News Reedy Creek Improvement District and the Central Florida Tourism Oversight District

[lazyboy97o]

I wondered the same thing.

I know that S&D are on Disney-owned land that Tishman leases, and that there are restrictions in that lease that Tishman is limited to what land they can develop, and were only allowed to develop 2 hotels (which is why Swan Reserve - originally to be called The Cove at the Walt Disney World Swan - was built on the location of the Swan's tennis courts and is technically an expansion of the Swan), and that Disney has to approve any changes.

So if Disney already had such authority over non-Disney hotels in the district, can they really argue that the new agreement gives Disney authority it didn't already have via lease agreements?

I guess in theory if someone made the right offer they could buy a parcel without any such agreements or restrictions. But I think that gets to the issue of standing, we’re talking about some future party who is impeded by the contract. Why does this limit the District and do so right now when there is no alternative comprehensive plan? I have a hard time not coming to the conclusion that the Board does have secret plans, that they thought they could take land and sell it off to other hotel developers. They’ve pretty much admitted as much with regards to affordable housing even though it is now allowed in most of the District.

 

[mkt]

So TWDC would purposely neglect WDW and relocate DCL (both cash cows for the company) to prove a point?

The company needs these dependable sources of income.

Not trolling, just asking.

Maintaining the status quo at WDW isn't neglect. They just wouldn't expand.

That's Disney's other potential power move: jobs.

DCL doesn't need Florida: it needs a port. I am beyond certain that there are plenty of cruise ports that could offer Disney a better deal than Florida's have.

And as far as the part you ignored, I can also imagine Disney allowing white collar professionals to go remote from anywhere they want.

 

[LAKid53]

So TWDC would purposely neglect WDW and relocate DCL (both cash cows for the company) to prove a point?

The company needs these dependable sources of income.

Not trolling, just asking.

DCL has invested a lot of money to upgrade their terminal in Port Canaveral and is in the process of modifying the terminal it acquired from Carnival at Port Everglades. It's not going to abandon either, especially with 2 more ships in the works. The partially completed ship it acquired last year will be used in Asia. No word if the Treasure will be permanently berthed at Port Everglades.

 

[Andrew C]

DCL doesn't need Florida: it needs a port. I am beyond certain that there are plenty of cruise ports that could offer Disney a better deal than Florida's have.

It absolutely needs Florida. The state is an essential part of Caribbean and Bahamian cruising out of the US.

 

[LAKid53]

Maintaining the status quo at WDW isn't neglect. They just wouldn't expand.

That's Disney's other potential power move: jobs.

DCL doesn't need Florida: it needs a port. I am beyond certain that there are plenty of cruise ports that could offer Disney a better deal than Florida's have.

And as far as the part you ignored, I can also imagine Disney allowing white collar professionals to go remote from anywhere they want.

I must disagree. As I said above, Disney has spent $$$$ upgrading their terminal at Port Canaveral and finishing work on the berth they acquired from Carnival at Port Everglades. The Caribbean is the bread and butter of the US cruise industry. The only other options would be Houston or New Orleans.

Why port further away from your most lucrative routes that include Castaway Cay and the addition of Lighthouse Point next year?

 

[LAKid53]

It absolutely needs Florida. The state is essential part of Caribbean cruising out of the US.

Precisely

 

[JAB]

I guess in theory if someone made the right offer they could buy a parcel without any such agreements or restrictions. But I think that gets to the issue of standing, we’re talking about some future party who is impeded by the contract. Why does this limit the District and do so right now when there is no alternative comprehensive plan? I have a hard time not coming to the conclusion that the Board does have secret plans, that they thought they could take land and sell it off to other hotel developers. They’ve pretty much admitted as much with regards to affordable housing even though it is now allowed in most of the District.

Makes sense. I hadn't considered what ulterior motives CFTOB might have had. So basically, regardless of whatever the superficial legal reasoning of their argument is, they're really just upset that the development agreement would prevent them from enacting their plan to "stick it" to Disney by letting the competition develop on the doorstep of the parks.

 

[Chip Chipperson]

So TWDC would purposely neglect WDW and relocate DCL (both cash cows for the company) to prove a point?

The company needs these dependable sources of income.

Not trolling, just asking.

Moving DCL wouldn't necessarily have a negative impact on its Financials- especially if the state continues trying to find ways to punish Disney since DCL could be a potential target for petty vindictive interference.

Not building more WDW hotels isn't necessarily "neglecting" WDW, either - but if the state is going to continue to seek out ways to cost Disney money then perhaps that money is better spent in places where they won't have to mount legal battles to build and won't face building inspectors who could potentially care more about pleasing the governor and his handpicked CFTOD board than actually making sure the building is up to code. Those added costs, delays, and headaches would alter the cost-benefit analysis when choosing between multiple options and locations. They could simply save any WDW projects for a time when a reasonable board is in place at CFTOD, which may be several years down the line if Disney somehow loses the court case.

 

[GrumpyFan]

They can't pack up WDW and move to another state, but they can relocate DCL home ports, slow/stop construction of new hotels in FL (and prioritize new DVC builds in CA over FL, possibly with more Hilton Head type beach resorts outside of FL), and move office workers to other states. None of that would equal the impact of moving all of WDW, obviously, but it's not nothing, either. I'm sure Disney would prefer to have the courts rule in their favor over those options, though.

For DCL, Florida is probably the best location, mainly because of its close proximity to Castaway and the new Lighthouse Point private islands, but also WDW. South Carolina or Georgia might be a reasonable re-lo option for them but those aren't great ports, and would require some major investment to get up to standard. Of those two, Charleston might be the better option, since no major cruise lines go out of Savannah. Also, compared to WDW, the cruise ports don't employ near as many people, so the impact there would be small, but certainly significant for the areas, although, I think the other cruise lines would quickly absorb them, so it wouldn't be a big loss for the state. The biggest hit Florida might see with DCL pulling out would be in tax and tourism revenue, but again, those might be leveled out by other cruise lines.

Building more DVCs outside of Florida also wouldn't have a big effect, as those outside Florida, don't have as big a draw, with the exception maybe of Aulani.

The other option was the suspension of the Lake Nona project, which was in progress. While this wasn't a large impact to the area, it was an investment and would have likely meant more jobs and revenue for the area in the long term. The bad part about this for Disney is that it would have been a significant savings for them. There really isn't another location for them to move to that would have the same cost benefit as Florida.

Outside of these, they could suspend or slow development in Florida, but that will hurt them more than the state. Sadly, they seem to be over a barrel here. Theirs and Florida's best bet would be for this to be settled and a return to what they had or something similar.

One other option would be for them to get REAL political and dump a bunch of money and advertising against Desantis. They could also donate heavily into his opponents, but as we've seen here, that can cause backlash as well with their fan base. If I were them, I would at least go on a publicity tour maybe with some advertising and perhaps even trying to get some other Florida business leaders to help them fight back. At the very least, hire a PR firm to help them wage this battle. It might be costly in the short term, and the timing couldn't be worse for them to incur such an expense, but losing this fight could also be costly for years to come.

 

[Chip Chipperson]

It absolutely needs Florida. The state is an essential part of Caribbean and Bahamian cruising out of the US.

They couldn't - and wouldn't - completely abandon FL ports, but if they could get an appealing deal at Port Charleston they could certainly start moving some of their older ships from FL to SC. They could also add more NYC to Canada sailings, have more Mexico sailings out of Texas, etc. Reducing does not mean eliminating.

 

[Andrew C]

They couldn't - and wouldn't - completely abandon FL ports, but if they could get an appealing deal at Port Charleston they could certainly start moving some of their older ships from FL to SC. They could also add more NYC to Canada sailings, have more Mexico sailings out of Texas, etc. Reducing does not mean eliminating.

Caribbean is the money maker and what you're suggesting would significantly hurt that, well beyond this fight with the gov. Location/proximity, infrastructure, skilled workers, customer base, customer expectations...just not viable.

 

[mmascari]

I have a hard time not coming to the conclusion that the Board does have secret plans, that they thought they could take land and sell it off to other hotel developers. They’ve pretty much admitted as much with regards to affordable housing even though it is now allowed in most of the District.

They don't even need to follow through and do that. The threat of doing it would create enormous leverage over Disney. That's clearly what they want.

They want to be able to say Disney should adjust Disney+, movie, and whatever other content. Even if that isn't an action available to the board. If they can can give a nod to "We're so distracted by this content we don't like that we're thinking of opening a high rise office building on the land between Animal Kingdom Lodge and Animal Kingdom."

They don't actually need to build that high rise, but they do need it to be a credible threat. Anything that removes it as threat option is a win for Disney.

 

[Dranth]

No real need for them to move much of anything though. Even if they lost a court case and then decided to start to implement any plans the governor would have what, maybe a year left in office and he can't run again in 2028. So, why bother? His own party is starting to push back on this mess so if you are Disney, just start donating to and working with people on either side of the isle who will start to roll back the rhetoric and work with the company.

 

[GoofGoof]

Dont they already pare back investment in Florida? Don't the WDW parks receive less investment then every other Disney park on the planet? It doesn't seem to really hurt their revenue.

I would still expect to see more investment in the Cruise Line and International Parks to get spending out of Florida, even just temporarily.

If Disney really wanted to hurt FL, which I don’t believe they do, they could move their cruise ships out completely. Baltimore or Galveston would be more than happy to take the business. That would be a big blow to the state cruise industry and a trickle down impact to businesses who get people from the airport to the cruise or hotels and restaurants that have extra business from people going on a cruise.

 

[lazyboy97o]

So there are two questions:

1. If the Swan wanted to add hotel rooms, does the developer agreement say that Disney has decision-making authority there, which Disney did not previously have (e.g., through an existing contract with the Swan)?
2. If the answer to (1) is yes, is that unusual for special districts in Florida?

It's a fact that other Florida SD boards include people who have direct and substantial financial interests in the board's decisions. The Wilton Drive board is composed entirely (IIRC) of people who own land and businesses there.

I believe that yes, the development agreement does require the Swan get Disney’s approval to add rooms because Disney has the right to those rooms. I’m not certain an agreement to which they are a party would matter to the District and how it operates.

 

[Fordlover]

Whether this decision was good or bad for the bottom line is up for debate. In reference to the fiduciary duty of the board I don’t believe anything they did is a violation even if it resulted in a negative impact to the bottom line. The board is obligated to act in a manner that they believe is in the best interest of the corporation. Directors have a duty to be loyal to the corporation over themselves (no self dealing) and they are required to make decisions for the benefit of the corporation and the stockholders. I see no evidence that Chapek or anyone on the board acted in their own self interest and no evidence that they acted in a way that they didn’t feel was in the best interest of the corporation and the shareholders. Whether the decision ultimately is good or bad for business isn’t the point. Many would say Disney should not have bought Fox. That doesn’t mean the board failed to meet their fiduciary duties when considering that acquisition.

Corporations take many different political positions all the time. It’s impossible not to. Disney was one of 100s of company who publicly opposed this bill including Comcast/Universal, most major airlines and hotel chains, big tech companies, other streaming competitors, etc, etc. Just about every one of Disney’s competitors. It was not a unique action but it was uniquely singled out by a politician looking to score political gain and donations.

Usually your first instinct is the correct one. In this case Disney kept quiet initially, even if they were working in the background regarding the law. The vocal minority pressed the issue and forced Chapek into speaking out. Because Disney's business is entertainment, seems to me they should focus on that. Considering the many recent box office duds I think it would be wise to refocus Disney on what they excel at: providing entertainment customers desire to consume, which would benefit shareholders in the end.

 

[lazyboy97o]

Makes sense. I hadn't considered what ulterior motives CFTOB might have had. So basically, regardless of whatever the superficial legal reasoning of their argument is, they're really just upset that the development agreement would prevent them from enacting their plan to "stick it" to Disney by letting the competition develop on the doorstep of the parks.

That’s my hunch. It’s just speculation.

If I was on the Board I would have waited to say anything about the agreement. Bring in the consultants to review the plan, cook up the deficiencies and then take action. That way you have some alternative need to point to as needing to alter the agreements. But they were mad that they couldn’t just start interfering and are now acting.

 

[GoofGoof]

This is where I lose you. Disney can't threaten to leave, we both agree. So where is the counter of Florida loosing Disney's tax money crippling the state coming from? You can leak out the figures on how many tax dollars Disney brings in to Florida.....but absent Disney going away, that tax revenue is STILL going to be coming in no matter what. There is no counter if there is absolutely no threat of those tax dollars disappearing.

They can’t pick up WDW and move it but they could impact the state in other ways. Pull back the jobs moving from CA. Pull their cruise ships out of the state. Invest less in growth at WDW which long term will reduce tax revenues. The tax dollars won’t go to zero, but they certainly could go down as the direct and indirect result of these actions. My guess is if Disney prevails in court then we don’t see any major changes from this that negatively impact the state.

 

[GrumpyFan]

If Disney really wanted to hurt FL, which I don’t believe they do, they could move their cruise ships out completely. Baltimore or Galveston would be more than happy to take the business. That would be a big blow to the state cruise industry and a trickle down impact to businesses who get people from the airport to the cruise or hotels and restaurants that have extra business from people going on a cruise.

I'm not sure it would hurt Florida as much as it would Disney. The amount of jobs for cruise line workers is small. Sure, it would impact taxes and revenue, but I could easily see other cruise lines filling those spots quickly.
Moving the ports further away from the Caribbean would mean added fuel costs for the ships to make their way to Castaway and Lighthouse point.
Also, those other ports don't have as big of a draw for cruisers either. The ports aren't as nice, and they just don't have the same appeal as Florida. I've heard that many of those don't sail completely full. They would also lose a lot of the combos where people do WDW and a cruise back to back. I don't think those are a significant portion but they do add to the overall number of passengers.

 

[lazyboy97o]

They don't even need to follow through and do that. The threat of doing it would create enormous leverage over Disney. That's clearly what they want.

They want to be able to say Disney should adjust Disney+, movie, and whatever other content. Even if that isn't an action available to the board. If they can can give a nod to "We're so distracted by this content we don't like that we're thinking of opening a high rise office building on the land between Animal Kingdom Lodge and Animal Kingdom."

They don't actually need to build that high rise, but they do need it to be a credible threat. Anything that removes it as threat option is a win for Disney.

Nothing gives a threat more power than actually acting on it. I agree that they wouldn’t need to do anything, but actually doing it definitely adds weight. It’s also just such an easy grift and I no longer give the benefit of doubt.