Before Donald Trump's visit to Boca Raton last weekend stoked the enthusiasm of his Tea Party fans, the Sunshine State was already a power center in the Trump universe. Florida's home to Trump's Mar-a-Lago Club, Trump Grande, and Trump Hollywood, so it’s not surprising that it figures into Trump's pre-campaign campaigning.
Indeed, his political fortunes may come down to a 12-block section of downtown Tampa.
That’s where a convention center, a federal courthouse and an abandoned lot all sit, within easy walking distance from each other.
The empty lot was to be home to Trump Tower Tampa, a 52-story luxury apartment project that went bust. A trial is scheduled in December at the federal courthouse, in a lawsuit that Tower investors have brought against Trump to recoup some of the money they lost in the failed project. And a few blocks away is the St. Pete Times Forum, where the eventual Republican victor (whoever that may be) will claim the nomination in August 2012.
As Donald J. Trump fuels speculation that he wants to be the one making that nomination speech, it’s worth a look at the business record he’s made a central part of his pitch. He has been wildly successful and made lots of money on his own projects. Other money has been made on “Trump” projects where he did nothing but sell the rights to his name. He’s also had spectacular failures, leading to bankruptcy court and investor lawsuits, and when that happens, the blame flies.
Throughout, Trump has treated his name as his most valuable asset. It’s a brand that sells — in real estate, in casinos, in reality television, golf courses — even in an Amway-like marketing business. It means success. And it’s rich. Shiny, polished and conspicuously rich.
“When things are going good, he’s at the forefront,” said Bart Ring, a California attorney representing clients who invested in a Trump-named development condo project in Baja, Mexico that flopped. “When things are going bad, he’s nowhere to be found.”
Like in business, politics can be a shell game, where bluster and feigned disgust commingle with truth. In the private sector, precisely worded contracts and tinkered corporate structures are deployed to contain liability and responsibility. In presidential politics, Trump may not be able to insulate himself in the same way from proximity to trouble, particularly when problem projects share his name.
Selling Success: The Trump Brand
Donald Trump grew up in New York real estate. His father, Fred Trump, was a savvy developer who saw early on that government-backed investment in middle class housing in the outer boroughs could mean big business. Father Trump was very successful — and politically connected.
“Donald paid attention to what his father did,” said Gwenda Blair, author of The Trumps: Three Generations That Built an Empire. “Although it sounds corny, he really was an amazing apprentice.”
After shepherding projects under his father’s tutelage in New York and Cincinnati, Trump honed in on Manhattan development, where Blair said he stood out for his ability to read — and feed — the desires of his customers.
“He has a really sharp eye for what people want, as opposed to what they say they say they want,” she said.
Blair pointed to his early high-end properties, where he moved away from the elegant, but somewhat staid, aesthetics of old wealth in New York, and traded them for a “fancy, brassy," design that was "advertising how much it costs.”
That turned out to be just what real estate investors in 1970s and 80s Manhattan were after. In the process, Trump became one of the first celebrity real estate developers, where his involvement alone became a commodity.
“Very early on, he got branding," Blair said. "He was really quite prescient about that, about how important it would be to make his name into something that would add value.”
As the lobby of any Trump property today shows, that over-the-top, wealth-with-no-apologies aesthetic has stuck.
But when you’re selling status, the value of the brand has to be beyond reproach.
“You can call him almost anything, but just don’t underestimate his fortune, is the way he looks at it,” said Wayne Barrett, journalist and author of Trump: the Deals and the Downfall.
Trump’s net worth has already been the subject of one high-profile case involving a journalist. Former New York Times and current Huffington Post journalist Tim O’Brien reported in his 2005 book TrumpNation that Trump is worth a fraction of what he boasts – O'Brian said in the range of $150-250 million– and Trump sued him for defamation. A New Jersey judge dismissed the case in 2009, but Trump is appealing the decision.
Of course, figuring out just how successful Trump has or hasn’t been isn’t so easy. His company is privately held. His name is on some properties he developed and continues to own, and on others where he just rented out his name.
And that’s the hurdle that makes Gwenda Blair deem an eventual presidential run “highly unlikely.” Up to this point, he’s been able to selectively court the media. Trump has said he’ll disclose his finances if he runs — though he hinted that he may only release his tax return if Obama releases his birth certificate. (Releasing tax returns has become customary for presidential candidates, but is not required.)
”Having his business empire actually face a lot of scrutiny, a privately held business, that’s hard to imagine that he would embrace that or endure or put up with it,” Blair said.
Selling Jackpots: a New Frontier
Trump’s penchant for the glitzy and gaudy led, perhaps predictably, to casinos.
“Basically, he looked fast and saw that you could get a license to make money, which is what casinos are,” Blair said.
Trump led the move into this territory on his own, breaking from the proven success of his father’s housing empire. But Wayne Barrett suggests Trump’s father was there to back him up when creditors came calling. In his book, he recounts a tale of Trump staring down a bond payment deadline, with creditors ready to call in the loans. Trump “stunned” the bondholders by coming up with a payment at the last minute, out of the casinos own coffers.
Later, Barrett writes, it was revealed that “a lawyer had mysteriously appeared…the day before the payment was due and purchased over 3.3 million dollars in 5,000 chips, almost precisely the bond payment shortfall.” The lawyer “did not gamble with the chips, and left with a police escort.”
Payments were not always made with such dramatic flourish. “You could find many of them who were not paid on time or not paid altogether in some cases,” Roger Gros, publisher of Global Gaming Business Magazine, recalled of the days when Trump was still directly involved in the day-to-day operations in Atlantic City. “He was an expert certainly at juggling money in those days.”
Trump’s name continues to be all over the Atlantic City boardwalk — Trump Entertainment Resorts runs Trump Plaza, Trump Marina, and Trump Taj Mahal hotels and casinos — but Trump the man has moved on.
He quit the company in 2009, shortly before it declared bankruptcy for the third time. “I have nothing to do with it. I have nothing to do with the company. I am not involved in the management of the company. I'm not on the board any longer,” Trump told Fox News at the time. “So, it's one of those things.”
He explained the failure this way: “Well, Atlantic City was hit very, very hard, as was Vegas, as is the world, to be honest with you, this country in particular.”
Though Trump is no longer chairman of the casino company, the bankruptcies hurt Trump’s reputation locally, Gros recalls, and that’s persisted.
"There are plenty of bankers you could find that would not do business with Donald Trump again, I can guarantee you that on the casino side of the ledger,” Gros said. “My complaint is if he can't even run a casino company, how is he going to run the country?”
Selling Real Estate, without the Real Estate
The Trump name on a property suggests a certain style, a particular attitude, but again, it doesn’t say a thing about who owns it. “Mr. Trump is personally involved in everything that his name represents,” the Trump Corporation website says, but Trump characterized a Trump-named "Signature" property a little differently in a deposition in the Tampa lawsuit:
It would not necessarily indicate ownership, but in some cases it does. In many cases, as I look at some of these buildings, it does indicate ownership. It indicates quality more than anything else.
In Tampa, Trump’s name and face were used for marketing during the sale of the units, and lawyers representing investors in the failed Trump development — in Tampa and another in Baja, Mexico — say it wasn’t clear at all to the project’s customers that they were buying the man, but not his business mind.
They found that out later in Tampa, when they got a look at a license agreement that had been secret. “Trump sought millions of dollars in unpaid fees,” the complaint reads, and confidentiality was stressed in the 2004 deal. “They will not under any circumstances, disclose or permit to be disclosed the existence of this Agreement or any of its contents,” it read, according to a copy that is now a legal exhibit.
Trump explained in a deposition in the Tampa case that Trump-named properties have all sorts of different arrangements. Some, like the Trump National Golf Club, “is a hundred percent owned by me.” On the other hand, Trump Canouan, a luxury development in the Grenadines in the Caribbean, “is a licensed deal,” Trump explained. “I don’t own that and I am not a partner in that.” He continued:
I view a partnership to be when we get a percentage of profits, when I have a percentage of ownership, when I have — beyond just a fee, beyond a flat fee, where you get a flat fee for helping to -- for using the name or for using the name and helping with the building.
None of this, however, was clear to the Tampa customers, who thought they were buying a certified Trump property, said their attorney Dan Clark.
“When that premium goes from buying a Mercedes and you ultimately are getting under the hood a Suzuki engine, that’s misleading,” he said.
In another Trump named-but-not-operated project, this one planned for the Baja Mexican coast, investors are suing for $23 million in losses.
“I can’t describe to you putting aside the names involved here — the level of dishonesty in connection with this particular project. It just makes your head spin,” attorney Bart Ring says of the Trump sales pitch for the property development - which featured Trump's face on billboards - and its subsequent failure. The trial date in that case is not yet scheduled.
In both developments, Trump has since notified the local developers that they hadn’t lived up to the name licensing agreement, and he took his name off the projects.
The Trump Corporation did not respond to requests for comment.
Selling Nutritional Supplements, Too!
Trump has also lent his name to The Trump Network, an Amway-like multi-level marketing company that sells nutritional supplements, skin care products, and Snazzle Snaxx, a “line of snack foods specially designed to help our children perform better.”
The starter kit to begin selling goes for $497, and the Trump connection is a big part of the sale. “Imagine the power of having Donald Trump help you present the opportunity and you reap the rewards. That's teamwork,” the website reads.
“It’s where ordinary people can become extraordinary,” Trump declares in his characteristic bark on an audio message on the site. “The Trump Network gives you the opportunity to earn a residual income, which can put you in control of your financial future, and that’s very important."
The Roxbury, Massachusetts-based company has shown up on Quackwatch, a watchdog site that polices internet health claims. Dr. Stephen Barrett, a retired psychiatrist and Quackwatch webmaster, has been watching The Trump Network since before Trump’s involvement, when it was known as Ideal Health International. He takes issue with the “Privatest,” which sells for $139.95, and purports to take a “snapshot of the most critical metabolic markers” to help develop a custom vitamin supplement.
“What they say is you take this test, and we’ll tell you what extra nutrients you should take,” Barrett told WNYC. “Many people don’t need extra nutrients, the fact is you can’t do a test to tell what you’re missing.”
“Basically you’re being sold a product that is probably not what you need, and paying a very high price for it," Barrett said.
Denise Autry, a registered nurse and Director of Research for The Trump Network, responded in a written statement. “Barrett continues his tradition of offering his opinions as scientific fact, she said, and suggested he has a “strong antipathy toward any treatment modality that is not strictly in line with his definition of mainstream medicine."
"The Trump Network products are based in science and we stand behind what we do," Autry concluded.
And We’re Still Buying What He’s Selling
So, Trump is unquestionably a salesman. With a mix of ceaseless quotability and dogged defensiveness, he’s worked for years to contain damage from soiling the Trump name. When deals have gone bad, he points to uncontrollable economic forces or management that was out of his hands. W
“Trump’s style has produced doubters, but no one could deny his ability to brand his products, and to rise, phoenix-like, from everything from corporate travails to satire,” trumpeted Wharton Business School, Trump's alma mater, in its listing of its 125 influential alumni.
Seconds Alan Marcus, Trump’s PR guru and crisis manager from 1994 to 2000. “I think he knows more about the media, how to impact it, and how to build name recognition and brand recognition, than anybody in the world.”
Modern political campaigns and the scrutiny they bring is a whole other enterprise. Whether Trump can withstand the scrutiny is one question. But as he holds his own in polls and dominates the coverage of the GOP field, there’s no question he’s already won at something.
“His family culture is one of seeing the competitive advantage in any particular era,” said biographer Gwenda Blair. “His grandfather made money off of the gold rush. His father did off of middle income housing, and now Donald has off of branding.”
That’s morphed from using the Trump name in flashy real estate to reality shows to now, polititainment.