When Donald Trump entered the presidential stakes, one positive thought I had about him was this: “Well, he is a good businessman.” He had,that at least. Or so I figured.
Turns out, when you look closer, even that assumption is a con.
The problem is that not a lot of people have a comprehensive view of Trump’s business history. Most of us have heard – and Trump often has recounted – this building or project or business venture or that. But how do they fit into place? How were they accomplished? Did they succeed? What was Trump’s role in these efforts; what did he do, exactly?
Short of reading the whole of an unauthorized biography, you can now get the clear answers to those questions in a half-hour or less thanks to a fine and clear piece of work just released about Newsweek, by Kurt Eichenwald. It is called, as if warning about what’s ahead, “Donald Trump’s many business failures, explained.”
“Lost contracts, bankruptcies, defaults, deceptions and indifference to investors—Trump’s business career is a long, long list of such troubles, according to regulatory, corporate and court records, as well as sworn testimony and government investigative reports. Call it the art of the bad deal, one created by the arrogance and recklessness of a businessman whose main talent is self-promotion,” he writes.
From time to time Trump has mentioned a $1 million stake his father Fred Trump, who had a generally consistently successful business track record over in Brooklyn, gave him early in his building development activities (the value of which might be about ten times as large now). But it turns out that was only one small example of the payments he got from dad – one of the smaller payments. Donald Trump was bailed out by his father repeatedly through the years, sometimes via direct payments and sometimes through political and financial contacts his father had developed over the decades (and which Donald, generally, proceeded to trash).
“To sum it all up,” Newsweek said, “Trump is rich because he was born rich—and without his father repeatedly bailing him out, he would have likely filed for personal bankruptcy before he was 35.”
But what about his basic business instincts, the kind of thing for which he was so celebrated on Celebrity Apprentice?
Best example here is his adventures in Atlantic City casinos. In the 80s he had the thought that money could be made through creating and running casinos. Not a bad thought; there are people who have made lots of money that way. Banks were skeptical of Trump, since he hadn’t run a casino before. Talking big, he persuaded Harrah’s to join with him in creating a new casino at Atlantic City. Once the money was committed, he pressured Harrah’s to promote it not under its own well-known name but under his.
Next? “Harrah’s quickly learned the price—now, with Trump able to argue he knew casinos, financing opportunities that did not exist before opened up, and he was able to use Harrah’s promotion of him as a lever against the entertainment company. Soon after that first casino opened, Trump took advantage of his new credibility with financial backers interested in the gaming business to purchase the nearly completed Hilton Atlantic City Hotel for just $320 million; he renamed it Trump Castle. The business plan was ludicrous: Trump had not only doubled down his bet on Atlantic City casinos but was now operating two businesses in direct competition with each other.” (Harrah’s soon let its interest be bought out by Trump.)
Then, in spite of being deeply in debt and already having two casinos competing with each other, he opened a third, more expensive still, called the Taj Mahal. You don’t have to be an MBA to see a business catastrophe in the making, and it arrived in short order. The only thing that saved Trump was this: The banks lending him money had too much on the line to settle for pennies on the dollar. Trump had become, like the investment banks of 2008, too big to fail. So, amid the eventual closure of the casinos, the winding down of the whole deal made for a long and unpleasant story in New York business circles.
This summary doesn’t do justice to the story of Trump and his businesses, and it’s only s few pieces in a long, ugly, tawdry story. His level and scope of business failure is astounding; the most amazing thing about Trump, in the end, is that he’s managed to retain as much of of his reputation as he has.
But the more people find out, the less of that reputation will remain.Share on Facebook