Trump’s the Opposite of a “Successful Businessman”
Over the weekend, I responded to one of Lord Donny’s Tweets, in which he bragged on himself as a “VERY successful businessman.” I countered by saying he is anything but a “successful businessman.” In fact, the myth of “The Donald” could very well be one of the most exaggerated legends in history. Unfortunately, even the expanded 280 characters isn’t enough to fully explain what I mean.
See, in order to believe Donald Trump is a “successful businessman,” it’s necessary to ignore a lot of facts. Like his casino bankruptcies, for example. A lot of people wonder; how the hell does anyone lose money on a casino? Well, it’s actually easy to do, if you don’t think about what you are doing. As we all know by now, Trump is a narcissist. Hell; his current business model is based on his narcissism. He truly believes the Trump name is golden; that millions of people flock to any building with the name on it. He seems incapable of conceiving of the fact that a great many people are repulsed by the name and will never set foot in one of his buildings because it has his name on it. Therefore, when he estimated how much money was available for his casinos, he didn’t take into account competition and he overestimated the value of his name brand.
Put it this way; in 1993, when his casinos and others were struggling, Donny went before Congress to testify about Native American casinos and what a threat they were. At the same time, his competitors — other players in the gaming industry — were partnering with the tribes to help them run their casinos. But there was Donny, insisting that the Native Americans were “sucking up” to the Mafia. He had gone in to the hearing room with a very good prepared statement, but decided instead that it would be better of he spoke more “off the cuff.”
This is from his congressional testimony:
“If [Indian gaming] continues as a threat, it is my opinion that it will blow. It will blow sky high. It will be the biggest scandal ever or one of the biggest scandals since Al Capone. … That an Indian Chief is going to tell [a mobster like] Joey Killer to please get off his reservation is almost unbelievable to me.”
His testimony was so bad, at least one Senator later referred to him as a “dirtbag” and a bigot, and they probably haven’t changed their minds since.
Put simply, Donny the businessman had decided, instead of working with his “competition” to make more money, he would work against them and say incendiary things about them and try to get other people to hate them through insults. Does this sound like a “successful businessman”?
Trump’s business career is littered with stupid decisions like this one. Part of it is because he doesn’t work well with others. While some sycophants talk about the Trump Organization as if it is some sort of intimidating behemoth, the fact is, it is a very closely-held family business that is run much the same as a sole proprietorship. It has also nearly collapsed several times. The Trump Organization has littered the business world with a long trail of bankruptcies, defaults, lost and unfulfilled contracts, nonpayments to contractors and outright deceptions and fraudulent schemes. Trump likes to talk about the book he didn’t write and certainly never read, “The Art of the Deal,” but he has himself specialized in the art of the con.
Trump likes to claim he’s worth billions of dollars and that the presence of those billions of dollars is proof of his business success, but the fact of the matter is, it’s impossible to tell how much he’s really worth. What is almost certain, however, is that he carries more debt than most “successful businessmen.” Worse, Trump knows he lies about how much he’s worth. Forced to tell the truth during a 2007 deposition, Trump admitted that his estimates of his wealth are based on his “own feelings,” as well as an attempt to convince others he’s a good investment. In 2004, when Trump attempted to secure a loan from Deutschebank, he claimed he was worth $3.5 billion and the bank re-estimated that to, at most $788 million and refused to approve the loan until Trump personally guaranteed $40 million of it. Of course, he defaulted on that loan.
That was only one of the latest such instances in his business career. Even as a young businessman working with his father, Donny had a habit of borrowing money for a big deal, then failing at that deal. The first deal Fred Trump let him work on was a Cleveland apartment complex that was sold for a loss. Despite that, Donny had delusions of grandeur. While Daddy was making gobs of money on Brooklyn real estate, his little Donny longed to be a high profile member of Manhattan society, in part because he thought of himself as “above” the “wretched refuse” of Brooklyn, the Bronx and Queens. In 1970, he invested in a Broadway play that closed in less than a month because he wanted to feel like a part of Manhattan society.
That would be about the only thing Donny did on his own for a really long time. The fact is, he was completely dependent on Fred Trump for most of his early career. While Donny claims all he ever received was a single $1 million loan from his father, that’s a huge lie. In addition to that loan, in the early days, Fred named him the beneficiary of a $1 million trust that provided him with about $250,000 per year for the next five years. He also brought Donny into a limited partnership and handed most of his ownership stake to his son. Fred also hired Donny as a consultant on several very lucrative deals that would be worth more than $10 million today.
Little Donny Trump’s first success, a partnership he entered into with Hyatt Hotels, is one he continues to brag about to this day. What he fails to mention is, his Daddy co-signed for a $70 million loan to make the deal happen. He also fails to mention that his personal finances were in really bad shape until Daddy set him up with a revolving line of credit with Chase Manhattan Bank. The City of New York also set him and his partners at Hyatt up with a 40-year tax abatement. In other words, the oldest deal that Trump loves to brag about was due to getting handouts from Chase Manhattan, New York City and his Daddy. This was in 1978, a year when Donny lost more than $400,000, according to his tax returns, which comes to about $1.5 million in current dollars. The next year, he lost $3.2 million, which is more than $11 million in current dollars. The year after that, Fred Trump must have felt sorry for him because he lent him an additional $7.5 million. If you’re keeping a running count, by now, he had already borrowed more than ten times the $1 million loan he claims was all Fred Trump gave him.
Put simply, by 1980, he was already in his mid-30s and he was constantly in trouble and being bailed out by his father. Keep in mind, he already had the vaunted education “from a good college” he likes to brag about when he calls himself a “”stable genius.” He’s been active in the business world for a decade and a half or so by this time, so this is not a successful businessman; this is a rich brat who grew up with delusions of grandeur and had a rich daddy willing to bail him out.
It was 1980 when Lord Donny decided he wasn’t making enough money on New York City. Well, to be fair, he may have decided he wasn’t losing enough money. That is logical since he hadn’t made anything to that point. Whether it was to make more money or lose more money, Lord Donny decided he wanted to go into the gaming industry. In August of that year, he incorporated the Trump Plaza Corporation in New Jersey, so that he could turn a major Atlantic City department store into a 39-story hotel and casino with more than 600 rooms.
There was just one problem; no bank would lend him money. Undeterred, he entered into a deal with Harrah’s Entertainment, in which they put up 100% of the money and let Trump develop the property. The Harrah’s at Trump Plaza opened in 1984, but Donny was pissed because he wanted “Trump” to be a major brand. This, despite the fact that Harrah’s spent more than $9 million to pimp the Trump brand. Instead of being grateful, Donny the “successful businessman” actually attempted to try to leverage his name and use it against Harrah’s. First, he refused to build a parking garage for the casino because he didn’t believe his name was prominent enough in the marketing. In fact, Harrah’s branding was so successful, Donny was able to borrow enough to buy the nearby Hilton Atlantic City and rename it “Trump Castle,” which opened in 1985. When that happened, Harrah’s dumped him by selling their interest in the hotel and casino for $220 million.
Let’s recap so far. This “successful businessman” turned 40 in 1985 and he had not made a single dollar on his own to date. His brand was shaky, at best, and any recognition of the Trump brand was the result of marketing done by Harrah’s.
Roughly 100% of his personal wealth was borrowed money at this point, nearly two decades after finishing his education. By this point he was more than a half billion in debt and owned two Atlantic City casinos, neither of which were making money. That was not enough for Donny, though. He went after Resorts International’s Taj Mahal Casino, designed to be the largest casino in Atlantic City. The New Jersey Casino Control Commission was a bit nervous about this, but at a licensing hearing in 1988, Donny assured everyone that banks would be throwing money at him, they loved the Trump name so much.
Wall Street experts, on the other hand, predicted disaster, and they were right. He couldn’t get a bank to finance his Taj Mahal purchase so this “successful businessman” instead turned to junk bonds for financing, to the tune of $675 million. Again, if you’re wondering how someone can lose money with casinos, consider the fact that Trump’s total debt for all three casinos was more than $1.2 billion. The interest on the Taj Mahal junk bonds was so high, he would have had to make as much as $1.3 million PER DAY just to break even, which would have been a record. The problem is, he had THREE casinos. That means, for the Taj Mahal to be successful, his other casinos would have to suffer. And they did.
Trump the “stable genius” had a solution, though. In 1989, he bought an Eastern Airlines northeastern shuttle service for $380 million in borrowed money, and in June 1989, the Trump Shuttle was born, with regular flights from New York, Washington, DC and Boston to Atlantic City. And because he is Trump, he launched the airline by suggesting that the planes owned by other carriers are unsafe. He did that because he, being such a great businessman, spent more than $1 million to upgrade each of his planes, so they looked like his gaudy Trump Tower condo. The bathroom fixtures were gold lame and the inside of the plane featured mahogany veneer. You know, because everyone who takes a less-than-one-hour flight needs luxurious accommodations.
Like most other of his investments with borrowed money, Trump knew nothing about the airline business. That is why he focused on luxury, rather than reliability, convenience and low cost. This is Trump’s problem; he can only envision his own world, so he thinks everyone else is interested in his definition of “luxury.” He cannot conceive of anyone who doesn’t want to live as he does. That’s the very definition of narcissism.
Trump Shuttle never had a chance, not just because there were no customers for his overpriced flights, but because his entire debt-laden world was beginning to fall apart. The beginning of the end came with a helicopter crash in New Jersey, which killed five people, including top executives at Trump’s casinos. That put Donny himself in charge of day-to-day casino operations, and his “style” alienated everyone so much that several quit. Of course, being Trump, he also fired several others. At the same time, under his leadership, he was missing interest payments on the junk bonds he purchased to finance his largesse. At one point in 1990, regulators in New Jersey estimated Trump’s total debt at $3.4 billion. They also suggested that the collapse of the Trump Organization was “not out of the question. At around the same time, several banks took control of his business in return for his accepting a budget of $450,000 per month for personal expenses.
For the next few years, Trump tried everything he could, but his casinos were doomed to failure. This is when he made his remarks about the Native American casinos. Here was a guy who was failing at the gaming business, and he was making things up about the Indian casino business. Typical Trump. And it was ironic, given some of the shit that was going on behind the scenes, such as the time Fred Trump bailed out his son once again by giving his lawyer a certified check for $3.35 million. The lawyer, Howard Snyder, then opened an account in Fred Trump’s name and had a blackjack dealer give him that amount in chips, with no gambling taking place. The interest payment must have been for $3.5 million, however, because a wire transfer was made for $150,000 the next day, with the same result; no gambling, and the money being converted to chips.
Again, let’s recap. Trump is pushing 50, more than two decades out of Wharton, and he is all but broke. He has a lot of cash flow, but he’s in debt up to his medically-altered scalp. The Taj Mahal was in bankruptcy about a year after it opened and it was followed by the other two not long after. Because of the way this “successful businessman” financed these ventures, there was no possible way he could have ever made money with him. It was the multi-millionaire’s version of a payday loan. He borrowed as much as he could and did not prepare to pay the money back.
Worse, Trump continues to brag about his massive debt and how he was able to extract himself from it. He lies that he owed roughly three times as much as he actually owed in two separate books, in order to make him seem like a business genius. But he reorganized Trump Hotels and Casino Resorts in 2004, and sent that into another bankruptcy, and then reorganized it into Trump Entertainment Resorts, which filed for bankruptcy again in 2009, several days after Trump resigned from the company’s board.
Basically, as late as 2009, which is not that long ago. One of Trump’s largest business pursuits was simply reshuffling the same massive debt over and over. He was $3.2 billion in debt for the casinos, but virtually all of that debt was wiped out in bankruptcy court at various times. It’s not like he paid it all back and invested more money in other, profitable ventures. In fact, it was quite the opposite.
And if you’re thinking, “Well, Trump was very successful in New York real estate,” well, think again. As late as 2008, Trump defaulted on a construction loan of $640 million to build Trump International Hotel and Tower in Chicago. He also had to shelve an ambitious 62-story luxury hotel project in Dubai because not enough wealthy travelers were willing to travel to the UAE. That was basically the end of his real estate exploits.
The projects that followed, however, were spectacular failures. Trump Mortgage (later rebranded as Trump Financial) didn’t survive 18 months. His online “travel service,” which he named GoTrump.com, never made a dime and was considered completely pointless. Trump Vodka lasted a couple years, but never really made money. Trump Steaks didn’t even make it through four months and the Sharper Image returned most of them, unsold.
Then there was Trump University, which was obviously a scam. In all fairness, Trump allowed his name to be used on it, but he has nothing to do with day-to-day operations. But really, how many “successful businessmen” allow their names to be used on a scam like that, which took thousands from people and delivered from nothing.
These days, Trump makes most of his money from licensing the Trump name, but even that venture belies the “successful businessman” moniker Trump likes to give himself. His name has been involved in a lot of scams and, frankly, enormously stupid projects over the years.
There was the Trump Ocean Resort Baja Mexico, which Trump swore would be “very special.” In 2006, dozens of buyers had paid $32 million in deposits, in part believing Trump was the developer, when he had only licensed the project. The project was never built, Trump walked away from it and told those who tried to sue him for his role in the scam to “contact the developer.” Many other properties including one in Fort Lauderdale and another in Tampa, saw the same story play out. He licensed the Trump name to developers, who took deposits in excess of $100,000 each and never built the projects. In one case, the victims of the scam only found out the building wasn’t being developed by Trump when Donny sued the developers for not paying the licensing fee.
Take Trump Hollywood, a 40-story oceanfront condo project that boasted of great views when it was unveiled in 2009, as home prices were tanking. A year later, the $355 million project was foreclosed on. In all of those cases, Trump was advised of the ripoff and advised those seeking redress to direct their complaints to get bent and to take their complaints to the developers because he had no responsibility.
In other words, this “successful businessman” never made a dime on his own until he started selling his name, and he has no problem with selling that name to scammers, who ripoff people for their life savings and use the Trump name to do it. He brags about “paying back” $9.2 billion dollars, when his debt was actually $3.2 billion and it was all wiped out via bankruptcy. And that doesn’t count the tens of millions of dollars in contracts he refused to pay to contractors who did work for him.
This is a fraud, not a “successful businessman.” If you believe he’s a business genius, you are falling for his con. Stop it.
Originally published at PCTC Blog.