Disney Nears Victory with Reedy Creek Resolution
According to a report, a settlement is in the offing for the Reedy Creek Improvement District.
To the surprise of no one who has been paying attention, this whole thing was much ado about nothing, and Disney should get out of this unscathed.
Here’s what we can expect when Florida announces changes to Reedy Creek.
How It Started
The Financial Times is one of the most respected business publications in the world.
While most of their content resides behind a paywall, a Disney report from December 2nd is currently free to read.
The gist is that Florida’s government officials have recognized the mistakes they made several months ago during a high-profile showdown with Disney.
At the time, then-CEO Bob Chapek waited too long to take a position on the so-called Don’t Say Gay bill Florida’s state government ratified into law.
After numerous cast members protested, Chapek loudly declared that he was against the law.
By this point, former CEO Bob Iger had already taken a stronger position, which embarrassed Chapek further.
More importantly, Disney’s strong, albeit tardy, admonition of Florida’s government led to an absurd decision.
Select Florida lawmakers voted to punish Disney by dissolving the Reedy Creek Improvement District.
At the time, many of us pointed to the fact that Florida chose not to do this immediately, waiting until the summer of 2023.
The lawmakers added the delay because they had performed no research into how such a dissolution would impact the government’s finances.
Almost immediately afterward, the people whose job it is to pay Florida’s bills frowned on the legislation. They indicated that the state would acquire $1 billion in debt by dissolving Reedy Creek.
Since then, MickeyBlog has stated on multiple occasions that the perceived showdown would lead to a single logical outcome.
Florida’s government would back away from the declaration by announcing a couple of meaningless restrictions that wouldn’t impact Disney in the least.
How It’s Going
On a seemingly unrelated note, the new Financial Times update suggests that Florida wants to settle quickly.
According to them, “state lawmakers are working on a compromise that would allow Disney to keep the arrangement largely in place with a few modifications.”
Naturally, you’re wondering what the modifications are. According to this report, Disney would lose the ability to build “a nuclear power plant or an airport on the property.”
This is akin to the state of Florida stripping away my right to win an Olympic Gold Medal. I wasn’t going to try to do that anyway, so…
In truth, Disney’s ability to build a nuclear facility has remained an ongoing joke for as long as I can remember.
The fact that this was even a possibility at some point speaks to how desperate Florida legislators have always been to keep the company happy.
Florida’s governor recognized an opportunity to score some political points at Disney’s expense during the spring.
Since then, circumstances have changed. For starters, Chapek is out while Iger is in.
Florida’s governor has eyed a presidential run in 2024. Iger had contemplated the same in 2020 to the point that Rupert Murdoch found a way to prevent that from happening.
When Fox sold its assets, the deal was contingent on Iger staying as CEO. That’s actually part of the reason why we’re all in this mess.
If Iger had run for president in 2020, someone else likely would have become Disney’s CEO instead of Chapek.
So, Florida’s governor clearly believed he could push around Chapek, a political novice. Iger poses a much stronger risk. As such, we’re facing a quick resolution.
One of the primary rules in politics is “only pick fights you’re sure you can win.” With Iger back, Florida legislators are no longer sure.
Are We Sure This Deal Gets Done?
A lot depends on what happens next. I’ll walk you through some recent events that factor heavily into this conversation.
For starters, Iger answered a question at his Monday Town Hall. The topic was the Don’t Say Gay bill.
Here’s how Iger responded:
“What I can say [is] the state of Florida has been important to us for a long time, and we have been very important to the state of Florida.
That is something I’m extremely mindful of and will articulate if I get the chance.”
That’s a polite way of saying that Florida and Walt Disney World need each other.
However, some of Iger’s strong comments in support of the LGBTQ+ community come across as a thinly veiled threat.
Iger has powerful friends, and the reality is that someone planning to run for president in 2024 doesn’t want him as an enemy.
That’s only part of the story as well. Florida is still facing the weight of its financial burden caused by Hurricane Ian.
In fact, the state recently reclaimed $2 billion from a BlackRock investment, with legislators randomly claiming it was politically motivated.
Florida likely needed that money to pay some of its unexpected debts. To a larger point, we’ve reached the end of the year.
Companies are approaching 2023 as a time to get lean. The same is true of state governments as they attempt to prep their annual budgets.
Despite what Florida politicians may have said, the money people who handle the state’s payments indicated a danger of defaulting on some payments.
That’s how poorly planned the Reedy Creek dissolution was. With Florida needing more money than planned, those payment defaults could have proven financially devastating.
For this reason, it’s MUCH easier for politicians to claim that they have whipped Disney into shape, even as that company’s CEO acts defiant.
So, a deal probably gets done.
What to Expect Next
Here’s what you should keep in mind about all this nonsense:
And lastly, a reminder that much of this is political theater.
Disney's Reedy Creek district is still there.
And the RPOF backed & elected a new GOP rep for the House district who has said she no longer believes Disney should have its special privileges revoked.
— Scott Maxwell (@Scott_Maxwell) November 30, 2022
That’s intrepid Orlando Sentinel reporter Scott Maxwell reaffirming what I’ve said all along.
Virtually everything about the Reedy Creek dissolution has been nonsense. However, the legislation carried real consequences for Disney and especially Florida taxpayers.
Now, cooler heads are prevailing about a matter that Disney was likely to win in court anyway.
The Financial Times article notes that Iger “struck the right tone for reaching a compromise.” He really didn’t in that he was openly defiant.
However, that’s what politicians need to state so that voters will believe they punished Disney as promised.
What happens next? The article hinted at the likeliest resolution. Presuming that nobody does anything stupid or, as I call it, pulls a Chapek, a deal should happen soon.
What will this “compromise” entail? As mentioned, Disney will lose its rights to make nuclear facilities or operate an airport.
Also, Florida’s governor could earn the ability to appoint two people to the Reedy Creek board. How big a deal is that?
Well, Disney has historically appointed all five members of the board. Two of them have terms that expire in May 2023.
Presumably, those are the two seats the governor would choose. Disney would remain full control of voting power with its three appointees, though.
In other words, all the changes under the discussion are utterly meaningless to Reedy Creek’s daily operations.
Should something change in the negotiations, we’ll let you know. For now, this appears to be a toothless political gambit with no endgame.