“Florida Needs Disney,” Says Harvard Professor


Disney (DIS) vs. DeSantis.

As the media conglomerate continues to grapple with the fallout from Florida Governor Ron DeSantis’ revocation of the company’s special tax district, business leaders around the world are considering their own corporate values ​​as political issues take center stage.

“I do not think so [Disney CEO Bob Chapek] did his homework,” Bill George, a Harvard Business School professor and former chairman and CEO of medical device company Medtronic, told Yahoo Finance.

“We are in a different world today – it was acting like it was in the 1990s. In this world of 2022, you have all kinds of stakeholders who expect you to take a stand, especially your employees” , continued the professor. adding that workers today have found their voice “especially in this post-COVID world”.

“They want to be respected and heard, and they want their CEOs to speak for them,” he said, arguing that Bob Chapek’s silence on the Parental Rights in Education Actor what critics dubbed the “Don’t Say Gay” bill, created the “uproar” that ultimately led to the political crossfire with DeSantis.

“Disney is right in the thick of it, and it’s having a hard time getting out of this mess.”

Today’s CEOs need to know how to handle a crisis…Bill George, professor at Harvard Business School and former chairman and CEO of Medtronic

The controversial bill, which will come into force on July 1, states that “classroom teaching by school personnel or third parties about sexual orientation or gender identity may not take place from Kindergarten through 3rd grade or in a manner that is not age or developmentally appropriate for students in accordance with state standards Parents may sue districts for violation.

Chapek initially decided not to speak publicly about the issue, opting instead to work behind the scenes in an attempt to loosen the legislation. It did not work.

The executive eventually changed course following intense backlash. He publicly denounced the act at the company’s annual meeting of shareholders on March 9, in addition to apologizing directly to employees in a memo.

But many believe it was too little, too late.

“When this legislation started in Florida, [Disney] should have had a position ready to go…a position that was true to the mission and values ​​of what Disney is – a place that accepts everyone for who they are,” George noted.

FILE PHOTO: Bob Chapek, Chairman of Walt Disney Parks and Resorts, speaks during the Hong Kong Disneyland 10th anniversary ceremony in Hong Kong, China September 11, 2015. REUTERS/Tyrone Siu/File Photo

Chapek’s fumbling now serves as a cautionary tale for other business leaders who are “very concerned” about future political battles, according to the professor.

Leaders “don’t want to be caught in the crossfire either, but they all come back and really ask themselves, ‘What do I stand for?’ ‘What issues should I get involved in?’ “When should I get involved?” and “How can I avoid being caught in the crosshairs of a politician?” Georges explained.

“CEOs today need to know how to weather a crisis because we go from crisis to crisis – from COVID to George Floyd to Russia to Ukraine, and probably another just around the corner. the street,” he continued.

“They need to be prepared for these crises and have a loyal position to their business.”

“Vatican with Mouse Ears”

ORLANDO, FL – MARCH 22: Disney employee Nicholas Maldonado holds a sign during a protest outside Walt Disney World on March 22, 2022 in Orlando, Florida.  Employees are holding a company-wide walkout today to protest the Walt Disney Co.'s response to controversial legislation passed in Florida known as the

ORLANDO, FL – MARCH 22: Disney employee Nicholas Maldonado holds a sign during a protest outside Walt Disney World on March 22, 2022 in Orlando, Florida. Employees are staging a company-wide strike today to protest the Walt Disney Co.’s response to controversial legislation passed in Florida known as the “Don’t Say Gay” bill. (Photo by Octavio Jones/Getty Images)

Currently, Walt Disney World Resort sits on a 40 square mile area known as Reedy Creek, the special tax district that has allowed Disney to operate as a stand-alone entity since its inception.

This means that Disney controls all of its utilities and infrastructure, sets building codes, runs its own police and fire departments, and can expand and grow as it pleases, all without interference from local government or of State.

“I call it a Vatican with mouse ears, because it’s essentially the same type of authority that the Vatican has in Rome in the state of Italy,” said Richard Foglesong, Disney historian and author of the book. “Married to the Mouse: Walt Disney World and Orlando.”

Therefore, the district (in addition to providing immense control and flexibility) saves the company tens of millions of dollars each year in certain taxes and fees.

The new decision will therefore force Disney to pay taxes on these government-funded programs; however, it also means Reedy Creek’s $997 million bond debt and some $163 million in annual tax payments could fall on the citizens of Orlando.

U.S. Governor of Florida Ron DeSantis speaks during the Conservative Political Action Conference (CPAC) in Orlando, Florida, U.S., February 24, 2022. REUTERS/Octavio Jones

U.S. Governor of Florida Ron DeSantis speaks during the Conservative Political Action Conference (CPAC) in Orlando, Florida, U.S., February 24, 2022. REUTERS/Octavio Jones

DeSantis revealed at a town hall last week that there will be “additional legislative action” to address potential tax fallout and any issues regarding the legality of disbanding the district.

“We’ve considered that. We know what we’re going to do, so stay tuned. It’ll all be obvious,” the governor said.

Still, who or what will pay off Disney’s bond debt is “the billion-dollar question.”

“There are a lot of unintended consequences, frankly, that haven’t been thought through that will give Disney more ammunition,” George said.

“Florida Needs Disney”

Therefore, due to the many uncertainties surrounding the bill, some experts say the dissolution might not even happen.

“I don’t think it’s very likely – frankly, the consequences are too severe,” Foglesong surmised.

Still, the bill was signed into law by Governor DeSantis last month and, barring a major pushback from lawmakers, will go into effect in June 2023. Disney could also sue Florida for retaliation in an effort to thwart the legislation, although experts say it is more likely that the media giant will enter negotiations to change the terms of the district.

“Florida needs Disney – it’s a huge revenue generator and has changed everything around [Orlando,]George said bluntly, saying the battle had become a matter of ‘who needs whom most’.

“Florida can’t live without Disney World, I can tell you that.”

Alexandra is a senior entertainment and food reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 or email her at alexandra.canal@yahoofinance.com

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