Doubts Linger From Disney’s Canceled Project
Retail executive Robert Price was puzzled. Why in the world wouldn’t the mayor of Burbank discuss his offer to develop the downtown property that the Walt Disney Co. had abandoned?
Price would find out soon enough. It was early April, and Burbank officials would not get word until almost a week later that Disney had decided to abort the project.
Price, president of the Price Co., which runs the wholesale Price Club stores, had heard the news from his own sources well before the city would.
Price later apologized to Burbank Mayor Michael R. Hastings for what was an embarrassing moment for both parties. But that did little to ease the stinging disappointment Burbank officials felt at losing a financial and status-building project that would have erased Burbank’s image as a sleepy bedroom community.
The episode underscored how Burbank city officials were caught off guard by Disney and how powerless the city was to save a project that was to have changed Burbank’s future. Now, like a spurned lover who is the last to learn that the courtship is over, some city officials find it hard to look ahead when they are still smarting from the rejection of Disney.
Questions Persist
Hastings and others, who helped woo Disney to the site to build a $611-million retail-entertainment center, still are asking the larger questions and wondering if more could have been done to revive the project.
They also wonder if Disney’s acquisition of the Queen Mary and Spruce Goose leases could have turned the company’s sights from Burbank and toward Long Beach.
“I think Disney could have made it work here,” Councilwoman Mary Lou Howard said. “It would have been good for them and good for us. They could have scaled it down and just put a hotel there. It would have been very successful.”
Howard, along with Hastings, had taken the most heat from critics of the Disney project, vigorously defending it against accusations that Disney was taking advantage of the city. It was Howard who initially approached Disney chairman Michael Eisner with the idea for the development, and Hastings who, in his role as mayor, was the most visible defender of the city’s plan to sell Disney the 40-acre property for a mere $1 million.
The possibilities seemed endless last year when Disney first offered to develop a retail-entertainment center that officials then estimated would cost up to $300 million. But that figure more than doubled, and Disney officials decided that projected revenue would not justify the high price tag.
Although Burbank leaders had heard six months ago that Disney was having difficulty reconciling the cost of the center, they still believed that, as in the movies Disney produces, there would be a happy ending.
Only one of the parties would walk away into an immediate future so bright that it included the appearance on the cover of Time magazine, where Eisner was featured recently with Mickey Mouse and the headline, “Why is the mouse smiling?”
But Burbank is not smiling.
Unlike other terminated affairs, the city and Disney still have to live together. Disney has its headquarters in Burbank, does much of its filming there and is the city’s 12th-largest taxpayer. The property that Walt Disney Productions sits on has an annual taxable value of almost $20.8 million, officials said.
In retrospect, some Burbank officials maintain that a closer relationship in the first place would have helped overcome the difficulties that arose as the development project evolved.
“They never really looked at a scaled-down project,” Howard said. “I would have liked to have had discussions with them on how they could scale down. We would have said, ‘What can we do?’ The council was never a part of that.”
Howard didn’t give up easily. When Eisner called her at home with the bad news, she said, “I asked him if they wouldn’t do something else, maybe just a hotel or a restaurant. His comment was that we could talk about it, but it wasn’t anything definite.”
At the same time, Hastings has been unable to shake a suspicion that Burbank was used as a pawn in a major feud between Disney and its chief rival, MCA Inc.
Council Overlooked
“I don’t think we were patsies, but I think we’ll always wonder whether we were used to get to MCA,” Hastings said.
“I would hate to think we were pawns. If that’s the case, it’s a terrible ploy,” she said. “Disney has been part of this community for a long time. If they did this as part of their war, it’s a real black mark against them.”
MCA had shown interest in developing the Burbank property and filed two lawsuits against Burbank claiming that city officials had unfairly shut them out of the bidding. MCA executives charged that Disney’s proposal was a tool to discourage MCA from building a tour attraction in central Florida. Disney denied the charge.
Disney officials were angered at the suggestions from Hastings and others that Disney used Burbank, or that the company didn’t try hard enough to make the project work.
“I guess we expected some kind of reaction to this, and we know everybody’s disappointed that it did not work out,” said Alan G. Epstein, vice president of Disney Development Co. and the key Disney official overseeing the project.
“But it’s outrageous and offensive to me that it’s being said that Disney used Burbank,” Epstein said. “It’s offensive to me personally and the team of dedicated people who worked so hard on this.”
Epstein said as many as 30 people, including independent consultants and experts in areas such as retail, food and beverage and development worked on the Disney proposal at any one time. The company spent $2.5 million on detailed planning studies, market research and related economic analysis, he said.
Harold Vogel, an entertainment industry analyst with Merrill Lynch, said it was possible but not likely that Disney was not serious about the Burbank plan.
“A major corporation does not spend millions of dollars conducting studies and getting publicity, only to slink away,” Vogel said. “I tend to doubt that Disney would gamble their corporate assets just to irritate MCA. Doing something like that could tarnish their image.”
The Disney project, which was to be called “The Disney-MGM Studio Backlot,” was to be the first of many planned Disney urban centers nationwide. The ambitious proposal included an artificial lake called “the Burbank Ocean” atop a 6-story parking structure, a fantasy theme hotel and an adventure ride depicting famous movie scenes. International retail stores would anchor the shopping mall.
In the end, Disney officials said poor demographics, inconvenient freeway access and competition from the nearby Glendale Galleria and San Fernando Valley malls would hamper the center’s success.
Hastings speculated that Disney’s reluctance to build in Burbank may also be connected to the company’s recent full acquisition of the Wrather Corp. Wrather assets include long-term leases on Long Beach attractions such as the Spruce Goose and the Queen Mary.
“They’ve acquired this site in Long Beach which is a much more attractive site,” Hastings said. “It wasn’t a choice between Burbank and Long Beach a year ago. But I suspect before long that they will show up with the Long Beach Ocean instead of the Burbank Ocean.”
Epstein said there were no immediate plans to build an urban center in Long Beach, and that the Wrather acquisition had no bearing on the decision to withdraw the Disney proposal.
He cast aside Hastings’ suggestion that Disney might have decided to abandon Burbank for Long Beach and explained the decision was the result of a thorough study of the area’s potential.
Pulling out a large map in his office, Epstein pointed to a marked-off radius that defined driving times. The project was designed to attract people who lived as much as 60 minutes away, and would have had to contain enough elements to warrant that drive, he said.
“To get people to drive to our project, they would have to pass other attractions, so we needed a number of anchors,” Epstein said. “People would come here to shop, or to go to the movies, or to go to the restaurants, or to get in the rides. Each anchor would have to have a critical mass.”
After studying the feasibility of the project for six months, Disney released results in October showing its cost to be escalating.
“We absolutely considered downsizing the project,” Epstein said. “We tried a whole variety of mixes. But there had to be a certain mass to the project, so we tried variations of the same concept. The more we cut out, the less revenue-producing space we had to accommodate the amenities.”
City Manager Bud Ovrom said that at one point during his periodic discussions with Disney, Epstein spoke about adding more entertainment to the project. “They felt they needed a magnet to attract people, but that’s not what we wanted because they would cut down on the retail.”
Ovrom said he met and talked regularly with Epstein. After October, he said, he was not getting much positive feedback that the project was working out.
“I had an intuitive feeling that things were not going well,” he said. “Whenever I went over to Disney to meet with Alan Epstein, there were not renderings of the project on the walls, no models on the tables.”
Hastings said the first inkling he got that the end was near came a few weeks before the withdrawal.
Epstein came to City Hall with a model of the new corporate headquarters Disney is constructing in Burbank.
“I asked him how the Burbank project was going, and he said, ‘Gee, I wish you wouldn’t ask me that question.’ ”
Even though word apparently spread that the Disney project was dead, the company did not make its final decision to abort the project until April 8, the day that Disney notified city officials, Epstein insisted. The decision was made by Eisner and top Disney management, he said.
Various developers have been trying unsuccessfully to build on Burbank’s downtown 40 acres for 15 years. Now that Disney has retreated from its proposal, the city is preparing to solicit alternative plans from other developers beginning this month.
Many in Burbank feel that Disney officials did the best they could, despite the pullout.
“I’m convinced that Disney gave us their best shot,” Ovrom said.
Hastings said he had no bitter feelings against Disney. But he added, “We took the bullets for a year defending this project. It was just a letdown for the members of the community, and maybe Disney was not sensitive enough to that.”
