Assuming that acclaimed writer Miles Finch is an elf, Buddy gets himself into a fight causing Miles to leave, with the money, and Walter shouts at his son. Buddy feels worthless and leaves, to wander around Central Park on his own.
The writing team find Miles Finch's notebook with all his ideas, but Walter leaves the office to find Buddy - and is fired by his boss.
Meanwhile, Santa has crash landed in the Park as the Christmas cheer meter has hit zero. Buddy stumbles across the sleigh, and helps to fix the engines. Walter and Michael find Buddy and Santa, while the evil Park Rangers are closing in on them. Walter pretends to be Santa to keep the Rangers busy, while Michael 'borrows' Santa's list and reads it aloud to a waiting news crew to help people believe once more.
Jovie remembers that 'the best way to spread Christmas cheer is by singing loud for all to hear' - so she gets the crowd singing and the Claus-meter jumps with power, the sleigh rockets into the sky and Santa can keep delivering presents.
In the near future, Walter starts his own publishing company and his first book, by a new writer about an Elf travelling to New York City, is a runaway success. Buddy and Jovie marry, and have a little baby, and visit Papa Elf at the North Pole when they can.