At first, it seemed a dream job—Cutler Industries won a contract for about $2.5 million. Payments came as soon as invoices were sent in. A couple of months before the Taj opened, however, something changed. A delay, then more delay. Soon, Cutler was waiting for Trump to pay him $303,000. He banded together with four dozen other subcontractors who had worked on the Taj but hadn’t been paid—Trump owed them $54 million in all. Marty Rosenberg, the co-owner of Atlantic Plate Glass Co., had installed the shimmery reflective glass on the Taj’s exterior. Now Trump owed his company more than $1 million.
Trump offered to pay each contractor one-third of what was due. For the rest, he would issue bonds that gave him nearly a decade to pay the full amount. Cutler couldn’t absorb the loss. It was a challenging economic time. His business was in turmoil. He couldn’t make payroll for his fifty employees. He couldn’t pay on time for the materials he needed to make signs. He took money from his daughter’s college fund. Still, it wasn’t enough. “It was devastating,” Cutler said years later. “Financially devastating and mentally devastating.” This was his company, his family’s heritage. He had built up its skill and reputation, finally winning the job at the Taj, which seemed like the biggest plum of all, and now it had knocked him down. In May 1991, Cutler Industries filed for bankruptcy. Seventeen months later, a judge gave permission to sell off the parcel of land that had been the company’s home.
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FOR MONTHS AFTER TRUMP worked things out with his bankers, he was required to meet with a group of them every Friday morning to report what he had spent and what progress he had made in unloading the Trump Princess and other possessions. Then, on a July afternoon in 1991, bankers saw Trump on television alongside Marla Maples. She held up her left hand to display a 7.5-carat, emerald-cut diamond ring. The best woman, Trump said, deserved the best.
The next Friday, when his bankers saw Trump, they were enraged. Where, they demanded to know, had he gotten the money for the $250,000 ring? Trump skated past their ire. The ring, he said, was on loan, borrowed from the jeweler Harry Winston in exchange for free publicity. This was Donald being Donald, his bankers figured. It wasn’t the first time they had had to deal with the messy intersection of his personal life and his finances. A few months earlier, without his bankers’ permission, Trump had handed Ivana a certified check for $10 million as part of their divorce settlement. The bankers had advanced him the money to keep his casinos and other businesses afloat, not to help end his marriage. Bollenbach, his chief financial officer, was astonished when he learned about the check after the fact, and he told Trump he shouldn’t have done it. Trump gave a familiar reply: What are they going to do? Trump’s affair with Marla, the fallout from his divorce from Ivana, the was-he-or-wasn’t-he links to other beautiful women—all distracted him from his faltering businesses. Over the years, he had blamed problems on his underlings, a weak economy—anything but himself. But in an interview for this book, he said: “I did take my eye off the ball, and part of that was because of the difficulty I had with the marriage, of course.” He acknowledged that he didn’t “focus as much as you would if things were going swimmingly.”
The first president of Trump Shuttle, Bruce Nobles, heard from women that they were shunning the airline because of its owner’s womanizing. Nobles was chairman of the New York chapter of a network of young chief executives, and even a male CEO approached him at one meeting and said he wouldn’t fly on the Shuttle and wouldn’t let his employees use it. The reason? He didn’t approve of Trump.
Nobles called his boss and urged him to get his sex life out of the headlines: “Look, businesswomen in particular are tending to avoid us because they don’t like what they’re reading about you in the paper.”
Trump chuckled. “Yeah, but the guys love it.”
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DESPITE THE TROUBLES, TRUMP had kept talking up his Shuttle with customary bravado. As late as September 1991, he asserted that, with falling fuel prices and a seasonal influx of passengers, the airline was gaining value. “There is no pressure to sell,” he said. What Trump left unsaid was that, a year earlier, he had begun defaulting on the Shuttle’s loan payments, prompting Citibank, in tandem with other financial institutions, to take over the airline. As a technicality, they left Trump as owner, but the banks called the shots, requiring him to keep the planes flying to protect the airline’s value as the banks searched for a buyer. The situation, the bankers reasoned, was unlike that of the casinos, where the Trump name added luster and generated business. Trump was a real estate guy, not an airline expert, and in this case his brand wasn’t much of a boost to its value.
It took another year and a half before the bankers found a buyer, US Airways. In March 1992, the banks took nominal ownership away from Trump. He blamed the economy, not his own widely questioned decisions, for the Shuttle’s problems. “If the economy stayed good or went better, it would’ve been a good deal,” Trump said years later. “But the economy didn’t go good, and I got out of the airline without any damage. I mean, it worked out fine. You have to understand, those were the go-go days where the banks would give you more money than you needed.”
In April 1992, workers stripped the giant Ts off the tails of Trump Shuttle’s Boeing 727s, the very ones Trump had sent back to be repainted with bigger logos. Now they were vanishing. The Shuttle, which had never made money, would no longer bear his name. It was the latest ignominy after what industry insiders regarded as a string of miscalculations.
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THIS WAS NO ORDINARY Saturday night at the Trump Taj Mahal. Upon arrival in the grand ballroom, each of eight hundred friends, relatives, and gamblers got a Donald-on-a-stick, a life-size mask. Free drinks flowed. Dinner was lobster-wrapped veal. After dinner came the impersonators—an Elvis crooning “My Way,” a faux–Marilyn Monroe singing, in Trump’s honor, “Happy Celebration to You.” Billed as a comeback party, “Against All Odds” was intended to spotlight the improving circumstances of Trump’s Atlantic City holdings. It was November 1992, eight months since the Castle and Plaza casino bondholders had agreed to lower Trump’s interest payments in exchange for nearly half his ownership. As with the Taj before them, a judge had quickly approved these tidy prepackaged bankruptcies.
Waiting in the ballroom for their host, his guests watched a large-screen video of Trump’s earliest days in Atlantic City and his recent gains in gambling revenues. The most notable new fact about the Trump empire, however, was conspicuously missing from the evening. Just three days before the party, Trump’s most cherished property—his Mona Lisa opposite Central Park, the Plaza Hotel—became his fourth to slip into bankruptcy. Trump had worked out yet another deal in which creditors would lighten his loan payments. In exchange, they would take nearly half his stake in the hotel—and win the right to sell it if it fetched a nice enough price. Of everything remaining in his empire, Trump wished most passionately that he could keep the Plaza.
Thus had the first three years of the decade left him presiding over an empire in tatters: Four corporate bankruptcies. An airline repossessed by his bankers. His Alexander’s department store stock in the banks’ hands. His 282-foot yacht sailing, on bankers’ orders, from port to port around the globe in search of a buyer, until a Saudi prince picked it up for one-third less than Trump had paid.
Yet there was seemingly no room for melancholy that Saturday night in the Taj ballroom. At 9:00 p.m., Trump was about to make his appearance. He stood behind a ceiling-high paper mural, decorated with rising stock prices and headlines celebrating his comeback. His hands wrapped in red boxing gloves, Trump punched through the paper and stepped through, revealing a bright silk robe and matching boxing shorts over his tuxedo.
The Rocky theme song played over the sound system. An announcer cried out, “Let’s hear it for the king!” But the king, if that is what Trump was, would need yet another magic act if he was to survive.
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TRUMP HAD TAPPED LINES of credit
, issued bonds, and even relied on his father to raise money. He retained control of the three casinos that had fallen into bankruptcy. By 1995, he believed it had all been worth it. The economy was improving, and increasing numbers of gamblers were filing into Trump’s Atlantic City properties. Still, he faced huge debts. So Trump seized upon a new strategy, based on one of the oldest tools in capitalism. He created a publicly traded company, which owned the Trump Plaza Hotel & Casino and was expected to operate Trump’s new casino ventures. Investors could now own a piece of the Trump brand, under a ticker symbol composed of Trump’s initials: DJT.
The plan worked, at least at first. Trump’s company raised $140 million from investors at $14 a share. He combined some of that cash with a sale of $155 million in new casino junk bonds to pay down $88 million of his debts. Shares soared to $36 in 1996, and Trump’s stake in the company grew to about $290 million, restoring him for the first time since 1989 to the Forbes 400 list of America’s wealthiest people. (Unsatisfied, he called the editors from his plane to argue that his net worth was “probably over $2 billion,” four times higher than Forbes’s estimate.)
Less than a year after Trump’s company went public, it paid premium prices for two of Trump’s deeply indebted, privately held casinos, the Trump Taj Mahal and the Trump Castle. In essence, he was both buyer and seller, able to set whatever price he wanted. The company bought his Castle for $100 million more than analysts said it was worth. Trump pocketed $880,000 in cash after arranging the deal. By the end of 1996, shareholders who had bet on a rosy Trump future suddenly found themselves saddled with $1.7 billion of his debt. The company spent much of its cash on interest payments. The share price plunged to $12 in 1996, about one-third of its peak price. The company paid Trump $7 million that year, including a $5 million bonus.
For years, details of Trump’s dealings had been kept private. But now, since public companies must disclose performance data, the gap between his projections and reality was revealed to all. Trump said in 1996 that his new riverboat casino in Gary, Indiana, would generate $100 million a year in revenue. In fact, it logged $82 million in revenue that year, and cost $80 million to run. In March 1997, when the stock was trading at one-quarter of its price ten months earlier, Chase securities analyst Steve Ruggiero said the company wasn’t “forthcoming with all the analysts,” which he said “raises suspicions.”
In 1998, the US Treasury fined a Trump company $477,000 for failing to file transaction reports designed to guard against money laundering. In 2000, Trump and his partners paid $250,000 to settle a New York case in which they were accused of secretly funding an ad blitz against the opening of new casinos in the Catskill Mountains. In 2002, federal securities regulators cited the casino group for having used a type of financial reporting that was designed to downplay negative results.
While Trump was chairman, the company lost more than $1 billion and was in the red every year between 1995 and 2005. During that time, the company’s share prices plunged from a high of $35 to as low as 17 cents. A shareholder who bought $100 of DJT shares in 1995 could sell them for about $4 in 2005. The same investment in MGM Resorts would have increased in value to about $600. Holders of the company’s stocks and bonds lost more than $1.5 billion during Trump’s management. In 2004, stock-exchange officials froze trading in the public company as word spread that it was filing for bankruptcy—the fifth such corporate action of Trump’s career. Its reorganization plan would reduce shareholders’ stake in the company from roughly 40 percent to 5 percent, with much of the difference given over to bondholders owed money by Trump.
Trump would also see his share reduced, but he would stay on as chairman—and, for his leadership, be granted a $2 million annual salary, a $7.5 million tract in Atlantic City, and a minority stake in the Miss Universe pageant, which the company co-owned with NBC. Shareholders sued, calling the plan a “basket of goodies” for Trump. Trump settled, agreeing to pay the stockholders $17.5 million and proceeds from an auction of the land. Sebastian Pignatello, an Atlantic City investor who bought 150,000 shares of the company beginning in the late nineties, said shareholders lost tens of millions of dollars because of what he called Trump’s use of the company as a personal piggy bank. Pignatello started buying when shares were around $3 each and sold when they were worth pennies. He recovered some of his money in the settlement, but said he still lost tens of thousands of dollars on the investment. “He had been pillaging the company all along,” Pignatello said. “He has no qualms about screwing anybody. That’s what he does. He still made out great.”
Indeed, the company was a good deal for Trump. During his time as the company’s chairman, from 1995 to 2009, including five years as its chief executive, he was paid more than $44 million. Between 2006 and 2009, the company bought $1.7 million of Trump-brand merchandise, including $1.2 million of Trump Ice bottled water.
Trump’s casinos struggled every year. His publicly traded company had bought the Castle (later renamed Trump Marina) for $525 million in 1996, and sold it for just $38 million in 2011. Trump had no regrets over his company’s performance: “Entrepreneurially speaking, not necessarily from the standpoint of running a company but from an entrepreneur’s standpoint, [the stock offering] was one of the great deals.” The entrepreneur, of course, was Trump himself, and the implication was that he had profited even as shareholders did not. Trump had managed to rebuild his finances, and even the skeptical analysts at Forbes said in 2004 he was worth at least $2.6 billion.
Once again, Trump saved himself by selling himself. The image, he’d always said, was at least as important as the underlying product. Now that image was about to catapult his personal brand to a new, nationwide stage, one where he wouldn’t need to build anything other than his reputation. A fellow “survivor,” one of the nation’s most prominent TV producers, was looking for the right billionaire to star in a reality show.
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Ratings Machine
Just when the Trump brand was teetering on the edge of no longer being the gold standard, along came a British-immigrant TV producer who was only a few years removed from selling $18 T-shirts on Venice Beach. By 2002, that shirt seller, Mark Burnett, had transformed himself into the creator and chief architect of Survivor, the biggest of the TV reality shows. One of the nation’s most durable ratings powerhouses, Survivor was a glamorous bit of TV catnip that attracted viewers by the millions to watch beautiful people compete in exotic spots such as the Australian outback and the Polynesian islands. The ratings zoomed from the start, but Burnett’s newfound millions couldn’t mask one bit of unhappiness at the center of his life: he had little kids at home in New York and he was hardly ever there. On one visit home from filming the show, Burnett’s son, ten years old at the time, told his dad he’d forgotten what he looked like.
“There has to be a way to do a successful show in an American city,” Burnett thought. The way home, he realized, was through Donald Trump. Burnett’s lightbulb moment came when he was filming the finale of Survivor: Marquesas in New York’s Central Park, at Wollman ice-skating rink, which Trump operated, having famously renovated it in a jiffy and under budget after the city government had spent six years and $12 million failing to fix it. Burnett was fed up with being stuck in the jungle, “with crocodiles and ants and everything that could kill you.” He decided that his next show needed to be set in a different kind of jungle, made of asphalt, “and what I needed was someone larger-than-life, very colorful,” a character who could carry this new urban Survivor, who would be likable, tough, and fascinating enough to interest an audience for a full season.
Wollman Rink put the idea right in Burnett’s face: TRUMP was plastered all over the Zamboni and the walls of the rink. Burnett took the hint and went to see Trump at his office in Trump Tower. Burnett’s notion for a new show had struck him on one of his visits home, when he watched ant colonies swarming around each other; it looked like a battle. Burnett let the image tumble around in his min
d and it morphed into teams of competing job-seekers—the premise for The Apprentice. Burnett’s meeting with Trump lasted an hour. Burnett explained that the show would showcase Trump’s whole empire—Trump Tower, the casinos, the hotels, the helicopter and the jet, the opulent apartment, and the splendor of Mar-a-Lago. Trump would be the main character, the arbiter of talent, the boss—judge, jury, and executioner in a weekly winnowing of young go-getters desperate for a chance to run one of the mogul’s businesses.
Trump didn’t watch reality TV and didn’t much like what he’d heard about it. “That was for the bottom-feeders of society,” Trump said. And he was worried that the show would take too much of his time. Burnett assured Trump that he could devote just a few hours to each episode, and the show could be made entirely inside Trump Tower. Despite his concerns about time, Trump was immediately taken with the show’s potentially enormous promotional value. “My jet’s going to be in every episode,” he said. “The Taj is going to be featured. Even if it doesn’t get ratings, it’s still going to be great for my brand.” Trump saw the show as a bridge to a new market, a new audience, and especially to young people. Burnett pressed Trump on the power of TV to shape reputations: Trump had been famous for more than a generation, but a TV show of his own would allow him to mold his image as never before, giving Americans the chance to see him in a way they perceived as unmediated. Without a show of one’s own, Burnett believed, a celebrity is but a product of editors’ headlines and journalists’ takes. Being the star of a show would let Trump remake himself as he saw fit.
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