To get rid of Disney World the government probably won’t hurt the mouse, German Bank the analysts wrote in a new research note published Tuesday.
“We do not see any material negative outcome of this situation for Disney; and financially speaking, we believe this could end up being a positive development,” the analysts said. Bryan Kraft, Benjamin Soff and Connor Murphy wrote.
Last week, the legislature voted to eliminate the special tax district that allows the Disney government to provide its own roads, utilities, fire departments, and other infrastructure needs at huge theme parks and resorts. Reedy Creek is about to be eliminated by June 2023.
State Republicans wanted to punish Disney after the company’s CEO Bob Chapeck voiced opposition to Florida’s measure of parental rights in education, dubbed the “Don’t Say Gay” law by critics. Disney also announced that the company is suspend campaign donations in Florida. Chapek was already under pressure from left-wing and LGBTQ+ activists for not speaking out against the controversial bill sooner.
Now, landowners in Orange County could face tax increases of 15% to 20% on average, and the county would have to absorb Reedy Creek’s financial obligations, including a $1 billion bond. , indicates the note.
“It is a huge tax burden to suddenly impose on residents when the system in place today makes Disney bear all the costs,” the analysts wrote. “One could conclude that if the Reedy Creek Improvement District is absorbed by the municipal government of Orange County and the government is to begin providing these services to Disney World, then Disney World will likely see improved results and of its balance sheet.”
The analysis warned: “The harm to Disney from the new law is that the company would no longer have full autonomy in managing Disney World infrastructure and services. This could impact the overall quality of experience Disney can provide to its customers.
But even that wouldn’t hurt the mouse too much.
Other Disney parks, like Disneyland, do not have their own government structure like in Florida. “These locations seem to be doing very well,” analysts noted.
But analysts also pointed out that Reedy Creek won’t expire until June 2023, so “a lot can still happen.”
The note hypothesized different scenarios.
“While we don’t know how this will play out, it appears to us that Orange County and Disney are highly motivated to maintain the status quo, more or less. We believe that maintaining the status quo could be accomplished by replacing the Reedy Creek Improvement District by an agreement between the county government and Disney,” the analysts wrote.
“Alternatively, we could see subsequent legislation at the state level that revisits the subject. Or there could be lawsuits challenging the legality of the new law, which could lead to its cancellation.