Financial fairy tale is coming to an end

WALT Disney used to say, “The way to get started is to quit talking and begin doing.” Gov. Ron DeSantis is about to put Disney’s own motto to the test — against Disney.

According to a high-ranking Florida official, the newly created Central Florida Tourism Oversight District is set early this week to call Disney on one of the worst bluffs of all time. The result could prove the House of Mouse made a costly miscalculation.

For decades, Disney had reason to be the “happiest place on earth.” Florida supported the company by giving it a unique status in controlling its own governance. The Reedy Creek Improvement District controlled the Disney property, and Disney effectively controlled its board. Technically, the board was elected by those living on the Disney property, which amounts to a small number of people living among the “cast members.”

It was a breathtaking deal for the company, which set its own building standards, granted its own construction permits and determined the scope of services, building codes, waste collection and other infrastructure matters. Outside of the Vatican, such self-governance is little more than a fantasy for companies and organizations.

Woke overreach

That favored status came to a crashing halt when Disney went public with a pledge to oppose Florida’s Parental Rights in Education Act. The legislation prohibited classroom instruction on sexual orientation and gender identity from kindergarten to third grade. It also required “age appropriate” material in other grades.

Then-Disney CEO Bob Chapek originally told workers the company would not take a public position on the legislation to stay out of politics. Employees protested, and Chapek quickly caved, declaring Disney would fight to have the law rescinded.

The company has long been “woke” in its policies. But this was a crossing of the Rubicon in plunging into politics.

Disney became the symbol of increasing corporate activism. While going woke will not necessarily force Disney to go broke, it is facing unprecedented boycotts of its parks and movies, including controversial children’s films with same-sex characters and relationships. On two of those movies, Disney lost more than a quarter of a billion dollars.

Picking fights with people with general tax authority is rarely a winning strategy.

Florida responded by removing Disney’s favored status, gutting the Reedy Creek Improvement District and creating the new board with governing authority over Disney properties.

The company could still have tried to find a compromise. Instead, it did something even more reckless. In the final days of the Disney-dominated board, the members voted to transfer powers to the company.

Disney is used to being its own self-governing boss. That history may have warped its judgment in attempting this power grab. It is a move that would make the Pirates of the Caribbean blush.

The “declaration of restrictive covenants” gives Disney total control over development and even bans the new board from using Disney’s name or the names of any of its “fanciful characters.” It added what is called a royal clause, used in England since 1692. It specified this “Declaration shall continue in effect until 21 years after the death of the last survivor of the descendants of King Charles III, King of England, living as of the date of this declaration.”

Mouse got too cute

Disney may have been too clever by half. The “Hail Mickey” play appears fundamentally flawed. I have been told the new board intends to treat the declaration as null and void. It appears to have strong grounds to do so. Indeed, Disney’s legal case seemed no better planned than its political campaign.

First and foremost, under Florida Section 163.3225, a board cannot order such changes without giving a seven-day public notice and other conditions. You are not allowed a jump scare like Space Mountain — you must give notice on your intended measures. There is no indication the board did so.

That alone could nullify the declaration. Ordinarily, a board would simply reschedule the vote with proper notice, but the old board is gone.

There are also serious problems with a board using a declaration to nullify a state law and pass a development plan with no actual plan for development. It is a curious legal claim that this now-defunct board could negate not just current state law but law for the next 30 years.

Instead, the new board will “quit talking and begin doing.” It will proceed with a vengeance.

Since the old board is no more, Disney will have to sue to try to enjoin the new board. For returning CEO Bob Iger, this could make Mr. Toad’s Wild Ride look like a walk in the park.

Nowhere to run

Disney has no good options. Even if it could sustain this dubious declaration, the state has myriad ways to impose added costs. When you are sitting on billions in fixed, unmovable 27,000 acres of real-estate assets, declaring war on your host state is remarkably stupid.

Worse yet, this declaration does appear invalid, and I am told the new board is ready to give Disney a rude awakening this week. Pro-Disney staff will be canned and public hearings planned on the range of new regulations for the Magic Kingdom.

There are a host of areas that will now be subjected to inspections, from the elevators to the famed monorail. There are also salaries for first responders and others, who may have been underpaid by the Mouse. Likewise, decades of controlling its own environmental compliance will come to an end with the potential for considerable costs and changes. It’s a Small World is going to get a lot smaller with inspectors testing the water, boats and electrical systems.

Shareholders are likely to raise a familiar question over Disney executives’ priorities in pursuing social and political agendas. This has already cost the company, and those costs are likely to grow in the coming weeks. Disney will be demanding it alone among companies dictate its own rules as if it were an Indian reservation that comes with its own faux Indians.

That is a fight DeSantis clearly welcomes. As Mary Poppins said, “In every job that must be done, there is an element of fun.” Whatever happens early this week, it is likely to be fun for everyone but Disney.

Jonathan Turley is an attorney and professor at George Washington University Law School.