Here Are the Ten Reasons That Could Stop Disney Expansion

The Walt Disney Company just put a song in all our hearts when it announced massive expansion plans.

Disney will double its investment in theme parks, cruise ships, and experiences over the next decade.

We’re talking about $60 billion or $6 billion a year that Disney will invest to grow its theme park brand.

Obviously, we’re excited about the results, but everyone should realize that Disney provided itself a few outs.

Here are the ten things that could stop Disney’s expansion plans.

The Economy

Disney’s SEC filing explicitly stated the ten conditions that could prevent the expansion from occurring.

Most of them fall under the heading of common sense, but we’ll discuss why they matter.

The most obvious one is “further deterioration in domestic and global economic conditions or a failure of conditions to improve as anticipated.”

Disney has suffered some notorious economic lulls during the 21^st century.

For instance, Disney California Adventure had only opened a few months before 9/11.

The housing crisis of 2008 also crushed the tourism industry for a time afterward.

Disney is warning investors that its current financial forecast suggests that the economy will remain strong indefinitely.

However, the company reserves the right to cancel projects if something unexpected occurs…like, you know, a pandemic.

Increased Competition

Another warning involves “the deterioration in or pressures from competitive conditions, including competition to create or acquire content, competition for talent and competition for advertising revenue.”

As a reminder, Universal Studios is currently constructing a theme park in Orlando, Florida.

You probably don’t ever consider this, but few people have received training in theme park construction.

A sudden competition for these jobs could create a recurring labor problem.

In such a scenario, Disney would more likely delay construction, but it reserves the right to cancel.

Advertising revenue in this context likely means sponsorship deals, which Walt Disney World uses more often than you might realize.

Right now, Ziploc even sponsors Jungle Cruise by giving away plastic baggies to safeguard your belongings.

Acceptance of Disney Content

You can think of this as the “presuming that Direct-to-Consumer doesn’t bankrupt us” legalese.

Here’s the exact quote from the SEC filing:

Disney wouldn’t expand if it tracked a drop in “consumer preferences and acceptance of our content, offerings, pricing model and price increases, and corresponding subscriber additions and churn, and the market for advertising sales on our DTC services and linear networks.”

Basically, Disney is saying that if all its fans suddenly revolted overnight and stopped supporting the products, Disney would cancel expansion plans.

That’s the equivalent of saying that if a riverbed suddenly dried up, people would stop selling boats and fishing rods.

There’s a “Well, duh!” element to it. When a product is no longer popular, the manufacturer stops making it.

Disney would do the same in the wildly unlikely event that its theme parks suddenly lost all their appeal.

Since Disney’s data suggests that it’s not currently monetizing 700 million potential fans with theme park content, this concern appears irrelevant.

Health Concerns

Disney alerts investors that it would alter its expansion plans due to “health concerns and their impact on our businesses and productions.”

This one circles back to the pandemic aspect I mentioned earlier.

In the once-a-century instance when a pandemic occurs, Disney wouldn’t want to perform construction.

Obviously, the odds are extremely remote that a pandemic would occur. But a different form of health crisis would cause a similar change in plans.

Military Conflicts

Yup, Disney has no intention of working on theme park expansion in the middle of a military conflict.

Specifically, Disney would stop in the event of “international, political or military developments.”

Let’s say that the conflict in some countries unexpectedly escalated to involve other parts of the world.

In that scenario, Disney’s theme park strategies would appear trivial in comparison. Park officials know this and would adapt accordingly.

Similarly, if some sort of unimaginable political incident occurred, that would stop progress as well.

Both these events are so unlikely that it’s pointless to speculate what could cause either of them, though.

Legal Developments

Okay, here’s one that should make you pause for a moment.

Disney lists the possibility of “regulatory and legal developments” as a potential cause to cancel expansion plans.

What could that be? I can’t help but think that, say, a feud with an unfriendly local board or state governor would qualify.

This section probably matters the most among everything we’re discussing here. A tidy bit of legalese establishes legal boundaries.

Should something happen in court that caused Disney to ask for monetary damages, it could point to canceled expansion plans as a rationale.

Will that happen? Probably not. Disney sounds rather determined to build at Disneyland Resort and Walt Disney World.

Despite this fact, Disney did leave itself a loophole here.

Some would even argue that it set a trap for bumbling board members, should any foolishly mess with the Mouse.

Tech Changes

Disney lists “technological developments” as a concern, but I’ll level with you.

I just don’t see that as a realistic threat anytime soon. Yes, Disney CEO Bob Iger appeared at an Apple event and showed some new tech.

This idea will eventually bring Disney stories into people’s homes through interactive digital experiences.

That tech may or may not qualify as a metaverse experience. No matter what it is, it ain’t happening anytime soon. Probably.

Disney is providing itself with an out in the unlikely event that some tech genius suddenly has a breakthrough that revolutionizes internet usage.

Nobody saw google or the iPhone changing culture the way that they did. So, it’s smart to account for unknowns with this language.

Work Stoppages

Disney uses the exact phrasing of “labor markets and activities, including work stoppages” to acknowledge the obvious.

If cast members or local construction crews or stage performers suddenly went on strike, Disney couldn’t populate new themed lands and attractions with staff.

That’s just math.

Thankfully, Disney has settled its labor agreements for a few years and, if it has learned from recent mistakes, it’ll negotiate earlier next time.

Given what we’ve watched in Hollywood in 2023, a prolonged strike always remains possible as long as stubborn people refuse to compromise.

Natural Disasters

Disney lists the possibility of “adverse weather conditions or natural disasters” as potential deal breakers.

Most SEC filings that involve construction include a clause like this one.

With Disney, such notices count as more than rote inclusions, though.

Realistically, Disneyland Resort resides in an area with approximately 100 fault lines, including the San Andreas Fault.

A 1994 earthquake infamously closed Disneyland Park, and a less dramatic incident occurred in 2019.

At Walt Disney World, hurricane season has grown gradually more disruptive.

Obviously, nothing dramatic is likely to happen at either park, but Disney is smart to take this concern seriously.

Content Availability

Finally, Disney lists “availability of content” as a sticking point.

You shouldn’t overthink this one. It’s rather straightforward even though the wording makes it seem open to interpretation.

Disney has constructed all its theme parks around its most beloved stories.

Should something happen that caused Disney to lose the rights to such stories, it’d no longer build the promised expansions.

As a reminder, Disney has hinted at themed lands and attractions for Frozen, Peter Pan, Tangled, Zootopia, Wakanda, and several others.

Disney needs the rights to build theme park iterations of that content.

Since Disney has vertically integrated most of its core content, this is a trivial concern, though.

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Feature Photo: Disney