UPDATE: The way has been cleared for $17 billion in planned development at Walt Disney World near Orlando.
On Wednesday night, the Central Florida Tourism Oversight District gave the Walt Disney Co. a locked-in, 15-year plan for expanding Disney World.
The agreement gives Disney the ability to build a fifth theme park, add three small parks, expand retail and office space, and build 14,000 hotel rooms.
EARLIER: After years of acrimony between Disney and Florida Gov. Ron DeSantis, the two sides are working on a new development agreement that would provide assurances and guardrails for the Bob Iger-run behemoth as it plans to expand near Orlando. In exchange, the State of Florida would see up to $17 billion in investment from Disney over “the next ten to twenty years.” It also sets the stage for a fifth park at the resort.
While the cessation of hostilities is good for all involved, the monetary commitment from Disney is more a renewal of vows than a new promise. The corporation has repeatedly promised over several years to invest $17 billion in and around Disney World and hire over 10,000 new parks employees in the state over the 10 years. The new agreement cites the same monetary investment, but extends the timeframe. But given all that’s happened between the parties in Florida, state and local officials are likely grateful to have any reassurance.
One new deal point in the proposed agreement is a minimum spend on Disney’s part.
“In furtherance of its plans to make significant capital investment in the Project during the term of this Agreement, Disney agrees to make at least an initial capital investment of $8 billion dollars within the first ten (10) years of the term of the Agreement, consisting of capital investment in existing infrastructure, new construction and technology investment.”
There is also a promise of a “minimum development” of 5 major theme parks in Orlando.
Additionally, there is a provision that Disney may “convert hotel/motel land use entitlements to up to an additional 225,000 gross square feet of office uses within the District Jurisdictional Properties.”
That item may just be additional flexibility, but it also could make room for Disney to restart its plan to move approximately 2,000 Parks, Experiences & Products staffers and their families to central Florida from California. That plan, which was put on ice almost exactly a year ago, would add not just jobs, but more tax revenue to the $1.1 billion Disney already pours into the state’s economy.
The new agreement would replace a very favorable 30-year development deal the then Disney-controlled board signed at its last meeting before the current DeSantis appointees stepped in. It requires a final vote next week to become official.
Disney just locked down a similar revised development agreement with the City of Anaheim for Walt’s original park. That deal gives Disney increased flexibility to create mixed use environments and new zoning permissions enabling it to add additional attractions. Dubbed DisneylandForward, the multi-decade expansion plan is tabbed at $1.9 billion. The company last fall touted a $60 billion investment commitment to its parks worldwide over the next 10 years, though details have been scant.
Another force likely driving the Disney deals is Epic Universe, a highly anticipated $1 billion expansion at Universal Studios Orlando set to open next year. Universal’s parks unit is riding high ofter opening its first Super Nintendo World at Universal Studios Hollywood last year and announcing regional parks in Las Vegas and Texas.
In response to a question about competition from NBCU during the company’s last earnings call, Disney CEO Bob Iger said, “We’ve been aware of Universal’s plans for a new park for more than a decade. And we have a sophisticated approach to analyzing the needs of all of our businesses and strategically deploying capital.”
He then got another shareholder question about why more details about Disney’s promised total $60 billion investment in its parks have not been shared. Iger kept his comments fairly brief. “You know, we have a lot of projects in development,” he said. “Many of them are known to us. But we disclose these at a cadence and when we really feel we’re ready, and we have something more tangible to show people.”
Experiences, the division that encompasses theme parks and consumer products, reported a 10% rise to $8.4 billion, while operating profit climbed 12% to almost $2.3 billion in the most recent quarter.
The uptick was driven by international led by Hong Kong Disneyland. Walt Disney World and the cruise line were solid. But Disneyland, despite growing attendance and per capita spend, saw results dip year-on-year on higher costs, including labor, said CFO Hugh Johnston on an earnings call with analysts.
A big surprise — he said Parks growth in the current fiscal third quarter will be flat for a few reasons including “some normalization of post-Covid demand as it relates to demand. While consumers continue to travel in record numbers and we are still seeing healthy demand, we are seeing some evidence of a global moderation from peak post-Covid travel.”
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