I suppose Donald Trump is an easy target at the moment, but even typing the start of this sentence speaks volumes. He’s the President of the United States of America, leader of the ‘free world’ (not quite sure how or where that designates for POTUS originates) and should be above satire and petty digs. He stated in his campaign that the people of the US could trust him because of his keen business sense, but how successful have Donald Trump’s businesses actually been?
Estimates suggest Trump inherited a fifth of his father’s $200 million fortune, along with his contacts and business goodwill. The BBC reported in April 2016 that Trump then valued his net worth at more than $10bn (£7bn) though this was disputed by other sources. According to Forbes his net worth was $4.5bn, Wealth-X stated it was $4.4bn, while Bloomberg Billionaire’s index said it was just $2.9bn.
However, exactly how much he is worth is unclear and as Trump has declined to be transparent about his tax affairs (even stating in October 2016 during a televised debate that he used a $916 million loss that he reported on his 1995 income tax returns to avoid paying personal federal income taxes for years) we’ll probably never know. How people like Trump get away with paying no taxes while still living a billionaire lifestyle while the rest of us struggle every January, is obscene and totally beyond me.
Trump claimed – when he announced his candidacy for President – that he had made his money “the old-fashioned way” but he is no self-made billionaires, not an innovator or an entrepreneur. Most of his best-known successes are actually attributable to family ties or money given to him by his father, you’ll see below the companies and brands he has tried to innovate and you can judge his success.
Trump is pretty sensitive about his net worth. He’s repeatedly threatened to sue individuals who speculate he exaggerates his wealth, and in fact did on one occasion, try to take the author of the 2005 book TrumpNation to court, after he estimated Trump to be worth a miserly $150 million. The lawsuit was thrown out. The editors of Forbes magazine, claim that Trump regularly lobbies them to increase the magazine’s estimates of his wealth. Hilarious.
Let’s set aside the fact that you wouldn’t get away with calling anything ‘trump’ in the UK. No matter how fitting it might be. Come on … let’s be grown up. Nonetheless, as someone who is serious about business (both my own and yours), I figured I’d have a look at Donald Trump’s businesses and see just how good a businessman he is.
A timeline of Donald Trump’s businesses
1960s – Swifton Village
Trump’s first project when working for his father was to revitalize the Swifton Village apartment complex in Cincinnati. Fred Trump bought the complex for $5.7 million in 1962. Trump undertook his ‘revitalizing’ and the complex was sold on for $6.75 million, with Trump always boasts of as a success. Not so. To earn an actual profit, the apartment buildings would have had to sell for $7.9 million.
1970 – On Broadway
Trump invested $70,000, to snag a co-producer’s credit for a Broadway comedy called Paris Is Out! The play bombed and closed after just 96 performances.
October 1988 – Trump Airlines
Eastern Air Shuttle was a no-frills airline that had been in operation for 27 years, running flights between Boston, New York City and Washington, D.C. every hour. Trump paid $365 million for the company – which included 17 Boeing 727s, landing facilities in each city.
Trump took the decision to enhance the features on each aircraft – we’re talking gold-coloured taps and maple-wood veneer, but unfortunately his customers were not enamoured. They wanted to get where they needed to be on the cheap. An increase in fuel prices meant that the company failed to make a profit, and ran up high levels of debt. Trump defaulted on his loans and the company was turned over to creditors.
1989 – Trump: The Game
Trump: The Game was a board game similar to Monopoly for all aspiring Trumpesque entrepreneurs out there. The aim was for 3-4 players to buy and sell real estate and beat each in other in business deals. Trump predicted moving 2 million units, but it bombed. In 2006, Trump revived the game to cash in on the success of The Apprentice, and added the phrase “You’re Fired” into the game, made the rules simpler and added business tips. It quickly went out of circulation too. I’d love a copy of those business tips …
1990 – Trump’s comms company
Trump registered Trumpnet as a trademark in 1990, under the category of “corporate telephone communication services”. It was one of Trump’s businesses that never got off the ground.
2006 – Trump beverages
People in the US may well be aware of Trump’s bottled water, Trump Ice — “one of the purest natural spring waters bottled in the world,” apparently. according to the Trump’s website. The line is bottled by a third party, and made $280,000 in 2015. Trump’s other beverage lines have included several non-alcoholic brands that have been abandoned (Trump Fire anyone?), and Trump’s American Pale Ale, the trademark for which was cancelled in 2007.
April 2006 – Trump Mortgage
Trump has been dealing in property for years so it probably made sense to become involved in the mortgage market. As Trump told a news channel at the time, “Who knows more about financing than me?” Hmmm. I wonder.
Trump, who you may remember had The Apprentice TV show on US TV made a huge mistake when hiring his executives. He hired E.J. Ridings to run the loans section of his company. Ridings claimed to have been a top executive at a prestigious investment bank, but he lied. In reality, his highest role on Wall Street was as a registered broker. The housing market crashed and Trump Mortgage was forced to close down. The Washington Post subsequently reported that the company never paid a $298,274 judgement it owed a former employee, nor the $3,555 it owed in unpaid taxes.
2007 – Trump magazine
Trump launched a magazine in late 2007, designed to “[cash] in on the booming advertising market for yachts and other high-end commodities.” The timing was terrible, given the global crash, and the magazine folded in 2009.
2007 – Trump Steaks
Trump filed for bankruptcy on his Atlantic City properties for the second of three times in 2005. Court records for the time show that he owed a company named Buckhead Beef $715,240. Two years later, in 2007, he struck a deal with Buckhead Beef to sell their steaks. CEO Jerry Levin later stated it was “a bad business idea… [W]e literally sold almost no steaks.” The steaks were pulled from shelves after just two months of abysmal sales.
2007 – A Trump travel site
Seriously- GoTrump.com was a travel booking website launched in 2006 to low expectations. It didn’t make much money and folded in 2007. The url is still in use. Try it.
Trump Tower in Tampa was a 52 storey apartment block. Trump did not propose or draft the project, he simply sold the use of his name to the developers (for $2 million!). The developers then collected down payments from buyers drawn in by Trump’s name worth hundreds of thousands of dollars. The project folded in 2008 (listing only two scale models and some office furniture, worth a grand total of $3,500, as its assets). The buyers sued Trump for misleading them. He eventually settled, in some cases for as little as $11,115, with plaintiffs in spite of the sums they had lost.
Similar situations have occurred with Trump Hollywood, Trump Ocean Resort Baja Mexico, and in Fort Lauderdale, Florida, where people who thought they were buying into a Trump property lost their deposits of at least $100,000. Trump always walks away from such deals stating, they are not his responsibility because he has only licensed his name.
2008 – Trump Vodka
Trump Vodka first appeared in 2006 using the marketing: “Success Distilled”. Trump optimistically said at the launch, “I fully expect the most called for cocktail in America to be the T&T or the Trump and Tonic.” You guessed it – it flopped.
2009 – Trump Casinos
Founded in the 1980s, Trump Entertainment Resorts Inc. filed for Chapter 11 bankruptcy protection for the third time in a row in Feb 2009 (which apparently made US history!). Trump tried to distance himself from the bankruptcy (“other than the fact that it has my name on it — which I’m not thrilled about — I have nothing to do with the company,” he said) but the fact was he owned 28% of the stock. He resigned from Trump Entertainment shortly afterwards, but later went on to buy the company for a cool $100 million.
2010 – Trump University
Trump University, or the Trump Wealth Institute and Trump Entrepreneur Initiative LLC, was a for-profit education company that ran a real estate training program from 2005 until 2010. It was not accredited as a college or University and could not proffer its own degrees or qualifications. Nonetheless, the company that was owned and operated by The Trump Organization offered courses in real estate, asset management, entrepreneurship, and wealth creation and students paid as much as $34,995 for mentorships that would gain them access to Trump’s secrets of success.
Promised hand-picked instructors by Trump, instead students had seminars delivered by motivational speakers, often without degrees, and sometimes with criminal records. Trump settled a number of lawsuits in November 2016, after being elected to the presidency, for a total of $25 million.
Non-protection of his earnings
Perhaps his biggest business mistake has been not protecting his future earnings. When Trump called Mexicans rapists and criminals while he was campaigning, he recognised he was losing some contracts: “Yeah, I’m losing some contracts, who cares, people – politically they’re weak and they want to be politically correct,” but possibly he underestimated how much.
He was dropped by NBC (home of The Apprentice), and Macy’s discontinued Trump’s line of menswear and his cologne brands: Success by Trump and Empire by Trump. According to his own figures, these brought in between $1 million and $5 million pa. Serta stopped selling its Trump-branded mattress (ewww) which, according to Trump’s FEC filings, brought in another $1 million and $5 million in royalties every year.
What did Trump tell Fox News in 2016? “The problem with our country is we don’t manufacture anything anymore. The stuff that’s been sent over from China falls apart after a year and a half. It’s crap.” Yes. That would explain why Trump’s range of clothing is made in …. China. Aaaaand some in Bangladesh to be fair. Oh and Mexico. Mexico? The same Mexico Trump wants to build a wall to contain? Yep.
He may be reluctant to tell us about his tax returns because he isn’t worth as much as he says he is. It’s all very well lending his name to things. Many Trump-branded projects and products are built and sold by third parties, and Trump only makes a (relatively) small amount from them. Trump’s name is his most valuable asset, and let’s face it, no doubt it will be worth far more if he manages a full term in office.
Am I being harsh? Is Trump a better business man than I’m giving him credit for? Join the conversation below or on Facebook. Keep it clean and keep it kind because that’s the way we roll 🙂 .