When Donald J. Trump unveiled his new online travel booking venture,GoTrump.com, he said in a promotional video in 2006 that customers would “love everything I put on this site.” “There’s nobody better,” he added. “There’s nobody even close!”
A few months later, ground was broken for Trump Tower Tampa, a project he said would “redefine both Tampa’s skyline and the market’s expectations of luxurious condominium living.”
And when he signed a long-term deal with the fledgling U.S. Pro Golf Tour that summer to become a partner on a new championship series, he proclaimed that “there is no doubt the talent level is among the highest in the world.”
The travel venture never took off. The tower in Tampa, Fla., was not built. And the golf championships? Mr. Trump withdrew as the tour fell apart.
Moving past a disastrous period that led to a loss on paper of more than $900 million — possibly freeing him from federal income taxes for years — Mr. Trump became a one-man factory of big ideas, churning out a continual stream of projects and promises. Together, they fed the image of Mr. Trump as an American Midas, the foundation of his argument for why he would make a great president.
To see whether the results of these ventures came close to their high-energy billing, The New York Times analyzed scores of Trump business announcements starting a decade ago, including those posted on the Trump Organization’s website and those that have been deleted but live on in web archives. The Times also combed through news reports, his personal financial disclosures and court records; interviewed partners; and interviewed Mr. Trump himself.
Of the roughly 60 endeavors started or promoted by Mr. Trump during the period analyzed, The Times found few that went off without a hitch. One-third of them never got off the ground or soon petered out. Another third delivered a measure of what was promised — buildings were built, courses taught, a product introduced — but they also encountered substantial problems, like lawsuits, government investigations, partnership woes or market downturns.
The remaining third, while sometimes encountering strife, generally met expectations — notably the television show “The Apprentice” and the purchases of numerous golf courses, including properties near Philadelphia and in the Hudson Valley.
In interviews, Mr. Trump disputed some of the characterizations, saying that, among other things, some projects that might appear to be failures were successes, for him at least, because he often made his money upfront, through fees for the use of the Trump name. The bottom line of all the hits and misses, however, is impossible to determine because Mr. Trump, the Republican presidential nominee, has not released any tax returns.
Regardless of how much money a deal made — or did not make — one constant through the years is that these ventures were almost always introduced with a certain Trumpian flair: Each would set a “new standard” or be the “very, very best.”
“I think he’s very good at real estate, I don’t think he’s very good at other things,” says biographer D'Antonio. “He tried to run an airline and failed at that. He tried to run casinos and failed four times. That’s not evidence of brilliance when it comes to operating a complex business.”
Trump has acknowledged a tendency to get bored easily with business ventures. “The same assets that excite me in the chase, often, once they are acquired, leave me bored,” Trump wrote in one of his books. “For me, you see, the important thing is the getting, not the having.”
Thanks to a leaked copy of his 1995 tax return, the basic story fact that Donald Trump built a mini empire of Atlantic City casinos that crashed and burned in the early 1990s is now well-known. What’s not yet well-understood by the public is the even more important story of what happened next. As Russ Buettner and Charles Bagli write in Wednesday’s New York Times, 1995 was also the year in which “Trump began the transaction that would eventually free him from his financial travails.”
Mom-and-pop investors who had the misfortune to put their confidence in Trump lost nearly everything. But as a performance of low cunning, his stewardship of THCR really did verge on genius. The company itself was a dumpster fire, losing money every year Trump served as chair. But he managed to personally pocket $44 million in salary and bonuses. Even more egregiously, he offloaded personal debts onto the corporate balance sheet and had the public company purchase services ranging from bottled water to plane flights from Trump’s privately held enterprises.
Along the way, he bankrupted the company and all but completely wiped out the value of its stock. If you want to be generous to Trump, the saga shows that he really does have some impressive business skills. He spun gold out of worthless casinos in a declining resort town with a dazzling efficacy.
If you want to be less generous, you see that the one time Trump’s leadership skills were put to the test as an agent of middle-class people’s economic well-being, he ripped those people off ruthlessly and unapologetically. As president, Trump would be a custodian of the American people’s interests — just as he was of THCR shareholders’ interests as chair. And unless he’s had a drastic change of heart, he’d be an incredibly ineffective one.
Stocks were to the 1990s what junk bonds were to the 1980s and single-family homes to the 2000s — the hot asset class that got so hot it increasingly attracted naive middle-class investors hoping to make a quick buck, and unscrupulous financial actors hoping to make a quick buck off the naive investors.
In Trump’s case, stock mania was a golden opportunity to get out from under the legacy of his disastrous performance as an investor in the early 1990s.
Trump emerged from his companies’ bankruptcy still in possession of his key assets but saddled with debts that he had personally guaranteed. What's more, as David Cay Johnston writes, in order to carry forward the tax value of his billion-dollar loss after receiving relief from some of his debts through bankruptcy, Trump would have had to agree to give up certain valuable commercial real estate tax breaks that are typically central to CRE deals.
Under the circumstances, to maximize the value of his holdings Trump needed to find a way to sell casinos to people who didn't know anything about the nuances of real estate tax law. The mom-and-pop stock investors of the mid-’90s were the perfect suckers, and they bought into the Trump Casino & Hotel Resorts IPO to the tune of $140 million.
The company’s sole asset at the time was the Trump Plaza Hotel and Casino, and the IPO money was supposed to be reinvested in the company. But Trump Plaza was already indebted, so one of the first moves made with the new equity was to pay down the debts — debts that Trump had personally guaranteed, meaning that company money was used to relieve not just a company debt but a personal debt owed by Trump himself.
Having hooked a parade of marks, Trump’s next move was to tunnel as much money as possible out of the public company and into his pockets. One easy way to do that was for Trump to have the company he controlled buy things he owned personally.
The public company bought the Trump Castle casino from Trump, for example, for $490 million, a price that James Sterngold reported at the time “was based on optimistic profit projections and was about $100 million too high.” Trump also paid himself $880,000 for brokering the deal.