Welfare Mouse
How Michael Eisner succeeded in turning Disney into the subsidized kingdom
Michael Eisner doesn't have a whole lot going for him these days. First he endured Walt Disney Co. heir Roy E. Disney's effort to push him out as Chief Mousketeer, then cable giant Comcast Corp.'s attempt to snap up the Walt Disney Co. on the cheap. Then last week came the annual meeting, where a record 43 percent of shareholders voted against keeping him as chairman of the board. He promptly resigned the post, but still maintains control of the unhappiest place on earth—for now.
Whatever eventually happens to Eisner, one thing is assured: He has helped Disney achieve a place as one of its biggest beneficiaries in the annals of corporate welfare.
Scrooge McDuck would be proud. Few have panhandled for taxpayer dollars as successfully as Disney during Eisner's reign. It has received at least $4.5 billion in subsidies, low-interest loans, land grants and "joint venture" investments from governments in Florida, Pennsylvania and Hong Kong. It even managed to get a handout from the French government—not exactly a fan of things American—which sold 4,800 acres just outside of Paris to Disney at a 90 percent discount so the company could build Euro Disneyland.
Disney has gotten even sweeter deals closer to its home base in Southern California. In Glendale, just a short trip from its Burbank headquarters, Disney's 125-acre Imagineering campus and studio development is being financed with the help of the city's redevelopment agency. Further away in Anaheim—home of Disneyland—the company got the city fathers to fork over another $550 million on new roadways and create a special tax district in exchange for building its now-floundering California Adventure park.
It has even become adept at getting financial help from Washington in the indirect form of copyright protection. To keep Mickey Mouse, Pluto and other characters out of the public domain, it successfully lobbied Congress for the Sonny Bono Act, which extended the life of its copyrights from life plus 50 years to life plus 70—restraining free speech in the process. Funny since Beauty and the Beast and Aladdin draw heavily from works that have long ago become fodder for public use.
Disney doesn't exactly need the welfare cheese. Last year, it generated $27 billion in revenues from its sprawling collection of studios, theme parks, and television channels. But Eisner has admitted some of its projects wouldn't work out as stand-alone private sector operations. "Disney's America wasn't economically viable without government subsidies," he wrote about one such plan in Work in Progress, his 1998 biography.
The company has been able to wrangle subsidies through promises of revitalizing communities, along with the mystique that comes with being in the House of Mouse. Helping out, of course, is the penchant for city officials to hand over the treasury for any hare-brained scheme. "It's the pixie-dust factor," said Rollins College Professor Richard Foglesong, the author of the aptly-titled Married to the Mouse, which chronicles Disney's dealings in Florida.
When it announced it was looking to build a second theme park in California, Disney used promises of economic improvement to get officials in Anaheim and Long Beach to offer it sweet subsidy packages (Anaheim won.). To garner subsidies for an indoor theme park project in Philadelphia, it even convinced then-Mayor Edward Rendell, now governor of Pennsylvania, to co-star in a promotional video, in which he bounds around with Goofy. It worked.
With his penchant for micromanaging, Eisner dons the mouse ears of chief rainmaker for the big projects. During Disney's failed effort to build an American history-themed amusement park near the Bull Run battle site in Manassas, Va., Eisner worked with then-Gov. George Allen to get a $160 million package of subsidies and "tourism marketing" dollars through the state legislature. When it had to back out of the project after outcry from historians and local residents, Eisner flew to Richmond to tell the governor the bad news.
Disney had certainly done some wheeling and dealing with government officials before Eisner came along. To get Walt Disney World off the ground in 1967, it convinced Florida officials to create the Reedy Creek Improvement District under the premise that it would develop a residential community, according to Foglesong in Married to the Mouse. That concept, called EPCOT, wound up being just a golf ball-shaped attraction at the theme park. But Reedy Creek remained, shielding Disney from local land use laws enacted by Osceola and Orange counties, in which sprawls the district and Disney World.
After Eisner took over in 1984, the company began to garner more generous subsidies. In 1989, it got $57 million in bond money that was originally slated by Orange County for affordable housing projects, then got $57 million more a few years later to finance a turnpike extension that leads straight onto Disney property—and nowhere near that county's boundary line.
These deals have worked out for Disney. For the municipalities themselves? A mouse trap. Disney abandoned the Philadelphia project in 2001 after years of delays, leaving the city on the hook for $55 million, according to one estimate. In January, Osceola County issued bonds to repay $35 million to Disney's Reedy Creek for guaranteeing bonds on the turnpike extension on Disney's property.
Now with Eisner's future in question, Disney may end up losing its key tool in getting more taxpayer dollars. But it'll probably be okay in that department. Besides its name and its own group of lobbyists, it also has its new chairman, George Mitchell, to step in and help bring in more subsidies. After all, if the former Senate Majority Leader can bring peace to Northern Ireland, he can probably get Mickey more cheese.
