Disney pulls the plug on $1 billion Florida development
In March, Disney called Florida Governor Ron DeSantis “anti-business” for his scorched-earth effort to tighten oversight of the company’s theme park resort near Orlando. Last month, when Disney sued the governor and his allies for what it called “a targeted campaign of government retaliation,” the company made it clear that $17 billion in planned investment in Walt Disney World was at stake.
“Does the state want us to invest more, hire more people and pay more taxes, or not?” So said Robert A. Iger, CEO of Disney, last week during an earnings-related conference call with analysts.
On Thursday, Mr. Iger and Josh D’Amaro, Disney’s theme park and consumer products chairman, showed they were not bluffing by pulling the plug on a nearly $1 billion office complex that was scheduled to be built in Orlando. It would have brought more than 2,000 jobs to the region, with an average salary of $120,000, according to an estimate by the Florida Department of Economic Opportunity.
Known as the Lake Nona Town Center, the project would entail the relocation of more than 1,000 workers from Southern California, including most of a division known as Imagineering, which partners with Disney’s movie studios to develop theme park attractions. Most of the affected employees complained bitterly about having to move — some quit — but Disney largely held out, in part because of a Florida tax credit that had allowed the company to recoup a whopping $570 million over 20 years building and occupying of the complex .
When announcing the project in 2021, Mr. D’Amaro cited “Florida’s business-friendly climate” as justification.
Mr. D’Amaro’s tone in an email to employees on Thursday was strikingly different. He cited “changing operating conditions” as the reason for canceling the Lake Nona project. “I remain optimistic about the direction of our Walt Disney World business,” Mr. D’Amaro said in the memo. He noted that $17 billion is still earmarked for the construction of Disney World over the next decade — growth estimated to create 13,000 jobs. “I hope we succeed,” he said.
But the company’s battle with Mr. DeSantis and his allies in the Florida legislature played a prominent role in Disney’s decision to cancel the Lake Nona project, according to two people briefed on the matter and on condition of spoke anonymously to discuss private deliberations. A spokeswoman for Mr Iger said he was not available for an interview.
About 200 Disney employees have already moved to Florida from California. Mr D’Amaro said in his note that the company would discuss options with them, “including the possibility of moving you back.” The Lake Nona project was initially scheduled to open next year. Last July, Disney pushed back the move-in date to 2026, citing construction delays.
The Lake Nona campus, about 20 miles from Disney World near Orlando International Airport, was defended by Bob Chapek, who served as Disney’s CEO from 2020 until he was fired last year. Mr. Iger, who retired to take over Disney’s reins again, was far less enthusiastic about the project — even before the company got caught up in the feud with Mr. DeSantis. For instance, as soon as he returned to Disney, Mr. Iger started telling lieutenants that there was little point in taking Imagineering so far away from Disney’s movie studios. As he likes to say, “Creative teams need to be together.”
Disney is also cutting $5.5 billion in costs to improve profitability, pay down debt and restore dividends.
Mr. DeSantis and Disney have been sparring for more than a year over a special tax district that includes Disney World. The battle began when the company criticized a Florida education law that opponents labeled “Don’t Say Gay” because it limits classroom instruction on gender identity and sexual orientation — much to the anger of Mr. DeSantis, who repeatedly vowed to payback.
Since then, at the urging of Mr. DeSantis, Florida lawmakers have targeted Disney – the state’s largest taxpayer – with a variety of hostile measures. In February, they ended Disney’s long-held ability to self-run its 25,000-acre resort as if it were a county, putting Mr. DeSantis in control of government services at the resort.
It was soon discovered that the previous Disney-controlled board of directors had approved development contracts that laid out a growth plan for the resort. An attempt to nullify those agreements has since resulted in dueling lawsuits, with Disney suing Mr. DeSantis and his allies in federal court and the governor’s tax district appointees dismissed in state court.