‘King of debt’: Trump’s brand faces an uncertain future as he gets back to business
It was the grand opening of the tallest building in Atlantic City, home to the city’s largest casino and biggest hotel. But the 9000 guests who wanted to be first to enter the city’s tenth casino were evacuated by a false fire alarm moments after it opened. Despite the inauspicious omen, the Trump Organisation pledged it would be profitable from day one. Instead, within a few years it drove Donald Trump to corporate bankruptcy. Next January, days after he is due to be prised from the Oval Office, the crumbling building is scheduled to be obliterated by demolition explosives.
The timing, barely a week after Joe Biden is due to take office, was called “poetic” by a former senator after the date was confirmed last week. As Trump’s fingers are wrenched from the gates of the White House and the once towering Trump Plaza is reduced to rubble, focus will shift to his business empire as he returns to full control and looks to cash in on the 70 million Americans who voted for him. The hotels, golf courses and resorts run by the Trump family have been hit by the pandemic and Trump’s enemies are not convinced his four years in the White House has done the brand any good.
“Imagine a Mad Max landscape of irritated cannibal mutants picking at the bones of a dying empire. That’s Trump’s future,” says Republican strategist and arch-Trump critic Rick Wilson, one of the architects of the Lincoln Project, which was launched to stop Trump winning a second term. “His clubs and buildings were rapidly depreciating assets even before he was the worst president in American history.”
Others have a slightly less dystopian view. American author Michael D’Antonio, who wrote The Truth About Trump, says that although the organisation “faces a reckoning with the debt it owes Deutsche Bank” and could find a drop-off in visitors to its resorts as customers distance themselves from the Trump name, “the good news is that his value as a political entertainer is now off the charts”. The president is furious at Fox News and there are rumours he could launch his own online news channel charging viewers a monthly fee. “As a businessman Trump has never been good at, or interested in, managing complex organisations. He likes lean operations with low overhead and reliable income like the rent payments his father collected in the old days. Media fits him perfectly and will be where he makes most of his money going forward.”
The self-styled “King of Debt” will want to avoid a repeat of previous high-profile failures when he becomes a private citizen again. As well as his casino business filing for bankruptcy protection on many occasions, he has had to scrap unsuccessful ventures such as his own brand of steaks, his own brand of water and the board game Trump: The Game, which launched in 1989 with the line: “It’s not whether you win or lose, it’s whether you win!”.
He has also been sued over allegations he defrauded millions of dollars from students who attended moneymaking courses at Trump University, which lawyers claimed was delivered neither by Trump nor was a university. Some students complained that instead of having their picture taken with the billionaire they had to settle for a photograph with a cardboard cut-out. Trump settled three lawsuits linked to the university for $US25 million ($34.4 million) in 2016.
Despite vowing to put his business interests to one side while in the White House, he has faced repeated accusations that he has tried to profit from the presidency. He has mentioned his properties in official remarks, has hosted government officials in his hotels and hiked up the membership fees for his “Winter White House” – the Mar-a-Lago resort in Palm Beach, Florida – to $US200,000 after being elected president.
Yet Trump still has financial troubles. Despite making more than $US427 million from entertainment and licensing deals after appearing on The Apprentice in the US, The New York Times revealed earlier this year that he had paid no income taxes at all in 10 of the previous 15 years largely because he reported losing much more than he made. He had also personally guaranteed $US421 million of his companies’ debts, the newspaper said, of which $US300 million needs to be repaid in the next four years. Trump later dismissed that $US421 million as a “peanut” due to the “vast properties” he owns. The bulk of his debt is understood to be owed to Deutsche Bank, the only big bank to consistently do business with him. It is not clear which of his businesses will pay off these debts. Stephen Clapham, founder of investment consultancy Behind the Balance Sheet, believes his Scottish golf resorts offer clues to how much money Trump really has.
“The issue with Trump’s business interests is that they’re quite opaque, and that is what makes his Scottish investments so intriguing because there we’ve got a reasonable amount of visibility that suggests performance hasn’t been as good as the peer group,” he argues. “If that were reflective of other areas of the business, one wonders what the real value of his empire would be. The two Scottish businesses [Trump International in Aberdeenshire and Turnberry golf resort] have lost money every year apart from the year Turnberry was purchased, and have therefore accumulated significant losses. They have also required significant cash injections.”
But Trump is more famous than he was in 2015 and there are rumours of book and TV deals that could be worth $US100 million. Tim Calkins, professor of marketing at Northwestern University’s Kellogg School of Management, disagrees that his brand has been damaged. “He managed to get more votes this time despite a pandemic that is completely out of control and an economy that is in disarray. That is a clear sign that the Trump brand is not tarnished. It remains a powerful, polarising brand,” he says.
The biggest money-spinner could come from a much-speculated Trump TV channel, where D’Antonio believes Trump could make as much as $US1 billion a year. He has fallen out with Rupert Murdoch, last week launching a series of attacks against Fox News on Twitter by arguing that their daytime ratings have “completely collapsed” as “they forgot what made them successful”. The network cut away from White House press secretary Kayleigh McEnany last week, explaining there was no evidence to back her charge about election fraud.
Media commentator Claire Enders, the founder of Enders Analysis, says Trump does not have the media pull he thinks he does and it is “impossible” that he could rival Fox News with his own channel. “If he doesn’t get a major deal with Netflix there won’t be a material contribution to his overheads,” she says. “I don’t see Netflix touching him with a bargepole, the average age of a Netflix viewer is 33. Trump is not a global event, he’s an American event.”
He is not yet done with politics. He has told advisers that he is considering running for the US presidency again in 2024 if the election is certified for Biden, and last week he formed a leadership political action committee, which will allow him to continue to wield influence over the party in the coming years. No doubt aware that he has been more successful in politics than he was in business, the two are likely to be intertwined for years to come.
The Trump Organisation could not be reached for comment.
Telegraph, London
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