Random Thoughts – Randocity!

Disney and DeSantis: Who wins?

Posted in botch, business, government by commorancy on May 19, 2023

Disney character balloons, amusement parkWith Disney canceling its plans to spend $1 billion on a new Florida campus, this is Disney’s first salvo lobbed directly at Ron DeSantis. Can Florida survive this fight? Let’s explore.

Ron DeSantis is Playing with Fire

Tourism in Florida accounts for more than $40 billion each year. Tourism also generates massive tax revenue; tax revenue that grosses $11.4 billion in state and local taxes and $13.3 billion in federal taxes annually. DeSantis and Florida clearly stand poised to lose hard when Disney pulls the plug on its Florida Disney resort properties entirely. Yes, “when”, not “if”. The United States also stands to lose a lot of federal tax revenue as well. This article, however, intends to focus primarily on the ramifications to Florida.

Once DeSantis makes Florida’s actions so punitive that Disney can no longer make money in Florida, Disney WILL pull out and leave Florida. DeSantis has wrongly assumed that Disney will remain in Florida. That’s a completely wrong assumption. When state legislators make doing business in a state a major problem to the bottom line, corporations have to make hard, but necessary choices. Some of those hard choices may involve leaving that state.

Musk and Tesla made that choice after California and Gavin Newsom made doing business in California almost impossible for Tesla. Tesla moved its headquarters to Texas and is likely poised to cease all of its operations in California eventually, manufacturing or otherwise. Even though Musk has made a small move to bring some portions of Tesla back to California, that doesn’t mean Musk embraces California for its business structure. Moving a portion of Tesla’s engineering staff closer to Twitter is likely more of a strategic and convenient business arrangement than it is embracing a move back to California. Musk is simply attempting to keep Twitter from collapsing most likely by leveraging Tesla software engineers when possible to do double duty between Tesla and Twitter. Dividing work time between two separate companies is not a job I’d want to do. We digress.

Disney’s stance, after cancelling its $1 billion campus project, is now crystal clear. Disney is on the verge of making a similar hard choice that Tesla was forced to make. Nothing says that Disney’s entertainment parks must remain in Florida.

Disney’s Contributions to Florida

Disney properties are responsible for generating at least $1.1 billion in tax revenues annually TO Florida. Ten percent (10%) of the entirety of gross taxes generated in Florida are generated by one single entity, Disney. Yes, that’s 10% from Disney alone. When factoring in all of the non-Disney owned businesses which exist because Disney drives massive tourism to Florida, such as restaurants, hotels and transportation, tax revenue attributed to Disney’s presence in Florida could account for as much as 40-50% of all of Florida’s tax revenue. Meaning, when combining Disney’s income with income generated by all other businesses which rely on Disney remaining in Florida, that’s a number that could literally tank Florida’s economy were it to dry up overnight.

Putting a number on it, this equates to between $4.6 billion and $5.5 billion of tax revenue lost were Disney to close shop and leave Florida. On top of the tax base lost, Disney closing shop would definitely cause most, if not all of Disney’s 75,000 Florida workers to lose their jobs. Further, the loss of Disney’s tourism industry would have massive repercussions on tertiary businesses which partially or fully rely on Disney remaining open in Florida. Thus, Disney leaving Florida could potentially cause the loss of another 100,000 or more Florida jobs simply BECAUSE Disney has left Florida. That’s just the beginning of Florida’s woes. Disney leaving Florida would likely cause a massive recession in Florida, followed by major unemployment in Florida, which, in turn, could potentially trigger a massive recession around the rest of the United States, particularly around tourism. This at a time when tourism is just beginning to rebound from COVID.

Because Airlines carry so many passengers to and from Florida almost entirely for Disney’s tourism, such a closure could mean almost certain problems for the whole of the United States. In fact, a Disney Florida closure could potentially even bankrupt some smaller airlines; airlines which may rely on as much or more than 20-40% of their business ferrying tourists to and from Florida. Car rental companies could also be impacted. The gasoline industry might even be impacted as far fewer people hop onto the roads to visit Florida. Even national and state parks could be impacted as fewer RVs show up due to a Disney closure. There are too many industries that wholly or partly rely on Disney’s continued operations in Florida. Without Disney parks, what incentive is there to visit Florida?

This right here 👆 is exactly how Ron DeSantis is gambling with Florida and the rest of the United States economy.

Juggernaut without Federal Response

At this point, Biden and the feds need to step in and stop DeSantis from further meddling with Disney. The longer this DeSantis vs Disney fight drags on, the more likely Disney will consider moving its operations somewhere else, thus ceasing operations in Florida. Worse, the more DeSantis pokes at Disney’s Country Bear Jamboree, the more likely Disney is to perform a knee-jerk reaction by shutting it all down instantly… leaving Florida, the tourism industry and the rest of the country reeling.

As with most types of shutdowns like this, it won’t be felt instantly around the nation. It’s one of those slow trickle economic problems. Florida, particularly around the general vicinity of Disney’s campuses, will feel the closure pinch almost instantly. The unemployment of Disney workers will throw a huge crimp into Florida’s unemployment statistics. From there, like a juggernaut, it will continue to roll downhill gathering momentum and growing bigger, expanding its damage across Florida, then across hotels, airlines and transportation as a whole and finally affecting the whole of the United States.

The stock market will reel at first over Disney, but then those stock losses will expand into the tourism industry as a whole, including the entirety of both the transportation and tourism sectors. Even restaurant chains like Olive Garden and McDonald’s alike, chains which at least partly rely on Disney to keep their restaurants full in the immediate vicinity of Disney’s properties, will also likewise begin to feel the pinch; first at the cash register, but later as Wall Street outlooks dim over Florida’s economy.

Disney as a Global Entity

The loss of revenue from Disney will be immense as Disney ceases its Florida operations. There is no doubt. However, moving Disney’s Florida properties to a new location is definitely possible. Disney isn’t beholden to anyone to maintain its Florida resort properties other than Disney and Disney shareholders. If Disney cannot maintain appropriate income under Ron DeSantis’s oppressive government ideologies, Disney will have no choice but to close down its properties and move to a better location.

For example, Texas would likely welcome Disney with open arms, even though Greg Abbott has the potential to become just as oppressive to Disney as Ron DeSantis. Disney would have to weigh the risks of moving its operations under a Greg Abbott controlled Texas as a result. For Texas, out of the frying pan and into the fire comes to mind.

What this might ultimately mean is Disney could choose to move its biggest resort property outside of the United States entirely. It could find property in Dubai, for example. Don’t think that Disney doesn’t have a task force actively searching the globe for possible properties to replace its Florida resorts at this very moment. If Disney finds a property that’s an equal or better value to the deal it formerly had (past tense) with Florida, Disney would be stupid not to choose to move to that new location, leaving Florida’s economy and, by extension, Ron DeSantis reeling.

The best way for Disney to fight Ron DeSantis is not to fight with him at all. Instead, closure of all of Disney’s Florida properties would say all that needs to be said. It might be just the trigger that causes a massive United States recession, but that’s not Disney’s concern. It is the concern of the Federal Government, however. Disney’s concern is to continue to make money at its resorts. If Disney is unable to do this because of an oppressive government leader, the only choice is to move on and find a new, better property to again house its resort operations.

These are the matches đŸ”Ĩ to which Ron DeSantis feels compelled to light and throw at Disney. Ron DeSantis, be careful throwing matches because when fires start, someone gets burned.

As a Florida resident then living under a massive recession after a Disney closure, just remember that it is you who chose to vote Ron DeSantis into office.

Can this situation be defused? Yes, but don’t think that it also can’t escalate for Florida? We’ll simply need to wait this one out.

Who Wins?

No one, not even Disney. If Disney closes its Florida properties as a result of DeSantis’s meddling, this closure has the potential to be the catalyst which causes a United States recession.

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