Originally Authored at TheFederalist.com
Fifty-five years after Florida passed a law at Disney’s request establishing the land around the Walt Disney World Resort as the Reedy Creek Improvement District (RCID), which gave it all the responsibilities and power of a county government, the entertainment empire made a fatal mistake: It chose the sexualization of children as the hill to die on.
Specifically, in response to HB 1557 — Florida Gov. Ron DeSantis’ Parental Rights in Education law, which critics dishonestly dubbed “Don’t Say Gay” because it prohibited activist teachers from bringing LGBT politics and transgender indoctrination into kindergarten through third-grade classrooms — Disney threw its weight around. In keeping with its executives’ commitment to injecting a “not-at-all-secret gay agenda” into every aspect of its brand, Disney, a “county” unto itself through the RCID, made striking down HB 1557 its “goal.”
Little did the gargantuan mouse know it was no match for DeSantis.
In April 2022, a little over six months before the Florida governor would win reelection in a 20-point landslide, he signed into law a bill repealing Disney’s sweetheart Reedy Creek Improvement District (RCID). It subsequently dissolved in June 2023.
DeSantis replaced the RCID with the Central Florida Tourism Oversight District (CFTOD) — and that’s where things get interesting. The CFTOD took on what looks to be the first exhaustive and independent audit in the five-decade-plus history of the district, with assistance from renowned finance, government, accounting, and city planning experts. The new district published its bombshell findings in an 80-page report on Monday, which can be summed up in a single line: The Reedy Creek Improvement District was “the most egregious exhibition of corporate cronyism in modern American history.”
Reedy Creek Scam
First off, the investigators’ report indicates, the entire premise of the RCID was a scam. Disney originally sold the idea of this special district to Florida with the idea of “EPCOT,” or Experimental Prototype Community of Tomorrow. EPCOT was supposed to boast not only attractions but also business and residential zones — but that never came to pass. Instead, it built its shiny theme park but never put up crucial infrastructure such as schools, hospitals, or housing for employees, meaning surrounding communities incurred the burden of providing these essentials to the company’s workers. As the CFTOD auditors noted in their report: “The RCID was a mousetrap. Disney dangled savory cheese in front of the Florida Legislature and the people of Orlando, but quickly abandoned its city-building pretense.”
Self-regulating Reedy Creek had virtually no oversight, the report shows — just Disney deciding what would serve its interests best, no matter the needs of the many taxpayers located inside the district. In fact, Disney’s authority became so out of control that the company “attained the power to, among other exceptional privileges, create and direct not just its own fire and police departments, but also, if it chose, construct a nuclear power plant,” according to the report.
Insisting that Reedy Creek’s autonomous authority was crucial to Central Florida’s growth, Disney was engaging in cronyism of the highest degree, which, according to the audit, included swaying local supervisors by paying board members’ property taxes and keeping district employees on Disney’s payroll.
Furthermore, though residents of Osceola and Orange Counties, where Reedy Creek was located, were led to believe the “rising tide” of the special district would lift all entrepreneurial boats in Central Florida, they were beached instead. Residents funded the district’s functions but got none of the participation or reciprocity they were owed. The audit revealed how competition was suppressed, if not destroyed outright, as the Disney hydra snaked its way through and dominated each of the district’s enterprises — from dozens of hotels to a handful of golf courses to shops and restaurants by the hundreds. And this was all on top of its many amusement attractions.
Some consequences of this unchecked monopoly are obvious. Entertainment behemoth Disney has become one of the biggest corporations in the entire world. In 2022, for instance, Disney brought in close to $83 billion — which is double the GDP of whole European and South American countries.
“What’s more, the company’s success has been far less reciprocal than Disney would care
to admit,” the auditors wrote. “As of November 2023, institutional investors attribute over 85 percent of Disney’s current stock-market value to its theme-park and consumer-products related businesses. So as advantageous as Disney has been to Central Florida, the converse is true many times over.”
Yet other results of Disney’s corporate cronyism and monopoly power have remained hidden — until now.
Crooked Kickbacks
Perhaps one of the most egregious revelations from the audit was the unethical flow of perks and benefits from Disney to RCID employees. Disney effectively bought the loyalty of the district.
According to the report, here’s how it worked: Disney would provide flashy perks to Reedy Creek employees, many of which weren’t available to the general public. These benefits included up to 40 percent off Disney cruises and merchandise, other discounts on resort rooms and services, and millions of dollars worth of Disney park annual passes for not only employees but also their friends and family — plus free, single-use, transferable tickets over the holidays. District employees even received some privileges reserved for Disney workers, known as “cast members,” such as gifts and invites to closed-door parties. Of course, none of these kickbacks were included in workers’ taxable income.
This obviously gave the appearance of impropriety, especially considering Florida’s gift statutes, which are similar to those of other states and government entities. Unbeknown to district employees, however, Reedy Creek’s board members and managers were paying Disney for these perks with tax dollars. As the auditors explained, “The effect of this arrangement was that Disney received full payment for the privileges RCID employees enjoyed, but most employees believed they received those privileges as a gift from Disney.”
This secret exchange inevitably resulted in Disney favoritism, the report noted. For instance, district employees were incentivized to purchase significantly discounted merchandise from The Mouse (subsidized by taxpayers) instead of non-discounted goods sold by non-Disney sellers (who were paying taxes that funded the Disney subsidies).
These weren’t the district’s only shady fiduciary actions. According to the report, “The former District Administrator charged hundreds of thousands of dollars on his District American Express card for celebrations, sports tickets, memberships, meetings, and other events.”
Crumbling Infrastructure
The audit also revealed Reedy Creek’s broad mismanagement and negligence regarding district infrastructure and growth needs. For example, when doling out contracts, RDIC failed to secure the best goods, services, and prices. Instead, it prioritized so-called “diversity, equity, and inclusion” and chose its contractors on the basis of skin color.
Disney meanwhile used RDIC as its personal pocketbook and resource bank, pressuring the district to favor the company in its permitting and policing, the report showed. Reedy Creek spent $700 million on Disney parking garages at taxpayers’ expense and failed to keep careful records of other exorbitant purchases, such as a $70 million utility buy from Disney.
A forensic accounting expert involved in the audit found that Reedy Creek devised one particular contract to throw $7.7 million at Disney for “expected impact costs due to road construction affecting a Disney-owned golf course,” but there was no evidence showing due diligence from RDIC to conduct price comparisons or analysis.
Then, according to auditors, when roads needed maintenance between 2018 and 2022, RDIC put it off, running costs up even higher. And despite Disney’s empty promises, the roughly 100,000 people who work in Reedy Creek must commute because there’s no housing for them in the district, leading to even more externalities, such as traffic jams and commuter costs. As the auditors noted, “Between 2019 and the present, the workforce required by Disney has grown from 70,000 to more than 100,000, and future anticipated development could add another 30,000 employees.” Reedy Creek had no plan for this boom.
Disdain for Democracy
Disney, drunk on power, opposed commonsense checks and balances, including even democracy itself. Based on the analysis of another expert, Professor Donald Kochan, the auditors drew this damning conclusion:
The historical record demonstrates that Disney disdained voters from the outset and did not want its special district or its corporate choices to be subject to public accountability through popular elections, despite how it had marketed its ideas to the legislature. Disney’s consultants on the Disney World and special district project advised Disney to “limit the scope of democracy” so Disney would be “freed from impediments to change, such as … elected political officials. … Because Disney ran the District, its land use and planning decisions were not subject to “veto points” and “choke points,” which are purposeful institutional restraints in our constitutional system.
In that same spirit, as the old Reedy Creek board was on its way out the door this spring, it instituted several 11th-hour agreements to try to maintain the corrupt status quo for decades — against the will of Floridians and the representatives they elected.
Disney’s Downfall
Thankfully, the DeSantis-created CFTOD is working to course-correct, despite a few disgruntled Florida lawmakers like Democrat state Sen. Linda Stewart trying to revert to the failures of Reedy Creek. No doubt the district’s new government structure has kinks to work out, but good on DeSantis for bucking the system of corruption that’s marbled everywhere in the country and turned virtually all of America into company towns. Disney probably thought it was entitled to this special treatment because most state and local governments give corporations mega entitlements; just look at sports stadiums and teams for one notorious example. In other words, the report is just the tip of the corporate iceberg — but DeSantis deserves major credit for taking a pick to it.
But beyond the bounds of Florida, the story of Reedy Creek is also just the next chapter in the story of Disney’s downfall.
Last year, we learned, thanks to Christopher Rufo exposing a video call between Disney execs, about Disney’s “not-at-all-secret gay agenda.” One animation executive producer bragged about “wherever I could, adding queerness. No one would stop me, and no one was trying to stop me,” while the president of the company’s General Entertainment Content praised the “many, many, many” LGBT characters but lamented the lack of gay and transgender leads. This while Disney pledged that half of its characters, actors, and staff would be from “underrepresented groups,” such as nonwhite, gay, or transgender, by the end of 2022.
It’s not working out so well. On Disney’s centenary, the mouse is floundering. And as Nathan Stone wrote in The Federalist last week, the company’s woes aren’t just box-office flukes. “They’re more like box-office bloodbaths.” Two of this year’s animated releases, “Elemental” and “Wish,” have been flops, with the latter bringing in less than $32 million over its opening Thanksgiving weekend, despite expectations of $45 million to $55 million and a production budget of $200 million. “Strange World” was even worse, losing Disney some $200 million last year.
Meanwhile, Disney’s supposedly reliable cash cows are fainting, from Marvel Cinematic Universe offerings bombing at the box office and on Disney-Plus to the Star Wars well drying up to live-action remakes falling woefully short.
That’s what happens when you declare war on the families that comprise your audience — and then blame them for walking away. As Stone explained, that’s exactly what Disney has done:
Is “Kenobi,” the Disney-Plus show about Obi-wan Kenobi, failing? Blame the fans. Are “Elemental” and “Wish” horrible disappointments? Blame the consumers. Are people not enthusiastic about what was obviously supposed to be the female replacement for Indiana Jones? Blame the fans. Do you admit that “The Marvels” is horrible? The audience is misogynistic and homophobic.
Disney, however, has a bigger need than reclaiming its spurned audience; it desperately needs to rehabilitate its brand. The sins of Reedy Creek won’t make that any easier.
Many Americans fell out of love with a Mouse that wants to trans their kids. Learning that it also hates democracy, screws taxpayers, thrives on bribery, and kills its would-be competitors probably won’t help woo them back.