Disneyland, if personified as a member of the seven dwarfs, has thought of itself as Happy, (The Happiest Place on Earth), but lately it’s been more like another of the seven dwarfs, Grumpy, for reasons tied to the pandemic and California government’s response.
With California restrictions to prevent the spread of coronavirus so tight that Disneyland remains closed, the company was forced to lay off 28,000 workers in its domestic theme parks. Newly reported state guidelines to reopen will make it tough for Disneyland to recover. Disneyland is the only Disney theme park around the world that has not partially re-opened, and the theme parks along with consumer products make up the most profitable business in Disney’s vast portfolio.
In other words, keeping Disneyland closed is a big hit to the company and its employees not to mention the revenue it generates to state and local government and other businesses that are in Disneyland’s sphere.
It has been estimated that 80,000 jobs in the greater Anaheim area are reliant on Disneyland. The Anaheim unemployment is a staggering 12% and the city budget could have a $100 million hole.
Disney puts blame on the state of California for not setting acceptable guidelines for the Disneyland re-opening. A Disney official was quoted as saying the impact of the pandemic has been “exacerbated in California by the State’s unwillingness to lift restrictions that would allow Disneyland to reopen.”
Bob Iger, Disney’s chairman of the board and past CEO, quit Governor Gavin Newsom’s economic recovery task force after the Disney layoffs were announced. Iger’s addition to the task force was heralded as one of California leaders who would help guide the business world out of the pandemic doldrums.
We’ve heard barely a word from the task force since its creation, meanwhile the state’s businesses suffer under the re-opening restrictions.
Meanwhile, 28,000 furloughed workers, many employed at Disneyland, who were at least receiving health benefits from Disney since April, although no wages, will now be let go.
Reportedly, new state guidelines from the state for theme parks will allow for opening to 25% of capacity once the county in which a theme park is located reaches the state’s minimal level of infections. However, the guideline reportedly also contains a requirement that park attendees come from within a 120 mile distance from the park. For Disneyland that roughly means residents from Santa Barbara to San Diego and East to Palm Springs.
For a number of California theme parks, this requirement will not be an obstacle, but for Disneyland, which attracts many of its 51,000 average daily visitors from beyond the state’s borders, the condition provides another hurdle to recovery.
An additional headache for Disneyland’s business is on the horizon if Proposition 15 on the California ballot passes. The initiative calls for reassessing business property in California on a regular basis. Disneyland has been vilified in the rhetoric of Prop 15 proponents as an example of a property that has not changed ownership and been reassessed since the property tax rules were changed 40 years ago. That argument misses the fact that Disney’s many improvements and new construction have been reassessed over the last four decades.
Still, if the property taxes go up on Disneyland it adds a new burden to the company’s bottom line. With income down, once the park reopens, how does Disney handle the new tax increase? Do the price of tickets go up or will many of those 28,000 laid off employees working previously at Disneyland never get their jobs back? The answer is probably both things will occur.
Disney executives, Disney employees, Disney fans, and all Californians have a reason to think the state is following the example of another of the seven dwarfs, Dopey, when it comes to Disneyland’s reopening.