NEWS ANALYSIS : Will Disney Make Anaheim Unhappiest Place on Earth?

Burbank lost.

Long Beach lost.

Now Anaheim may become the third Southland city to lose the promise of a new Walt Disney Co. theme park and the enormous windfall of jobs and tax revenue it would bring.

This possibility became evident Monday, when project director Kerry Hunnewell resigned before a Disney decision on whether to proceed with the proposed $3-billion Disneyland Resort and Westcot theme park, the largest proposed construction project in Southern California.

And the man who will make that fateful decision, Disney Chairman Michael Eisner, has recently issued some of the strongest expressions yet of ambivalence about the project.

When Eisner said, “I don’t even know if there’s ever going to be a Westcot. . . . I don’t think a company can ever spend this kind of money,” it hardly sounded like the chief executive known for a Midas touch and imperial ambitions for expansion.

It was a far cry from three years ago when Eisner came to Anaheim to propose the new resort, promising to “reinvent the Disney experience” for the 1990s. Then-Anaheim Mayor Fred Hunter reacted to the invitation with a “yes, yes, yes.”

Eisner’s current pessimism could easily be dismissed as strategic posturing aimed at extracting up to $1 billion in public improvements from the city and state to accommodate the Disneyland Resort. But there is growing evidence that Disney has developed a serious case of cold feet.

“We’re at a real crossroads,” Eisner warned.

After a string of successes, Eisner was jolted back to reality by the spectacular failings of Euro Disneyland in France, which sapped more than $514.7 million from Disney profits last year alone with no end in sight.

The drain appears to be strapping one of America’s richest corporations. And Eisner will surely think twice before sinking $2 billion of his corporation’s money--apart from government’s contribution--into another theme park resort.

Since Eisner proposed the Disneyland project in 1990, the Walt Disney Co. has hired staff and bought or optioned land at a cost of tens of millions of dollars. To walk away now would mean losing it all.

Eisner, however, has walked away twice before on projects well into the planning stages--and just before incurring the real expense of construction.

Disney scuttled a $611-million studio and shopping mall attraction in Burbank in 1988 and abandoned plans two years later to turn the Queen Mary in Long Beach into a $2-billion amusement park called Port Disney.

But spurn Anaheim, the city where founder Walt Disney mortgaged his Palm Springs vacation house to build a dream called Disneyland?

Consider:

* Eisner has denounced the state’s poor business climate, hinting that it may be the reason for eventually scrapping the resort. However, Julie Meier Wright, director of the state’s Department of Trade and Commerce, said her office has received no new demands from Disney since Gov. Wilson announced a $60-million package of incentives to bring the resort to Anaheim.

The state and city are itching to win the project because of its promise to provide 28,000 jobs and add $2.4 billion to the moribund California economy, now in the worst downturn since the Great Depression. City economists say the expansion could generate $27 million a year in tax revenue for Anaheim alone.

* Hunnewell, the developer who was synonymous with the project, leaves in midstream in a “mutual agreement” with his boss. Hunnewell issued a brief statement saying he enjoyed working on the project but has refused all other comment.

His boss, Senior Vice President Ken Wong of the Disney Development Co., said he is temporarily reassigning Disneyland Resort’s 25-member staff to other projects. He added that they could be recalled if the resort project, already a year behind schedule, heats up again.

* Eisner has suddenly shifted public attention to a proposed history-theme amusement park in suburban Virginia, dubbed Disney America, that could be built at a fraction of the cost of Westcot.

* A recession-spawned shift to shorter, cheaper vacations is causing a re-evaluation of mega-resorts such as the proposed Anaheim one, designed to lure guests who stay several days. Attendance was off in 1993 at Walt Disney World in Florida, according to an influential industry trade magazine, Amusement Business.

Perhaps more alarming for Disney, most of the drop was attributed to a single one of its parks, Epcot Center, upon which the proposed Westcot theme park for Anaheim is roughly based.

If Disney decides against the Disneyland Resort in its current form, it still has some tantalizing alternatives, but they are fraught with complications.

One possibility would be to propose something smaller. But that is unlikely, if not impossible, because much of the financing for massive public works improvements hinges on taxes from 5,600 hotel rooms that would be built as part of the project.

A less-than-spectacular and cheaper theme park would mean less demand for hotel rooms. Fewer hotel rooms means less tax revenue to pay for the public improvements. And the deal, as presently structured, would probably fall apart.

Another possibility might be to join with a wealthy partner: Disney supplies the name and expertise, the partner brings the money. Disney already has such arrangements overseas.

But the problem is that if the Disneyland Resort falls short of expectations, its failure could cause the same kind of collateral damage suffered by Euro Disneyland: another besmirching of the Disney name.

Many still hope that the project will go forward. “I’m not worried,” said Anaheim City Councilman Irv Pickler. “I think it’s going to happen, but I’m an optimist.”

Others are just groping for a direct answer about Disney’s intentions.

“If this is an exercise in futility,” City Manager James D. Ruth said Tuesday, “then we want to know about it.”

And if the worst happens--and Disney leaves--chances are that Anaheim will experience the same soul-searching that occurred in Burbank and Long Beach when their Disney projects fell by the wayside.

“Maybe Disney is hoping to find a community that will roll over and give them everything they want and have the money do it,” Long Beach Councilman Evan Anderson Braude, whose district included the Queen Mary, said Thursday. “But they’re going to have to stick with a project soon; otherwise they are going to get a terrible reputation for failed projects.”