Disney “Out-GOPs the GOP” with Last-Minute Reedy Creek Vote that Sidesteps New Board — Complete with Royalty Clause
In a fairytale-like plot twist, Florida Governor Ron DeSantis’ appointed board of overseers recently found out that they have been stripped of power over Walt Disney World before they could even take over, effectively throwing out DeSantis’ earlier efforts.
In February, the Florida Governor signed a law that strips the Walt Disney Parks and Resorts Inc (NYSE: DIS)-controlled Reedy Creek Improvement District of its authority over the special district covering its Florida theme parks. Reedy Creek has had this authority since 1967, and the new law would transfer this authority to a board handpicked by the governor. The move was done after the entertainment giant opposed the parental rights bill, or the “don’t say gay” law.
But, unbeknownst to the board and DeSantis until recently, Reedy Creek passed a vote on a Declaration of Restrictive Covenants in favor of Disney on February 8 — a day before the Florida House voted to put the governor in charge.
The declaration effectively transfers Reedy Creek’s authority to Disney, and gives the entertainment giant the sole right to approve any amendments to the agreement.
And it even comes with a royalty clause: a validity of “21 years after the death of the last survivor of the descendants of King Charles III, king of England living as of the date of this declaration,” if it is found to violate rules against perpetuity.
“This essentially makes Disney the government,” board member Ron Peri said in a report by the Orlando Sentinel. “This board loses, for practical purposes, the majority of its ability to do anything beyond maintain the roads and maintain basic infrastructure.”
But the DeSantis government isn’t backing down just yet. “An initial review suggests these agreements may have significant legal infirmities that would render the contracts void as a matter of law,” said DeSantis spokesperson Taryn Fenske in a statement.
A statement from Disney notes that its actions followed the rule of law.
“All agreements signed between Disney and the district were appropriate and were discussed and approved in open, noticed public forums in compliance with Florida’s Government in the Sunshine law,” the statement read.
The new board’s legal counsel indicated that while Disney claims the agreements were public, the new board only recently discovered them — the board was appointed by DeSantis a month ago on February 27.
“We’re going to have to deal with it and correct it,” said new board member Brian Aungst Jr. “It’s a subversion of the will of the voters and the Legislature and the governor. It completely circumvents the authority of this board to govern.” The Sentinel said that he also hopes that Disney “will work with the board and correct the agreement in a ‘very collaborative manner.’”
But just in case they don’t, the new board has brought in an army of “financial and legal firms to conduct audits and investigate Disney’s past behavior,” Fenske said.
Martin Garcia, the new board’s chairman, said that the outside law firms are made up of “lawyers that have extensive experience in dealing with protracted litigation against Fortune 500 companies.” He added contracting outside help was something they had to do because of the vast amount of resources that Disney has at its disposal.
Information for this briefing was found via Orlando Sentinel, Deadline, Reid Wilson on Twitter, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
