Disney Makes the City of Anaheim a Billion-Dollar Offer

June 25, 2015, 1:14 PM · The City of Anaheim is considering whether to extend a 20-year exemption from any city entertainment tax that it awarded the Disneyland Resort back in 1996. To help convince Anaheim to grant it another 20 years without new ticket taxes, Disneyland is promising Anaheim that it will make $1 billion in new capital investment in the resort.

Carthay Circle at DCA
The Carthay Circle was part of the most recent billion-dollar expansion at the Disneyland Resort.

Let's break this down: Disney is going to invest a lot of money in Disneyland no matter what the City of Anaheim does. There's money on the table for Disney to make from fans by developing new attractions based on Star Wars, the Marvel Cinematic Universe and Frozen, and Disney's not in the habit of leaving money on the table. The company's already announced that it will expand the presence of these franchises in its parks, and Disneyland will get its share of that investment. And part of the new Disneyland Resort investment will be a major new parking structure, in addition to in-park improvements.

So why the fuss? By making this offer, Disney is helping its allies in Anaheim's City Hall by giving them some political cover for continuing to exempt Disney from a ticket tax. With this proposal, Anaheim officials can claim that they leveraged a valuable investment in the community from Disney in exchange for the extension, so it doesn't look like they gave away a new source of income for the city for nothing.

And so long as people overlook the fact that Disney isn't about to stop investing in the gold mine that is Disneyland, it all works for everyone.

Ultimately, what this comes down to is Disney saying, "Look, Anaheim, if you don't start collecting the tax you're already not collecting, we will go ahead and make a billion-dollar investment we were going to make anyway."

Long live the status quo.

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Replies (16)

June 25, 2015 at 1:33 PM · Unlike the investment for the Mickey and Friends parking structure, will Disney pay for the new 5,000 space parking structure itself? It could be a $200 million investment. This is 50% more parking capacity. So will the parks experience a 50% increase in attendance without a third park? Certainly DCA should double in attendance and Disneyland should receive 20% increase for the new parking structure to make sense. Something big should come to both parks. Seems like Marvel and Star Wars are tops for new additions.
June 25, 2015 at 1:34 PM · Hooray for the status quo! Themed cupcakes for everyone!!
June 25, 2015 at 1:47 PM · What a weasel move by Disney.
June 25, 2015 at 2:00 PM · So currently, are any taxes paid on ticket sales i.e. sales tax?

Or is this exemption from additional taxes specifically on entertainment admissions?

From the article, and other linked articles on the subject, to me it reads more like they won't add any additional taxes onto ticket sales, implying that ticket are already subject to sales or other taxes.

Any specific additional tax is a cash grab in my opinion.

June 25, 2015 at 2:23 PM · If they levied a ticket tax, Disney would just raise tickets prices to compensate. At least this way fans get a guarantee of $1B in NEW capital investments. It's the better deal for fans (and for Disney, of course).
June 25, 2015 at 3:02 PM · Does Knotts pay a ticket tax? I know they are in Buena Park not Anaheim but if they pay one than Disney should. If they don't then Disney shouldn't.
June 25, 2015 at 5:39 PM · Anyone that thinks Disney as a corporation is paying any taxes does not really know how the real world works. It is just part of the cost of doing business like office supplies or the fireworks at night. So if Disney has to pay more taxes then our ticket prices go up and the average Joe pays Disney's taxes for them. So just for future reference 95% of the time when you advocate for most any corporations taxes to go up you are really asking for your own tax burden to go up unless you never use their services in any way.
June 25, 2015 at 7:19 PM · Well put.
June 25, 2015 at 10:28 PM · Re: Current entertainment taxes. My understanding is Anaheim does not currently have an entertainment ticket tax. Anaheim has been talking about one for some time, but Disney is currently exempt if Anaheim created one today. This new agreement would extend that exception for another 30 years.

I agree this is pretty nasty from Disney. What are they saying, if Anaheim doesn't extend the exemption Disney is just going to stop maintaining their parks?

Disney, I am sure there are many, many real estate companies that would love your sweet, overpriced freeway adjacent OC land if you feel it is too much of a tax burden to maintain.

June 25, 2015 at 10:47 PM · Over what period of time would the $1 billion be invested? $1 billion over 8 years could be a big deal. Over 30 years, that would not be so much.
June 26, 2015 at 3:17 AM · @ Mr. Niles, As I understand it Disney is expanding its Anaheim footprint by buying up some of the hotel properties around DLR. Is there any link between that Disney effort and the tax issue?
June 26, 2015 at 6:56 AM · "...Disney is expanding it's Anaheim footprint by buying up some of the hotel properties around DLR."

What, like they didn't already? ;)

If what TH is saying is true, and Disney is buying those hotels, then that would be so deliciously ironic. After all, those hotels are one of the main reasons why Walt wanted to expand eastward.

Also, if I were the city if Anaheim, I'd do whatever Disney wanted me to do. No offense to anyone who actually lives in Anaheim, but Disneyland is probably the only thing keeping them on the map right now. (Well, that and it's close proximity to L.A.)

June 26, 2015 at 8:32 AM · Good deal for tourists and Disney, not so good deal for locals, who bear much the burden of maintaining an infrastructure heavily used by non-residents. Where is the benefit for them...you know...the ones who elect the politicians. A ticket tax would mean a price increase, but since when has Disney really cared about that.

I'm not one to vote for piling on the taxes, but there are occasions where people or companies should contribute more to maintain the environment that they help to create. What's Disney going to do...shut down the park? Not improve? bull****. They are going to improve and expand regardless because they have to, lest they not be able to maintain the numbers they do. They will continue to buy where they can so that they can assume control of the environment as much as they can around the park. That's what Disney does.

If it's a threat, it's an empty one, but it sets the table for politicians to be spineless, or to cash in. Anyone check their pockets yet?

June 26, 2015 at 11:22 PM · The only thing I really took away from this article is the billion dollar figure. For theme park fans, that is all that counts, IMHO. I am very glad that future investment in DLR will start with a "B".

Okay, I will make one more comment. Considering how greedily Anaheim taxes hotel rooms, it would be pretty shameless to tax tickets, too. We're going both to San Diego and Anaheim, and the hotel tax at the latter is about double the former!

June 27, 2015 at 12:10 PM · I agree with Derek, if the entertainment tax is increased, it's not going to have much effect on Disney. They don't pay the tax, the ticket buyers pay the tax in the cost of their admission. Disney is just the collector of the money then deposits tax portion into the city coffers. I understand why Disney would want to stop the tax from being added or increased. It just makes their tickets look more expensive when you see a total dollar amount. Yes- they bring in a lot of money to Anaheim and the surrounding areas. Are their bed taxes on hotel rooms? Sales taxes on products and services? I'm sure there is. Does Anaheim, and the State get some of it? What about property taxes. Does Disney pay any? Disney isn't going anywhere. They will have to re-invest in the parks anyway to keep people coming back and keep up with characters, trends and the TV and Movies that people want to come and see. Too many of the big sports and entertainment companies have their hands in the tax payers pockets looking for subsidies (tax payer dollars) for their investment. For example: Daytona International Speedway, in Daytona Beach, FL is currently undergoing a major renovation of all seating, fan experience areas including food and souvenirs, corporate suites, race related track operating suites used for rules, scoring, pit monitoring, etc. They have asked for a rebate of all sales taxes received at the speedway for 30 years to offset some of the cost of this investment. There is a bill in the Florida Legislature discussing if this will be granted. I believe it also includes the 3 NFL teams in Florida looking for the same rebate of sales taxes. While NFL teams do relocate (sorry Los Angeles), does anyone really think that International Speedway Corporation (ISC) parent of Daytona International Speedway and other race tracks, is going to pull up stakes and leave Daytona Beach behind if they don't get their way? No, never going to happen-just like Disney in Anaheim. Disneyland is there to stay. Hopefully city officials and Disney can work together for the benefit of everyone.
June 27, 2015 at 12:19 PM · Disneyland should open a third gate

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