESPN sports network protested the legislation with on-air silence during an NCAA women’s basketball tournament.

Adding to their anger, Chapek’s comments came just before the bill was passed. He only issued a public statement of opposition to the legislation after DeSantis signed it into law. By then, Chapek had lost the support of his workforce so all his statement served to do was annoy DeSantis who mocked the company as “Woke Disney.” That was just the start.

In April last year DeSantis signed another bill which cast a dark spell on Disney’s Magic Kingdom. It aimed to dissolve the Reedy Creek Improvement District (RCID), a special governing jurisdiction which was created by the Florida Legislature a year after Walt Disney died in 1966. Only the most eagle-eyed visitors to Disney World will have noticed the RCID name on local services such as the fire station with its eye-catching artificial hose which wraps around the building and leads into a fountain. However, the RCID’s relative obscurity belied its importance as it essentially allowed Disney to self-govern its 25,000-acre theme park complex as a de facto county, controlling fire protection, policing, road maintenance and, crucially, development planning.

DeSantis’ decision to dissolve it jeopardised all this and the curtain was due to come down on the RCID on July 1 this year. That changed after Chapek was unexpectedly replaced by his predecessor Bob Iger in November last year. Iger’s more amenable approach initially seemed to appeal to DeSantis as he decided to water down his plan to dissolve the RCID.

During a special session of the Florida legislature in February, the RCID was renamed the Central Florida Tourism Oversight District and the governor got exclusive rights to select board members instead of Disney choosing them. To ensure their independence, they aren’t allowed to have worked within the theme park industry for at least the past three years. “Today the corporate kingdom finally comes to an end,” said DeSantis when he signed the bill into law. “There’s a new sheriff in town, and accountability will be the order of the day.”

DeSantis hasn’t been shy about his motivation. Just last week he told an audience at Hillsdale College, a conservative liberal arts college in Michigan, that “under no circumstances should the state of Florida be subsidising woke activism by allowing [Disney] to have their own government so we took it away. They lost their own government.”

It set the stage for a tussle worthy of a Hollywood blockbuster and Disney has tried to stay one step ahead of its opponent.

In early February, at a public meeting before the legislative change, the RCID approved a new development agreement that keeps Disney in the driving seat, limits the power of the incoming board and prevents it from changing these terms. Theme park industry experts Screamscape recently reported that as part of this development agreement, the RCID board approved plans for Disney to build a fifth major theme park by 2032 as well as two more minor additions, such as water parks.

Some saw this as a last ditch attempt for Disney to plant its flag on the sites before DeSantis marched in. Disney doesn’t have to build the parks but by getting the approval it seemed to be keeping its options open. In fact, its plans may be a lot more strategic than that.

At the first meeting of the Central Florida Tourism Oversight District they found that their hands were tied. Unsurprisingly, DeSantis was apoplectic. On April 3 he sent a letter to Melinda Miguel, chief inspector general of the state of Florida, asking her to carry out a “thorough review and investigation” into the actions of the RCID board.

The letter asked the inspector general to pay particular attention to “the involvement of Walt Disney World employees and agents in the execution of RCID’s actions” and to look into whether there was “any financial gain or benefit derived by Walt Disney World as a result of RCID’s actions.”

Perhaps, ominously it also asked the inspector general to include analysis of “RCID’s adherence to applicable Florida civil and criminal laws and ethics requirements” and added that “any legal or ethical violations should be referred to the appropriate authorities.”

Of course, that doesn’t mean the RCID’s actions were criminal and Disney strenuously denies any wrongdoing. It said in a statement that “all agreements signed between Disney and the District were appropriate, and were discussed and approved in open, noticed public forums in compliance with Florida Government in the Sunshine law.”

DeSantis strongly disagrees and made this very clear in a statement given to WDWNT, the leading authority on Disney parks news. The governor’s communications director Taryn Fenske said that DeSantis “is aware of Disney’s last-ditch efforts to execute contracts just before ratifying the new law that transfers rights and authorities from the former Reedy Creek Improvement District to Disney.

“An initial review suggests these agreements may have significant legal infirmities that would render the contracts void as a matter of law. We are pleased the new governor-appointed board retained multiple financial and legal firms to conduct audits and investigate Disney’s past behavior.” If the contracts are overturned then the fifth park would be far from a certainty and Disney could kiss goodbye to having control over local development planning.

Brian Aungst Jr., one of the directors of the Central Florida Tourism Oversight District, said at its second meeting on March 29 that the RCID’s manoeuver “completely circumvents the authority of the board to govern.” He added that “we gave governmental control to Disney…we’re going to have to deal with it and correct it.” This was echoed by Martin Garcia, chairman of the new board, who suggested taking the case to the Supreme Court in “protected litigation” against Disney.

If it is so clear that Disney is in the wrong then why did it go ahead with this in the first place? Just like the sorcerer’s apprentice himself, Iger may have a trick up his sleeve and the first signs of that may have started to come to light.

Talking at Disney’s annual shareholders meeting on April 3, Iger voiced his frustration with DeSantis, saying that “a company has a right to freedom of speech just like individuals do”. He added that DeSantis “has decided to retaliate against us, including the naming of a new board to oversee the property, in effect to seek to punish a company for its exercise of a constitutional right. And that just seems really wrong to me.” Then came the bombshell.

Iger said that not only is Disney Florida’s largest corporate employer and taxpayer, but it is planning to invest more than $17 billion in Disney World over the next decade, creating an estimated 13,000 additional jobs and thousands of other indirect jobs, which would “generate more taxes” and increase tourist numbers to the state.

It seemed to make the prospect of a fifth park at Disney World much more concrete. Although leading theme park attractions can cost north of $100 million, Disney would have to add a huge number of them to its existing parks over the next decade to reach the $17 billion mark. It’s particularly hard to imagine given that Disney has just finished updating its four existing parks in Orlando.

It started with the addition of Pandora – The World of Avatar to Disney’s Animal Kingdom park in 2017. Hollywood Studios park added Toy Story Land the following year with Star Wars: Galaxy’s Edge and Mickey & Minnie’s Runaway Railway joining it just before the pandemic. Earlier this week the Magic Kingdom park opened its latest rollercoaster themed to the Tron movies and another based on the Guardians of the Galaxy series opened at the futuristic Epcot park last year.

Disney recently announced that the transformation of Epcot will be complete by the end of 2023 so it would be logical for the company to then turn its attention to a fifth park, especially as it would be in line with its corporate strategy.

Soon after Iger became Disney’s boss for the second time in November he confirmed that it will continue to use a controversial theme park reservation system to limit attendance and improve the guest experience. Clearly, ticket prices can’t be increased ad infinitum so if attendance is capped, the most logical way to boost Disney World’s revenue would be to add more parks. Disney’s biggest rival isn’t hesitating to do this.

Just a few minutes down the road from Disney World, Comcast
CMCSA
is expanding its Universal Orlando resort by building a third theme park which is due to open in 2025 on 750 acres of land. Called Epic Universe, the park is expected to be a gamechanger so Disney will have little choice but to respond, especially as its latest park opened in Orlando way back in 1998.

The cost of earthworks and construction of a cutting-edge theme park can run into billions which is further evidence that this is what Iger was referring to. However, perhaps the biggest giveaway is the job creation. Building new rides doesn’t generate as many new jobs as an additional park as it requires roles in everything from retail and catering to security, landscaping and lighting. As this author recently reported, Disneyland Paris employs 17,000 staff across two parks and that of course excludes the construction crews which would be required to build a new complex.

It puts the 13,000 jobs right in the ballpark for a new theme park so if that is what Iger was referring to, surely that means it is on its way? Not so fast. If a fifth park has been disclosed in filings from Disney and comments from its CEO why hasn’t it been formally announced? Disney doesn’t usually do this unless a project is going ahead as it doesn’t like letting its customers down. So what was the point in the disclosures if a fifth park isn’t actually on the way?

There’s no doubt that a fifth park appears to be under development and 13,000 new jobs in Florida could be on the line if it doesn’t go ahead. Even if Disney doesn’t actually intend to develop a fifth park it appears to be seriously considering it and this suits it just fine. On the one hand, a fifth park hasn’t been officially announced so no one will be let down if it doesn’t go ahead. On the other hand, does DeSantis want to risk calling Disney’s bluff by overturning the RCID’s decision and being known as the man who cost Florida 13,000 new jobs? That would be anything but a happy ending and would be a great gamble as Disney might not even have concrete plans to develop a fifth park.

It doesn’t seem to have deterred DeSantis. Instead of backing down, he is doubling down and told the audience at Hillsdale College last week that “we are not just going to avoid the development agreement that [Disney] tried to do, we are going to look at things like taxes on the hotels, we are going to look at things like tolls on the roads, we are going to look things like developing some of the property that the district owns…Come hell or highwater, we are going to make sure that policy of Florida carries the day. They can keep trying to do things but ultimately we are going to win on every single issue involving Disney, I can tell you that.”

A rapprochement may seem far, far away but the allure of a fifth park could still swing it. Over the coming months DeSantis is expected to formally declare that he will run for president in 2024 and if he does, it would be handy to have the generation of 13,000 jobs on his ticket. Iger could gift it to him on a plate provided of course that Disney’s development agreement isn’t overturned. Make no mistake, Disney’s mascot may be a mouse but when it comes to business negotiations, the company is a shark.