The Mouse that Roars: Disney's complicated arrangement with the City of Anaheim

NotionsCapital calls our attention to a two-part series in the Los Angeles Times on the relationship between the Disney Corporation and the City of Anaheim, home to California's Disneyland amusement park. The city provides Disney with a boatload of tax incentives and an agreement to not charge an "entertainment/amusements tax" on tickets for many decades into the future.

While the city still rakes in a great deal of tax revenue, most of the agreements favor Disney, such as the city building, paying for, and eventually giving to Disney a parking garage where Disney collects all the revenue, and bond agreements that don't allow the city to take back funding overages. A goodly amount of the city's tax revenue stream is encumbered by agreements with Disney, which prevent the monies from being used for other priorities.

Like with what are called "public private partnerships", the reality is that the private sector party has far more legal and financial resources generally and negotiating expertise and power that far exceeds the capacity of the local government, meaning that the city is in an extremely weak position.

One of the campaign mailers sent out against an "anti-Disney" candidate for Anaheim City Council, funded in part by PAC contributions from Disney.

The asymmetric relationship is furthered by Disney's active creation of political action committees to support candidacies of people who will be pushovers when it comes to approving deals with the Company.

-- Part 1: "Is Disney paying its share in Anaheim?"
-- Part 2: "How one election changed Disneyland’s relationship with its hometown"

Part two reports on how the results of the 2016 election changed the composition of the City Council to one that was not in lockstep with Disney proposals.

These are the LA Times stories that briefly led the Disney Corporation to refuse access to LA Times reporters to movie previews and other press events ("Disney Ends Ban on Los Angeles Times Amid Fierce Backlash," New York Times).

The Orange County Register, which under the most recent previous ownership was doing a decent job of trying to do balanced reporting on Disney, tourism, and Anaheim City Government matters, came out with a piece defending Disney, "In fact, Disney does pay its fair share."

The op-ed by Lucy Dunn, president and CEO of the Orange County Business Council, makes the point that despite all the various incentive programs, the city still nets money from the various agreements, tand that the city wouldn't be raking in that dough from hotels if Disneyland wasn't there, that the company is the city's and county's largest employer. It also makes the point that some of the key arrangements were made in the late 1990s when the City of Anaheim languished--the article uses the term "blighted"--and was in need of new investment.

All that is true, but the issue of opportunity costs is still relevant and the fact is that like most "enclave developments," Disney aims to capture as much as 100% of the tourist spend of visitors coming to Disneyland and related parks, leaving very little opportunity for local business or the city to benefit.

The city's is also home to the Anaheim Angels baseball team and the Anaheim Ducks hockey team.  The downtown is pretty paltry, although they continue to invest in it, and despite the presence of one of the country's most innovative retail developers, Shaheen Sadeghi ("Most Influential 2014: Shaheen Sadeghi led an independent revival in Anaheim," Orange County Register).

The city developed a striking multimodal transit center called ARTIC ("Gleaming new transportation hub reflects OC's embrace of public transit," Los Angeles Times; "Anaheim's new ARTIC: Icon or eyesore?," Orange County Register) which was built with the expectation that it would be a terminus for the state high speed railroad system, and a streetcar program is being developed to link the station, the nearby stadium and arena, downtown, and Disneyland ("Anaheim streetcar making a comeback," OCR), although speaking of opportunity costs, the program was terminated by the City Council, but picked up by the Orange County Transportation Authority.

Ironically, the program was terminated by the Council because it was seen as over-benefiting Disney rather than as an opportunity to capture more spending by visitors outside of the Disney complex.