Trump said years later he had not known Sullivan or Shapiro well. He considered them “tough guys” and once heard a rumor that Sullivan had been the one who had killed onetime Teamster union chief Jimmy Hoffa, who famously went missing in 1975 and was never seen again. “Because I heard that rumor, I kept my guard up,” Trump remembered. “I said, ‘Hey, I don’t want to be friends with this guy.’ ” But Trump told the Casino Control Commission in 1982, “I don’t think there’s anything wrong with these people. Many of them have been in Atlantic City for many, many years, and I think they are well thought of.”
Trump, however, was aware of mob involvement in Atlantic City. In confidential conversations with FBI agents, who contacted him in April 1981 about the Mafia’s role, Trump said he “had read in the press media and had heard from various acquaintances that organized crime elements were known to operate in Atlantic City.” An FBI summary said Trump had told agents “he wanted to build a casino in Atlantic City, but he did not want to tarnish his family’s name.” After questions surfaced publicly about Sullivan and Shapiro’s involvement in Trump’s proposal, the commission delayed final approval of his casino license. The commission told him to disentangle himself from the Scarfo association by canceling the lease on the property and buying the land outright instead.
Even then, the sale provided a hefty windfall for Sullivan and Shapiro. Trump paid them $8 million—nearly three times what the pair had paid for the land just three years before.
• • •
ON MARCH 14, 1982, the Casino Control Commission took up Trump’s application for a casino license. Trump wanted to build the city’s largest casino-hotel, thirty-nine stories with 614 rooms. Atlantic City officials all but bowed before him. It didn’t matter that he had no experience running a casino, had not assembled financing, and had been investigated for dealings with organized crime figures. To the officials, Trump’s presence showed the city was on its way back. “People were excited that someone was coming who was not just another operator out of Nevada,” said then-commissioner Carl Zeitz. The license was approved in less than two hours.
Now, as Trump moved ahead with his plans, he stoked his image with flair, wearing a black suit, white shirt, and blue or red tie under a black overcoat with a velvet collar. New York City reporters and gossip columnists regularly followed him. His timing seemed grand. Some analysts predicted Atlantic City might overtake Las Vegas as the country’s premier gambling mecca by the end of the decade. Yet Trump needed a partner who could help him finance and run the casino. To entice someone to join him, he performed an illusion.
In June 1982, Trump hosted board members from Harrah’s, a subsidiary of Holiday Corp., the company that also owned Holiday Inn, at the site of his proposed casino—the land Trump had leased and later bought from Sullivan and Shapiro. The Trump Organization had done little work at the construction site. To impress the Harrah’s officials, Trump told a crew to dig up dirt and push the piles around the two-acre lot. Trump instructed the workers to make it look like “the most active construction site in the history of the world.” On the tour, a Harrah’s official asked why one of the workers was quickly filling a hole he had just dug. Trump was relieved when the questioner was not more skeptical. Trump would recall with glee his little deception: “The [Harrah’s] board walked away from the site absolutely convinced that it was the perfect choice.”
Three weeks later, Harrah’s agreed to invest $50 million up front, arrange for construction financing, and manage the casino-hotel after it was completed. For his part, Trump assumed virtually no risk. In exchange for half the profits, he supplied the casino license and the land, and he agreed to build the property for an additional construction fee. When the casino-hotel was under construction in 1983, Trump’s father, Fred, paid a visit to Atlantic City. As a field engineer on the project gave him a tour of the site, Fred looked out over the steel framework taking shape along the boardwalk and marveled with pride, “I told Donald to stay out of Manhattan and now look at him.”
Trump now had a stake in his first casino, Harrah’s at Trump Plaza, which opened in spring 1984. It towered above the boardwalk, the tallest building in Atlantic City, with sleek lines and neon lights that contrasted with the monolithic dome of the Convention Hall next door. But the debut was marred by malfunctioning slot machines and fire alarms, and the money didn’t come rolling in as expected. The first year’s results brought in half of projected profits. Trump blamed part of the problem on the name and began a campaign to eliminate the reference to Harrah’s. He reasoned that gamblers confused the casino with the other Harrah’s Atlantic City property. Trump insisted the property should be called Trump Plaza, saying he “created the value that exists in my name” and accusing Harrah’s of running the property poorly. “I gave them a Lamborghini, and they didn’t know how to turn on the key,” Trump said. A Harrah’s executive responded that Trump’s “unsupportable falsehoods” had undermined their partnership. After lawsuits and countersuits, Harrah’s sold its 50 percent stake, giving Trump full ownership of what was now unambiguously the Trump Plaza Hotel & Casino.
• • •
TRUMP HAD A VICTORY, but he wasn’t satisfied with one casino. In February 1985, a remarkable opportunity to acquire another presented itself. The Hilton Corp. was putting the finishing touches on a $270 million casino-hotel across town in the marina district. The company, run by chairman Barron Hilton, had already hired more than one thousand workers. But with opening day just three months away, the Casino Control Commission surprised Hilton by denying the company an operating license because of Hilton’s ties with a reputed mob lawyer. (The commission did not make an issue of Trump’s reliance on his lawyer, Roy Cohn, who had represented New York’s Mafia families.)
Trump seized on Hilton’s misfortune, offering to buy the place since he had already been qualified for a license. That spring, he agreed to pay $320 million, beating out Las Vegas casino mogul Steve Wynn. It was an extraordinary gamble. Trump had never set foot inside the casino, ignoring his father’s admonition to carefully inspect even small properties before making an investment. As a young man, Trump had watched his father check everything from the sink to the boiler. “If I’d told my father” that he hadn’t gone inside the Hilton property, Trump later confessed, “he’d have said I’d lost my mind.” Trump acknowledged that he would have to take financial responsibility amid doubts that the market could support the casino, but he was convinced the property would “earn a ton of money.”
Trump now had his second casino, comparable in size to his first, a sixty-thousand-square-foot hotel with 615 rooms and a three-thousand-space parking garage. It would become known as Trump Castle Hotel & Casino. It sat on the west side of the barrier island, away from the boardwalk and next to a marina, featuring bright lights arrayed as crowns, inspiring its advertising slogan as the “crown jewel of Atlantic City.” Now Trump just needed somebody to help run it. He consulted friends, colleagues, experts. His choice shocked nearly everyone: he picked his wife, Ivana. She, like Donald, had no experience running a casino. But she did have a sense of style, albeit an expensive sense, and she did have Donald’s trust, at least at the start. He called her “a natural manager.” Some of Trump’s friends later wondered whether he put her there so he could have affairs with women in Manhattan, or to get her away from his construction projects in New York. In any case, she had an important role, serving as vice president and chief operating officer of Trump Castle, where she was now finally treated as the boss, not just the boss’s wife. She would often infuriate other Trump executives, who viewed her as boosting the Castle at the expense of the Plaza casino. The intracorporate competition, other Trump officials believed, was a sign of difficulties to come.
• • •
TRUMP EVENTUALLY REALIZED THAT he needed executives with a strong background in running casinos. He scouted the competition and picked Stephen Hyde, a devout Mormon with a large family. The Church of Latter-day Saints opposed ga
mbling, but the casino industry employed many Mormons in key positions, in part because executives believed the faithful wouldn’t be tempted to bet. Hyde was soft-spoken, unflappable, and widely considered one of the nation’s savviest gaming executives, having most recently worked for Trump’s competitor Steve Wynn. Trump, who once wrote, “I can be a screamer,” would occasionally humiliate Hyde by cursing him out in front of other executives. Yet Trump recognized Hyde’s capabilities and entrusted him with a business potentially worth billions of dollars. Hyde was, Trump wrote, “a very sharp guy and highly competitive, but most of all, he had a sense of how to manage to the bottom line.” Trump throughout his career would rely on small circles of advisers, and Hyde became one of Trump’s most trusted associates at the time. That meant some other senior executives felt shut out, unable to convey their concerns to Trump without going through the tight inner circle. Hyde was at the top of that chain of command.
Hyde’s colleagues marveled at his ability to anticipate Trump’s moods and protect midlevel staff from outbursts. Trump sometimes dropped in on his casinos without warning, polling low-level employees about the performance of managers and commenting on the appearance of the facilities. He once fired a director at the Castle after he found four cigarette butts in a stairwell used exclusively by casino employees. At the Plaza casino, Hyde often followed Trump, smoothing over abrasive or awkward interactions with workers or customers. Hyde became adept at gently steering the boss to see things his way. The two would talk on the phone for hours, sometimes late at night, about personal matters. One former colleague said Hyde “may have been the only person Donald truly trusted . . . as close a friend as Trump ever had.” He was one executive Trump could not afford to lose.
• • •
AS HE BUILT HIS empire, Trump became increasingly aggressive fighting his competitors. Starting in mid-1986, he went on a stock-buying spree using borrowed money. He spent $70 million to snap up shares of Holiday Inn—the parent of Harrah’s, his bitter rival and former partner. Next, he spent about $62 million to buy 10 percent of Bally Manufacturing Corp., which also owned a competing casino in Atlantic City. Trump insisted he was merely pursuing investment opportunities. The competitors saw the stock purchases as precursors to a hostile takeover and they took drastic action, taking on additional debt to make themselves less desirable takeover targets. Trump backed off, but made big profits. He sold his Holiday Inn stock for more than $12 million in gains. Bally agreed to buy back Trump’s stock at a premium in a private transaction. The companies were left reeling.
These deals did not sit well with the Casino Control Commission, in part because Bally’s efforts to fend off Trump had sent it into a financial tailspin. Commission members accused Trump of “greenmail,” the practice of threatening a takeover to extract premium prices for stock. At an April 1987 hearing, Trump was asked if he had intended to damage the company. “Not at all,” he said. “The practice is a totally legal practice.”
Outraged, the commission’s chairman, Walter N. Read, accused the Trump Organization of using its casino licenses “as a weapon to weaken or undercut the financial integrity of its competitors.” Read warned that he would vote to revoke the license of any casino operator who did the same in the future. But in the end, the commission gave Trump a pass, renewing his license. The Federal Trade Commission, however, said Trump was not in compliance with regulations designed to prevent anticompetitive mergers or acquisitions. In 1988, the US Justice Department alleged that Trump had not provided timely notice to authorities when he bought the stock in Holiday Corp. and Bally, as required by federal antitrust laws. Trump did not admit violating the law but agreed to settle the complaint by paying a $750,000 penalty.
• • •
TRUMP WAS ALLOWED TO own three casinos in Atlantic City, and he had only two, so he began scouting properties. His strategy would prove risky. One company, for example, could market two casinos to different types of gamblers, working-class in one and high rollers from around the world in another. But a third casino might cannibalize customers and earnings of the other two, sending all three into a tailspin. Still, Trump had made up his mind. He wanted more. A troubled casino project being built by Resorts International caught his eye. The Resorts property became available unexpectedly, just as the Hilton casino had. Resorts’ founder, James Crosby, had died during surgery the year before, and the firm’s profits waned. Over the previous three years, Resorts had poured as much as $500 million into Crosby’s grand vision for a new casino: the one-thousand-room Taj Mahal. It was only half completed, with construction funding running low, when Trump made his move. Some would have considered the Taj a money pit. Two of Trump’s closest advisers argued against investing in it. Trump, now forty, saw it as a potential money machine. He made deals to buy shares of Resorts stock from Crosby’s heirs, seeking to take control of the company. With three casinos, he expected to dominate gambling on the East Coast.
Trump seemed poised for triumph. A year earlier, Forbes had estimated that he was the fiftieth wealthiest American, worth $700 million. He kept buying “trophy” properties that fed the image that he had money to burn. He spent $29 million on one of the world’s largest yachts, formerly owned by Saudi arms dealer Adnan Khashoggi, and another $8 million to refurbish it. He called it the Trump Princess and planned to offset the expense by leasing it to the Castle for $400,000 a month—a major financial drain on the property. The 282-foot-long vessel came with a helipad, a swimming pool, a disco, a movie-screening room, and two hundred telephones and could accommodate a crew of fifty-two. Trump gold-plated the sinks and even the screws. He didn’t care much about sailing. The Princess was to be a docked spectacle to enhance the Trump brand, a place where high-roller gamblers could cavort. After the yacht was unveiled to an admiring public, Trump headed from the Princess to the Castle with an entourage in tow. A bystander shouted, “Be our next president, Donald.”
It seemed that Trump couldn’t spend fast enough. In 1988, he had paid $365 million to buy airplanes and routes from Eastern Airlines, which he turned into a Northeastern shuttle service. And he shelled out $407 million for the Plaza Hotel, the iconic château-style building across from Manhattan’s Central Park. In both cases, he borrowed most of the money, and analysts said he overpaid. The purchases loaded him up with debt at the same time he was ramping up his gambling empire by the boardwalk, and both moves would come to haunt him.
To Atlantic City boosters at the time, however, Trump appeared to be the savior he had promised to be, and they applauded his verve. Here was the ultimate showman, reputedly one of the nation’s richest men, almost single-handedly reviving the resort town. “He came in, in 1988, and said, ‘I’ve done this, I’ve done that, I’ve done the other thing, everything I’ve ever touched has been successful,’ ” said Steve Perskie, a state legislator who drafted the bill that legalized gambling and later became chairman of the Casino Control Commission. “Everybody said, ‘Great, terrific, you’re Donald Trump, you’re too big to fail.’ ” There was, however, a potential downside. If Trump failed, he might bring down much of Atlantic City with him. Trump had bet on the city, but it had also bet on him. And there was reason to be nervous.
Trump’s plan to take over Resorts and complete the Taj was audacious. The projected completion costs of the Taj had ballooned to more than $800 million and were rising. To profit from his investment, Trump had to finish the Taj and do it as financing was becoming difficult to arrange. At the same time, the gambling market was becoming more complex. Revenue in Atlantic City had risen to record levels, but casino profits had dropped because of mismanagement and fierce competition. In 1986, the city’s casinos recorded $2.5 billion in gambling revenue but only $74 million in profit. One man in particular began to express concerns—a man little known outside the casino world, but whose judgments were closely watched within the industry.
• • •
MARVIN ROFFMAN SAW PROBLEMS looming. He had long been fascinated by the c
asino business, which led him to be a gaming-securities analyst for the Philadelphia-based Janney Montgomery Scott. He specialized in the Atlantic City scene, and he spoke out about both the promises and risks of the business, providing strong opinions and data to reporters, casino operators, and investors, including Trump and his executives. Roffman was like the theater critic in a city with a handful of playhouses; his words mattered. So when he said in June 1987 that the opening of the Taj Mahal would put pressure on profits, Atlantic City operators paid attention. When he predicted that tougher years lay ahead, casino owners listened.
Trump was undaunted. In July 1987, he completed the $79 million purchase of 72 percent of Resorts’ voting shares, became chairman, and installed his brother Robert and another associate on the board. Donald promptly began looking for side deals that could bring him quick riches. He didn’t act merely as an investor or a manager; he pushed for a lucrative “comprehensive services agreement” that would require Resorts to pay him to arrange for financing and manage the Taj’s construction. The agreement was estimated to be worth $108 million over five years. Resorts would eventually bend to Trump’s request.
Trump’s power seemed to be hitting new highs. He had just finished working on his first book, Trump: The Art of the Deal, with journalist Tony Schwartz, which was already creating buzz. Trump’s Atlantic City casinos were ordered to boost sales by buying eight thousand copies, which they would first try to sell to guests and then give away. The book portrayed Trump as a brilliant dealmaker who got the better of his partners, not to mention his enemies.
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