How Disney's Cancelled Plans Affect the Local Economy and Job Market

Disney announced their plans to build a $1 billion campus that would have relocated 2,000 employees from California to Florida have been scrapped, citing leadership changes and shifting business conditions as reasons. According to The https://paypal.com/donate/?hosted_button_id=TGNTCSWLKKNJW York Times, employees received an email explaining this decision from management.

Disney and Florida Governor Ron DeSantis are engaged in an increasingly contentious fight, as Disney has filed suit against DeSantis over an education policy which DeSantis supports.

1. Affected Employees

The Walt Disney Company announced Thursday in an email sent out to employees that it has decided not to build and relocate thousands of employees to Florida for an envisioned billion dollar office complex project. Parks, Experiences and Products chairman Josh D'Amaro explained in this decision was due to "considerable changes resulting from new leadership and changing business conditions," including many employees being excited by this idea of moving to Florida and being offered this project opportunity. He acknowledged these feelings but pointed out Florida wasn't necessarily the ideal state in which to invest and grow its business operations.

Disney's plans were derailed by an ongoing feud between themselves and Republican Governor Ron DeSantis of Florida, who has taken far-right positions on issues like education, healthcare access, speech and speech regulation. DeSantis took particular offense at CEO Bob Iger's opposition to Florida's so-called "Don't Say Gay" law as evidence that Iger was supporting an "extremist agenda".

Iger initiated an internal review of Disney's operations in California. According to The New York Times, this will include staff reduction and layoffs as part of its restructuring effort, which it expects will yield savings totalling $5.5 billion by 2023.

However, it remains uncertain how much of those savings will come from job cuts at Orlando-area theme parks and resorts owned by Disney. Affected workers include cast members, Imagineers and senior managers. Disney announced in February that 7,000 jobs -- representing approximately 3% of their workforce -- were potentially at stake.

By Thursday of this week, the company plans to release details regarding a second round of planned layoffs affecting staff who lost their positions as part of its response to COVID-19 pandemic.

ABC will also cut jobs at Disney World and ESPN, the cable network owned by ABC. At a time when unemployment remains near half-century lows and consumer spending remains stagnant, companies have taken measures to cut costs by either laying off workers or adopting work from home policies; though these initiatives have reduced payrolls considerably they have had little significant effect on overall labor market dynamics.

2. Economic Impact

Disney's decision to cancel plans for a billion dollar campus in Orlando was a devastating blow to local economy. This facility would have provided thousands of new jobs and would have served as regional headquarters, leading to more business for Disney which in turn meant more employment and tax dollars for Florida state government. As we consider what Disney's decision means for Florida states.

Disney had planned a regional campus in Lake Nona, a suburb of Orlando in Florida, that was expected to cost an estimated $1.3 billion and house thousands of new employees over its planned 10-year investment of $17 billion into Florida over time. But in an email sent out earlier today to employees Josh D'Amaro informed them they had decided against proceeding with construction of the campus due to "considerable changes that have taken place since this project was first announced, such as leadership changes and changing business conditions that make construction no longer feasible," D'Amaro stated.

One reason Disney canceled the project is due to their battle with Florida lawmakers over an anti-LGBT law passed in response to Orlando mass shooting. Disney CEO Bob Iger has been outspoken against it; Chapek too has voiced opposition but not as outspokenly as Iger.

Florida provides companies investing in its state with several tax incentives. These include a capital investment tax credit that reduces corporate income tax rates for companies meeting certain spending requirements; job creation tax credits; and business development investment rebates.

Florida has long been seen as an attractive state for major corporations to expand, creating jobs and contributing to Florida's economy. But if lawmakers continue imposing restrictions on large companies like Disney, that may change.

3. Taxes

The Walt Disney Company recently decided not to build an office complex in Florida and relocate more than 2,000 high-paying jobs due to "changing business conditions". This decision comes amid a heated dispute with Florida Governor Ron DeSantis who stripped them of self-governing rights over Orlando-area theme parks and resorts; this has caused lawsuits between Reedy Creek Improvement District Board appointed by Disney as well as their newly appointed board overseers to be filed by both parties involved.

DeSantis' action is in response to Disney's suspension of political donations and condemnation of an education law known as the "Don't Say Gay Law." Experts estimate that this special district saves Disney millions in fees and taxes each year; plus it employs 38 lobbyists at Florida state capital as well as giving generous donations each election cycle, giving the company considerable influence over lawmakers.

DeSantis has made clear his intention to restore Disney into Florida's favor by providing more tax breaks and permitting foreign workers to work there. He has also pledged to reinstate a $1.5 billion job tax credit which expired last year.

Disney CEO Bob Iger recently signaled his company's willingness to return to Florida if DeSantis and other Florida lawmakers provided more favorable terms for investors, employees and tax payments. On an earnings conference call last week, he asked lawmakers whether they wanted more investments, jobs and taxes from Disney if it returned there.

Disney parks leader Josh D'Amaro informed employees in a memo that "changing business conditions" have forced Disney to reconsider its plans for Lake Nona and stop asking workers from California to relocate there. At the same time, however, he noted that $17 billion will still be invested into Florida over the next decade to create 13,000 jobs.

An economic development expert warns that Disney's decision to cancel the new office campus could cost Florida dearly in terms of lost tax revenue and tourism spending. Len Testa of Touring Plans speculates that their decision was driven by their battle with DeSantis; speaking to Imagineers who have considered moving to Florida and learning of their concerns over high housing costs, leaving family behind, and differences in political climate was certainly influential in making their choice clearer.

4. Jobs

Disney announced plans to withdraw their investment plans and relocate 2,000 high-paying jobs from Florida due to "changing business conditions," in an email sent out to employees. This move follows on the heels of Florida Governor Ron DeSantis dissolving a special district that gave Disney self-governing control for their property in Orlando; that district provided fire, police and waste services, road maintenance as well as bond issuance costs for them.

State authorities granted Disney a special status when EPCOT, their attempt at creating a future city, was established. Though that effort never materialized, Reedy Creek Improvement District continued as an invaluable business asset that has assisted Disney for decades.

Disney had planned to invest $864 million and relocate 2,000 jobs under former CEO, Bob Chapek's leadership, including Imagineers who create theme park rides known as Imagineers. Lake Nona was selected as its site approximately 20 miles from Magic Kingdom. Chapek was fired and replaced by Disney Chairman Bob Iger who quickly denounced DeSantis for what Iger called his campaign of government retaliation against Iger.

Last week during his earnings call with investors, Iger lashed out against Governor Abbott's actions, questioning investors as to whether or not the state wants Iger to continue investing here, employing more people, and paying taxes or not?

Since then, Disney has filed suit against Florida alleging they have engaged in a "relentless campaign to weaponize government power" against them and punish Disney for its public opposition of their "Don't Say Gay" law, which restricts in-class discussion of sexual orientation and gender identity in class settings. Their lawsuit was filed federal court in Orlando. Furthermore, corporate travel has declined nationwide impacting parks and resorts leading them to introduce offerings such as annual passes, the return of Disney Dining Plans as incentives in an age when consumer spending remains flat or even decline.