Major Financial Risks Walt Disney Took in His Career

For people around the world, the name Walt Disney conjures imagery of prosperity — inviting charmed sentiments not only about the man himself but about his enduring cartoon creations like Mickey Mouse, Donald Duck and Pluto. We think too, about the ever-growing brand that is Disney, and the myriad inventions and innovations. And of course, we think about Disneyland, an entire little world that Mr. Disney dreamed up and built in a balmy city just 24 miles away from Los Angeles called Anaheim. We think of ambition, perseverance and unbridled imagination.

What we do not think of, at least not immediately, when we hear or see the name Walt Disney is bankruptcy, poverty and rejection from lenders. We do not think of dangerous gambles or deep dives into debt. But Walt Disney’s career had its fair share of close calls and bad deals, and there were times when it didn’t look like he’d leave behind a penny, let alone an internationally renowned legacy. For his birth week, here’s a look at some of the biggest monetary risks that Disney took and the financial imbroglios he navigated through to become a legend.

Well before there was Mickey Mouse, there was Newman Laugh-O-Grams, Walt Disney’s first studio located in Kansas, specializing in Disney’s short fairytale cartoons. Barely 21 years old, Disney didn’t have the business acumen or guidance necessary to make sophisticated deals. A deadbeat company called Pictorial Clubs of Tennessee promised the eager young animator $1,100 for six cartoons but skipped out on paying. Disney’s crew was working without compensation and quitting as a result. In 1923, after less than a two-year stint, Newman Laugh-O-Grams folded, and Disney, broke after having sunk $15,000 of investor money into the nascent studio, moved to Hollywood for a fresh start as a director.

In 1927, Disney drew up a character called Oswald the Lucky Rabbit. With his floppy ears and round M-arched brow, Oswald looks a lot like an early draft of Mickey Mouse. But it’s quite possible that there would never have been a Mickey Mouse had things played out differently concerning Oswald.

Dazzled by the chipper cartoon character, Universal executives ordered a series of Oswald shorts from Disney. When Disney went to negotiate a follow-up animation contract with Universal in 1928, Universal dismissed him, saying that it had hired away all of his staff and retained the rights to Oswald the Lucky Rabbit. The mega studio offered Disney a job, but only if he agreed to a lower salary. Disney refused and set to work with his animating partner Ub Iwerks to create another iconic cartoon character. And so, Mickey Mouse was born.

By 1940, when the Walt Disney Company made its IPO debut, the company had substantial achievements under its belt and Walt was a household name in motion-picture animation. In 1937, he took home an honorary Oscar for his studio’s groundbreaking film “Snow White and the Seven Dwarves.” But his next two films, “Pinocchio” and “Fantasia,” failed to impress at the box office, and Disney’s esteem in his company — and bank account — seem to have been compromised by the flicks’ subpar performance.

Rather than undergoing a proper valuation of their company, Walt and his business partners plopped Disney on the stock market priced at as low as $5 a share. It was a dark time for the country, still reeling from the Great Depression and ensnared in World War II — but the risk paid off. Disney shares sold out by the end of the day.

By selling all its shares, Disney raked in $9 million — more than enough to pay for a new studio in Burbank — but the influx of wealth also brought boiling tensions at the Disney company workplace to a head. Enraged over being continuously left out in the cold financially, Disney’s workers went on strike in 1941. The strike lasted five weeks but caused long-lasting damage to Disney’s reputation as an employer. Had Disney not denied his workers a healthy raise when he ushered in millions, the Walt Disney Company’s business model might look very different today. After a federal mediator stepped in and sided with the Screen Cartoonist’s Guild, the company unionized. Even Disney’s best-paid animator, Art Babbit, resigned as president during this time and joined the Guild.

Walt Disney may have moved to Hollywood to make it in the film industry, but over time, a much bigger dream emerged: to build an amusement park. Though Disneyland was flourishing for decades as a business enterprise (before the COVID-19 pandemic indefinitely shut its gates, of course), the Magic Kingdom was far from a solvent endeavor at first. In 1952, when Disney began drafting concepts for the theme park, his company was barely scraping in gains, with a net profit of $720,000 on revenues of $7.3 million. Launching a project as ambitious and costly as a theme park was a ludicrous idea and the Disney Board was quick to shun it.

So, Walt Disney formed an entirely new company called WED to power his dream of Disneyland. He borrowed $50,000 — the most allowed — from his life insurance policy to fund Disneyland. He also sold his second house and put his other home in his wife’s name to help avoid losing it should he fall into bankruptcy. Had Disneyland not taken off as a monumental success, it’s likely that Walt Disney would be remembered not as a branding genius and pioneering entrepreneur, but as an artful but overambitious animation filmmaker who, unfortunately, took financial risks that just didn’t pay off. Thankfully, history sailed in Disney’s favor and the mustachioed showman from Hermosa, Illinois, has inspired countless dreamers not just to wish on a star, but to gamble on it, too.

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