Disney Choice: Intense Match Between Equals : Theme park: Executive who planned losing DisneySea project admits he was ineffective in wooing political support.

The Walt Disney Co.’s decision to develop a new resort in Anaheim--rather than Long Beach--was the culmination of some two years of intense effort by a pair of executives who knew that only one would come away the winner.

The victor was Kerry Hunnewell, charged with planning for a world’s fair-style park to be built in Disneyland’s current parking lot. The loser was David Malmuth, who had devoted his energies to designing an ocean-oriented theme park next to the Queen Mary on the Long Beach waterfront.

On paper at least, they are a matched pair. Both are 36 and hold the title of vice president for the Disney Development Co. Both were honor students with MBA degrees--Malmuth’s from Stanford and Hunnewell’s from Harvard. They worked in coveted positions for other developers before joining Disney, Malmuth in 1988 and Hunnewell in 1989. Both are highly competitive.

“I don’t think you would say it was a rivalry,” said Ron Dominguez, who oversees both Disneyland and the Queen Mary as executive vice president of Walt Disney Attractions/West Coast. “They were loyal to the projects, and they were working hard to make it a reality.”

Hunnewell said he did not often chat with his Long Beach counterpart during the process. “David was working very hard on Long Beach, and I was working hard on Anaheim. We were keeping our eyes on the prize.”

Malmuth had a year’s head start before Disney Chairman Michael D. Eisner decided to pit the two projects against each other. But Hunnewell’s project caught up fast. Sometimes the two men would be called to a Burbank conference room where together they would be asked to describe parts of their schemes directly to Eisner and Disney President Frank Wells. Other times, Hunnewell said, Eisner would buttonhole them in the hallway of the company’s Burbank headquarters for a quick update.

Instead of reporting to their immediate supervisors, Malmuth said, he and Hunnewell reported directly to the company’s top brass because “we were closer to it than anybody else. I think they felt it was important.”

Malmuth said he met with Eisner and Wells about a dozen times during the course of planning for the Long Beach project. But he said neither revealed much of their personal feelings about the respective projects.

“I didn’t know how they were weighing the various elements,” Malmuth said.

All was going well until a major hurdle developed in the Long Beach proposal: Disney belatedly realized that its plans for 250 acres of landfill in the harbor waters were going to run afoul of the state Coastal Act.

Although the Coastal Act restricts landfill, it allows fill for water-dependent projects. Malmuth said the company had been advised early on by former Coastal Commission staffers that an ocean-oriented theme park would be permitted.

Further discussions with the commission yielded a different opinion--that such a development would probably not be approved. Disney responded by going to Sacramento to lobby the Legislature for a bill that would have exempted the Long Beach park from the act’s restrictions.

By Malmuth’s own admission, the company then dropped the ball. In an interview last Friday in his Queen Mary office, Malmuth spoke candidly of “our ineffectiveness in trying to move our legislation forward.” And he placed much of the blame on himself, acknowledging his “lack of sophistication and understanding about how Sacramento works. . . . I’ve learned what not to do.”

He said Disney should have done a better job of cultivating local political support for the bill and also should have touched base with environmentalists before pushing the legislation.

“No question. If I had to do it over again, I would spend more time with the environmental community,” he said.

As it turned out, environmentalists led the fight against the proposed exemption after they found out about it, arguing that the bill would set a dangerous precedent that would open the floodgates to similar requests from other developers.

Though Malmuth still says he thinks Disney had the votes to pass the bill, it never got that far.

Without the ocean landfill, the scope of the Long Beach project was severely limited. Malmuth’s planners tried to reconfigure it to fit on existing land, but he said they just did not have enough time to develop alternate schemes in the face of company deadlines.

“We really felt it essential to focus on one project,” he said, explaining that Disney bosses did not want to continue juggling competing proposals. They wanted to make a choice.

In the two weeks before the decision was announced, Eisner and Wells kept their distance from the planners. By then, Malmuth said, he was reporting directly to his immediate superiors, development Senior Vice President Kenneth Wong and President Peter Rummell.

During those same two weeks, Anaheim Mayor Fred Hunter said that members of his negotiating team were telling him that compromises were becoming easier to obtain in the closed sessions with Disney negotiators.

“(The negotiators) were coming to us saying that everything was looking good,” Hunter recalled. “They felt our chances were good.”

In Long Beach, meanwhile, negotiations had stalled. There were no meetings. City leaders were growing increasingly anxious as they read the handwriting on the wall. In late November, Long Beach Mayor Ernie Kell even went so far as to predict that his city only had a 20% chance of winning the Disney project.

He was right. Last Thursday morning a grim-faced Malmuth told Long Beach officials that Disney was going to Anaheim.

However exotic and appealing a water park was, in the end it was simply faster and easier for Disney to develop another attraction in Anaheim. To pursue the Long Beach project through the thicket of necessary government approvals would have cost the company another $70 million and four to five more years of work, Disney officials predicted.

“I am extremely disappointed with the outcome,” Malmuth acknowledged last week at a downtown Los Angeles news conference at which Disney announced the decision. “I have invested over three years of my life trying to make the project successful.”

He won’t have long to mourn, however. Now he must turn his attention to deciding what, if anything, Disney should do on the lease it holds for 50 acres of existing land next to the Queen Mary.

“I’m sure lots of ideas will be suggested to us,” he said.