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opinion

Gus Carlson is a New York-based columnist for The Globe and Mail

How much does being woke cost a business? Walt Disney Co. DIS-N chief executive officer Bob Chapek is finding out.

What began a few weeks ago as a war of words over a controversial parental rights bill in Florida has escalated into a full-blown throw-down between Disney’s California-based leadership and Florida’s Republican Governor, Ron DeSantis, that has become a de facto referendum on woke capitalism.

This week, the Florida legislature approved a measure to dissolve a special district established in 1967 that gave Disney self-governing rights over its Walt Disney World resort and theme park property near Orlando.

Under the bill, which now goes to Mr. DeSantis for signature, the Reedy Creek Improvement District would be eliminated on June 1, 2023, along with the benefits Disney has enjoyed for more than 50 years, including tax breaks and the ability to develop and run the district pretty much as it sees fit.

The wrestling match has captivated a corporate world that has felt increasing pressure from stakeholders to take stands on social issues often unrelated to the products and services companies sell and, in the process, often put them squarely at odds with lawmakers in the markets they serve.

In the balance hangs the future of an enormous commercial enterprise.

Disney is Florida’s largest employer, with 77,000 employees, and a huge contributor to the state’s tourism revenue. In a normal year, Disney World attracts 20 million visitors from around the world.

Critics say the move on Reedy Creek is Mr. DeSantis’s way of punishing Disney for its vow to fight to repeal the new parental rights law, dubbed the Don’t Say Gay law, which bans the teaching of sexual orientation or gender identity to schoolchildren from kindergarten to Grade 3.

While Mr. Chapek initially said it would be counterproductive for Disney to weigh in, he abruptly changed course after feeling pressure from a group of LGBTQ+ employees. He apologized to them publicly, and the company said it would work to quash the law.

Mr. DeSantis, who warned last year that he would push back on “woke” companies such as Disney if they wander into state politics, did just that – hard. His effort to dissolve the Reedy Creek district shakes the foundation of a productive and highly lucrative long-term relationship between the state and the company that many see as the model of public-private commercial success.

“This is a governor who is willing to buck your traditional elite establishment and corporate America,” Florida House Speaker Chris Sprowls said about Mr. DeSantis’s Reedy Creek legislation. “And maybe that’s a difference in politics over the last 20 years, but I think we’re starting to live in this really unique time.”

The industrial logic behind the district made sense at the time it was established and, until this week, it seemed to be working just fine. Disney agreed to invest heavily in developing 25,000 acres of unused land, much of it swamp, to create a theme park that would create thousands of jobs and become a powerful economic engine for the state. In return, the company would enjoy incentives from the state and virtual self-rule, including bypassing typical state approval processes for development.

Remarkably, Disney’s significant sway in the state’s economy has not prompted Mr. DeSantis to back off or even soften his stand on the issue. Quite the contrary, his move on Reedy Creek sends a clear signal to Disney and others to stick to their knitting and keep their noses out of the state’s legislative chambers in Tallahassee.

This signal could come at a price for Florida residents. Disney actually pays more into Reedy Creek’s coffers now than it would as a corporate taxpayer. Without the special arrangement, residents in neighbouring Orange County could see a 15 to 20 per cent property-tax hike to cover the shortfall, its tax collector has said.

The ball is now in Disney’s court. It would be hard to imagine Mr. Chapek taking his multibillion-dollar business elsewhere – the costs, logistics and lost revenue would be crushing to the company.

That fact is clearly not lost on Mr. DeSantis, an expected GOP presidential hopeful in 2024, who continues to push hard on his political agenda, knowing Mr. Chapek may have few options but to capitulate.

Can Mr. Chapek find some middle ground with Mr. DeSantis and still satisfy concerned employees that he is sensitive to and supportive of their views on the issue? The financial and reputational imperative to do so seems obvious.

Mr. Chapek is certainly between a rock and hard place. But many agree he put himself there, ignoring Mr. DeSantis’s warning shot and, after some initial hesitation, stepping into the line of fire voluntarily.

In the meantime, Mr. DeSantis is not the only leader making political hay atop the controversy. California Governor Gavin Newsom, a Democrat, poked fun at Florida’s claims of being “business friendly,” and suggested that “punishing businesses for speaking out against hatred is the move of an authoritarian regime.”

And in a tweet this week, Colorado Governor Jared Polis, also a Democrat, said Mickey and Minnie Mouse could have “full asylum” in his state, an offer that, considering the gravity of the issue, seemed downright, well, goofy.

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