Amid feud with DeSantis, Disney pulls the plug on $1 billion in development
In March, Disney called Florida Gov. Ron DeSantis “anti-business” for his scorched-earth efforts to tighten oversight of the company’s theme park resort near Orlando. Last month, when Disney sued the governor and his allies for what it called “a targeted campaign of government retaliation,” the company made clear that $17 billion in planned investments in Walt Disney World were at stake.
“Does the government want us to invest more, hire more people and pay more taxes, or not?” Robert A. Iger, Disney’s chief executive, said on an earnings conference call with analysts last week.
On Thursday, Mr. Iger and Josh D’Amaro, Disney’s theme park and consumer products chairman, proved they were not bluffing, pulling the plug on a nearly $1 billion office complex that had been planned to be built in Orlando. That would have brought more than 2,000 jobs to the region, with an average salary of $120,000, according to an estimate by the Florida Department of Economic Opportunity.
The project, known as Lake Nona Town Center, would involve relocating more than 1,000 employees from Southern California, including most of a division known as Imagineering, which works with Disney’s film studios to develop theme park attractions. Most of the affected employees complained bitterly about having to move — some quit — but Disney largely held on, in part because of a Florida tax break that would have allowed the company to collect as much as $570 million over 20 years to build and occupy the complex.
When he announced the project in 2021, Mr. D’Amaro cited “Florida’s business-friendly climate” as justification.
Mr. D’Amaro’s tone in an email to employees on Thursday was notably different. He cited “changed business conditions” as a reason for canceling the Lake Nona project. “I remain optimistic about the direction of our Walt Disney World business,” Mr. D’Amaro said in the note. He noted that $17 billion was still earmarked for construction at Disney World over the next decade — growth that would create an estimated 13,000 jobs. “I hope we can do it,” he said.
But the company’s battle with Mr. DeSantis and his allies in the Florida Legislature played a prominent role in Disney’s decision to cancel the Lake Nona project, according to two people briefed on the matter, who spoke on condition of anonymity to discuss private deliberations. A spokeswoman for Mr. Iger said he was not available for an interview.
About 200 Disney employees have already moved to Florida from California. Mr. D’Amaro said in his memo that the company would discuss options with them, “including the possibility of moving you back.” The Lake Nona project had originally been scheduled to open next year. Last July, Disney pushed back the move-in date to 2026, citing construction delays.
The Lake Nona campus, about 20 miles from Disney World near Orlando International Airport, had been championed by Bob Chapek, who served as Disney’s CEO from 2020 until he was fired last year. Mr. Iger, who came out of retirement to take back Disney’s reins, was much less enthusiastic about the project — even before the company became mired in its battle with Mr. DeSantis. As soon as he returned to Disney, for example, Mr. Iger began telling lieutenants that it made little sense to move Imagineering so far away from Disney’s movie studios. As he likes to say, “Creative teams must be together.”
Disney is also in the midst of cutting $5.5 billion in costs as it tries to improve profitability, pay down debt and restore its dividend.
Mr. DeSantis and Disney have sparred for more than a year over a special tax district that includes Disney World. The fight began when the company criticized a Florida education law that opponents called “Don’t Say Gay” because it restricts classroom teaching about gender identity and sexual orientation — angering Mr. DeSantis, who repeatedly promised a refund.
Since then, Florida lawmakers, at the urging of Mr. DeSantis, have targeted Disney — the state’s largest taxpayer — with a series of hostile measures. In February, they ended Disney’s longstanding ability to self-governe its 25,000-acre resort as if it were a county by giving Mr. DeSantis control of public services at the resort.
It was soon discovered that the previous, Disney-controlled board had approved development contracts that lock in a growth plan for the resort. An attempt to void those agreements has since resulted in dueling lawsuits, with Disney suing Mr. DeSantis and his allies in federal court and the governor’s tax district appointees returning fire in state court.