Serious Question About Donald Trump - Please Advise!
February 20, 2016 9:56 PM   Subscribe

I grew up in NYC in the 70's and 80's. Donald Trump was a person in pop culture, but my take-away was that he was actually a good showman and a poor business person. He ended up on a reality show on a major network this seemed about right, he was blustery and had a lot of business failures under his belt. I assumed at the time he was really good at leveraging loans and his image, without much success in the money part. When did this change? And/or, how is his campaign financed?

I totally get that anyone outside the bubble of NYC media under 30 years old does not know this guy's history, but I am honestly confused. What are the mechanics here? I am looking for answers based in FACT (has his business acumen improved? how is his campaign financed?) rather than the pat answers about his marketing skills of creating something from shite. I grew up with the later. I'm confused about this current phenomenon.

To be specific, my impression has always been that Donald Trump had the image of being a businessman without actually being one. I assume he has investors that actually run any business interests he is attached to, and he is a clown-like spokesperson. Is this correct? If so, who props him up?

I know this guy is entirely a fiction, it just never really mattered to me until recently. With the media in the current state it is in, I don't expect there's a well researched expose out there I just have not read. Still. This person is the facade of a bunch of other interests. If you have personal experience or slightly deeper knowledge than anything I acquired from the gossip pages of The New York Post back in the day, please enlighten me.

Who invests in him (his business ventures) and profits from his image? I'm entirely open to the answer being he is a Kardashian-like virus that propagates itself, but even they have bigger interests concerned with making them a (cultural/financial) phenomenon.

I know why this question isn't being asked on a larger stage. I hope asking here will give clues and help me figure it out for my own edification. Thanks.
posted by jbenben to Education (25 answers total) 12 users marked this as a favorite
Two thoughts:

1) His campaign has raised very little money (comparatively speaking), and he's only self-funded a bit. He's mostly relied on earned media, which is likely a big part of the reason he did so poorly in Iowa (because you actually need a real campaign to get people to show up for caucuses). He likes to claim he's self-funding, but it's really bullshit.

2) I also grew up in NYC around the same time as you (I'm probably a bit younger), but my perception of Trump as this mostly failed businessman squares with yours. And on a certain level, it's not wrong. Trump is rich because he inherited a fortune from his father, then spent the last several decades not doing a particularly good turning that money into more money.

And had he instead taken that fat pile of cash and plowed it into an S&P 500 index fund (in other words, simply had his money follow the stock market as a broad whole), he'd be much richer today than he is.
posted by Conrad Cornelius o'Donald o'Dell at 10:23 PM on February 20, 2016 [27 favorites]

My impression, which admittedly, may be wrong, is that Donald Trump has primarily made money in the real estate market when the markets were charging upwards so quickly that a reasonably smart alpaca would have readily made money. And then, when faced with down markets or competition for his casinos from other casinos, he tended to lose it. So, not so much that he wasn't making his own deals as that they weren't deals that required any particular acumen to make.
posted by jacquilynne at 11:04 PM on February 20, 2016 [6 favorites]

Mod note: Some comments deleted. For general conversation about Trump, please head over to the Blue and discuss on any of the Trump and/or election threads. For the purposes of this thread, OP is looking for straight, factual information on a) his actual business skills, and/or b) the support behind the figure, and c) how is his campaign financed. General "my impression is ___" or other discussion (including advice about whom OP should support, etc.) doesn't belong here. Please stick narrowly to the question. Thanks.
posted by taz (staff) at 1:15 AM on February 21, 2016 [5 favorites]

there's an article about his funding here, a summary of donors here and a comparison with other candidates here.

from that you can see that (1) he's doing incredibly well, spending much less than any other viable candidate and (2) that he is not funded by "big business".
posted by andrewcooke at 1:16 AM on February 21, 2016

In 1974 Trump inherited an estimated $40,000,000 from his father. This amount is equal to $205,000,000 today

In 2015 Forbes estimated Trump's net worth at $4.0 billion. Trump himself claims to be worth $10 billion. The real number is probably somewhere between the two.

Trump has turned $205 million into anywhere from $4000 to $10,000 million. He's an objectively brilliant businessman.

I fucking hate the guy, but facts are facts
posted by BadgerDoctor at 4:21 AM on February 21, 2016 [6 favorites]

BadgerDoctor, as noted above by Conrad Cornelius o'Donald o'Dell, anyone who invested $40,000,000 in an index fund in 1974 would have turned it into ~$4.0 billion by today. Outpacing inflation does not make someone an "objectively brilliant businessman."
posted by telegraph at 5:46 AM on February 21, 2016 [25 favorites]

He's an objectively brilliant businessman. I fucking hate the guy, but facts are facts

Not quite. From Fortune in August 2015:

Trump’s net worth has grown about 300% to an estimated $4 billion since 1987, according to a report by the Associated Press. But the real estate mogul would have made even more money if he had just invested in index funds. The AP says that, if Trump had invested in an index fund in 1988, his net worth would be as much as $13 billion. The S&P 500 has grown 1,336% since 1988.
posted by NotMyselfRightNow at 5:47 AM on February 21, 2016 [14 favorites]

The other thing is that Trump leverages loans like nobody's business.

He builds all his buildings with borrowed money. If they're a success, he pockets the profits, if they're dogs, he goes bankrupt on them, sticking the banks and investors with the losses.

How does he do it? VOLUME!

The point is that he does all his stuff with OPM (Other People's Money) keeping his actual money, nice and safe.
posted by Ruthless Bunny at 5:48 AM on February 21, 2016 [17 favorites]

And had he instead taken that fat pile of cash and plowed it into an S&P 500 index fund (

That claim is based on the dubious assumption that he invested it in the index and never took any out to, like, eat, let alone buy airplanes and houses.

Given that he has very likely eaten and bought planes, he seems to have done fairly well as an investor.
posted by jpe at 5:56 AM on February 21, 2016 [2 favorites]

The point is that he does all his stuff with OPM (Other People's Money) keeping his actual money, nice and safe.

That's how the real estate industry works. To the extent there's a criticism, it's of the RE model, not Trump.
posted by jpe at 5:58 AM on February 21, 2016 [1 favorite]

Trump's businesses have filed 4 (FOUR!) times for business bankruptcy chapter 11 . It's unclear how much of a role he played in the events leading to those decisions.

While he has never filed chapter 13 personal bankruptcy, he's pretty much the epitome of "when you owe 1000$, the bank owns you, but when you owe 1,000,000$, you own the bank."
posted by beaning at 6:37 AM on February 21, 2016 [3 favorites]

That claim is based on the dubious assumption that he invested it in the index and never took any out to, like, eat, let alone buy airplanes and houses.

No. It's stating that the market - using the S&P 500 as a benchmark - grew 1,336% in the 27 year period between 1988 and 2015. During that same period, Trump grew his money 300%. To claim that Trump is a great businessman, yet grew his money at less than 1/4 the rate of the market overall, is illogical.
posted by NotMyselfRightNow at 6:39 AM on February 21, 2016 [8 favorites]

The Economist has an interesting, apparently objective analysis of how much he's worth, where it came from, and whether he'd have done better with an index fund. (In terms of the index fund question, it says that if you choose the starting point carefully, you can make it look like he beats the index, but if you view his investing career overall, he does not.) It also discusses his strengths and weaknesses as a businessman.

The whole thing is worth reading, but I'd say the crucial three paragraphs are as follows:
Judged from the low point in 1996, he has outperformed the S&P 500 index of big firms and the New York property market. Judged by his long-term record, he has done poorly. And over the past decade Mr Trump has lagged both benchmarks. His ranking among American billionaires has fallen from a peak of 26 to 121—by the standards of the country’s oligarchy, he is small beer. His property empire is a seventh the size of America’s biggest real-estate firm.

Mr Trump was sensible enough to get out of casinos in Atlantic City. But he missed out on the industry boom in Macau that propelled erstwhile rivals such as Sheldon Adelson of Las Vegas Sands into a different league. Mr Adelson is worth $26 billion, according to Forbes. When considering Mr Trump’s performance, one should also spare a thought for outside investors in his projects. Many have made money. But roughly $5 billion of equity and debt (at current prices) from outsiders sat in Trump vehicles that went bust.

What of Mr Trump’s management style? His attributes are charisma, spontaneity, frequent communication and quick decision-making. He is a fine negotiator, grinding down the other side with charm and relentless tweaks of the fine print. “He is incredibly charming and deeply frustrating,” says someone who has acted for him. A former top executive at the Trump organisation says, “People think he is running everything from 30,000 feet, but it is the opposite. He knows if the carpets were cleaned and every clause in the contract.”

The flip side of Mr Trump’s personality is volatility, with explosive outbursts and unpredictable behaviour. “He’s not stable. He has a nuclear temper,” says the same source, who recalls spittle flying and desks being swept empty. Throughout his life Mr Trump has pursued energy-sapping feuds.
posted by yankeefog at 6:43 AM on February 21, 2016 [6 favorites]

Last year Bloomberg Businessweek, wrote about the Trump Organization:
"It’s not a gargantuan company. The $605 million revenue that Weisselberg says it took in last year (though the months shift depending on the business line) makes it, for purposes of comparison, roughly the size of a company called NN, based in Johnson City, Tenn., which produces tiny steel balls."

"The parts of his company that slap his name on other people’s things help explain how Trump can make all that profit from such a modest amount of revenue. Trump can earn millions of dollars when he licenses out his five sparkling letters, that unbeatable verb, to new towers in the Philippines, Panama, India, Uruguay, Brazil, Canada, and the U.S., too. And he doesn’t have to worry about spending money on stuff like concrete."

The Weekly Standard followed up the numbers from Businessweek article:
"(...) the Trump Organization brought in about $605 million in revenue last year, and managed to clear somewhere between $275 and $325 million in profit. That’s a phenomenally high profit margin (which, of course, is a key sign of the health of a business). Trump’s approximately 50 percent margin means his company is more profitable than Pfizer, Gazprom, and Hyundai – all the most profitable companies in their respective industries. Trump’s company even has higher margins than Apple."

Wkikipedia has a list over "things named after Donald Trump". The list includes several buildings that were never built. Example:
"In early 2009, The Associated Press reported that the project had collapsed financially; investors who had put down deposits on the project condos faced a total loss of their investments (typically $200,000 - $300,000 per person). After its collapse, Trump (whose videos promoting the development had been shown to potential investors) suddenly claimed that he had been little more than a spokesperson for the entire venture, and disavowed any financial responsibility for the debacle.
After 4 1/2 years of litigation, Trump settled the lawsuit against him in November 2013, for an undisclosed amount. "

NY Times wrote in 2011:
"But when three of the planned buildings encountered financial trouble, it became clear that Mr. Trump had essentially rented his name to the developments and had no responsibility for their outcomes, according to buyers. In each case, he yanked his name off the projects, which were never completed. The buyers lost millions of dollars in deposits even as Mr. Trump pocketed hefty license fees."

A similar story regarding the Trump Tower Tampa:
" Trump misrepresented himself as a tower investor when he was only lending his name to the project in a licensing deal with Tampa Bay developer SimDag Robel LLC, said Kenneth Turkel, a Tampa attorney hired by some of the condo buyers.

Scores of buyers plunked down 20 percent deposits on units that ranged in price from $700,000 to $6 million. Developers didn't refund half the deposit money, and buyers aim to recoup losses from Trump though the courts.

"Buyers were never told about the confidential licensing agreement," Turkel said. "Would people have bought into the project if the name was SimDag Tower Tampa?" "
posted by iviken at 8:26 AM on February 21, 2016 [5 favorites]

jpe: "That claim is based on the dubious assumption that he invested it in the index and never took any out to, like, eat, let alone buy airplanes and houses."

This is mistaken. The markets beat Trump over this time horizon by 1,000%, and that huge difference is not because Trump bought some private jets. Very few investors can beat the market over a 40-year period. Trump was not one of them, even accounting for outsize living expenses.
posted by Conrad Cornelius o'Donald o'Dell at 9:57 AM on February 21, 2016 [1 favorite]

A pertinent question might be how many other people had $40 million in 1974 and how he ranks now within that population?
posted by XMLicious at 10:45 AM on February 21, 2016 [1 favorite]

Response by poster: I had no idea that he inherited as much as 40 million, the things you miss as a kid! This does explain a lot.

Everybody, please keep it coming. It will take me time to read through these articles, although they seem so far to back up what I remembered. I remember the bankruptcies, and that his "wealth" or "success" was either relative or a matter of opinion. So far noting contradicts that (although if you can factually contradict this, please do!!)

The point I made to someone via memail was that we've all used Facebook or Paypal, it's easy to see where those billions in wealth come from. The majority of people I know never or rarely use any Trump products, so I don't see where that wealth comes from. From a quick skimming of articles, it seems he started off with a huge chunk of money and managed not to lose it over 40+ years, all while making himself a household name. That's not unimpressive, but it's not Apple, Microsoft, FB, Paypal, etc..

In 2015 his campaign only cost about $19.4 million, about $13 million is personal money he loaned his campaign + companies he owns are in part servicing the campaign for compensation - in a sense he's paying himself to run for office. Again, this pretty much tracks.

Part of the problem for me is that I don't have the time or inclination to pull company tax filings or read detailed campaign filings (something I've done IRL for other issues, it's a monumental task!) There's an overwhelming echo chamber in journalism/internet these days, it's hard to find information where anyone has used or cited original documents. Fact checking points in any articles referenced in this thread at least gives me a place to start.

For the curious... It's not that I care about Trump, hate him, or am otherwise interested in the Presidential election in the way most folks seem to think elections matter. Trump is not a divisive figure to me. His presidential campaigning is an interesting phenomenon to behold. I'd love to noodle out what's behind all of this! After all, his ratings on TV weren't that great, and most people aren't watching regular TV anymore, anyway. Plus, there was that whole Marla Maples debacle way way back that puts him firmly in Citizen Kane territory in my mind. His rise in the polls is also completely Capra-esque, reminding me a bit of Mr. Deeds Goes to Town/Meet John Doe/ Mr. Smith Goes to Washington. How could anyone not be fascinated?? It's amazing. Truly.

I'm especially interested in former employees who have gone on the record about him, since this does not seem to happen often (again, I might have missed it over the years.)

Unbiased critiques of current campaign media coverage about his campaign are welcome, although I am doubting this exists in such a form. If some poor person has done the work to independently research and aggregate the coverage, tho, I would love to read their findings.

Thanks all. Keep it coming.
posted by jbenben at 10:45 AM on February 21, 2016 [1 favorite]

I don't understand a lot of your comments, OP (Trump not a divisive figure?), but since you want further material, I highly recommend this piece on Trump's debacle in Atlantic City. This passage in particular demonstrates how reliant he was on his father:
On Dec. 17, a lawyer representing Fred Trump went to the Castle’s casino cage, handed over a check for $3.35 million as “front money,” filled out several forms and walked out with an equivalent amount of $5,000 chips in a briefcase, commission documents show. The lawyer repeated the procedure the next day, this time the exchange was worth $150,000.

Trump used the money to pay the interest, and the casino recorded the exchange as an outstanding gaming liability, documents show. But state officials later ruled it was a surreptitious loan and said it violated casino regulations. The state Division of Gaming Enforcement fined the Castle $65,000.
posted by Conrad Cornelius o'Donald o'Dell at 2:51 PM on February 21, 2016

I know he's kind of persona non grata here, but Metafilter's own Scott Adams has bee writing about Trump and his campaign since about August.
posted by ericales at 4:05 PM on February 21, 2016

More recently Trump makes money by licensing his name on real estate (and products). (as mentioned by iviken)

This makes many of his recent statements while running for President bad for business.
posted by eye of newt at 4:44 PM on February 21, 2016

This show just aired on On Point with Tom Ashbrook: Trump's Business Record. He had on two experts on Trump's history, including his business record. Their discussion backs up just about all of the points made here in people's answers and then some. This seems like a great listen for you to address your question.
posted by incolorinred at 8:05 PM on February 21, 2016

Best answer: This doc was done on him 25 years ago, and is quite illuminating.

As a native New Yorker, I can confirm that he was always FOS.
posted by dbiedny at 11:05 PM on February 21, 2016 [1 favorite]

Trump's financial disclosure to the FEC has been released.
posted by XMLicious at 5:48 AM on May 20, 2016

Response by poster: I just want to add this important update!!

First of all, it's so obvious and I can't believe I missed it. It doesn't come from me, and the person who wrote it on a comment somewhere attributed it to a friend... Basically...

They noted Trump really made his money in Atlantic City. He's the mob candidate. Now stay with me...

I was wondering how this person got to being a serious candidate, who was (PROTECTING) backing him this far? That was my ultimate purpose with this question.

The one thing The Sopranos did was convince everyone the mob was a bunch of guys in waste management hanging out in front of Satriale's pork store - but this is nostalgia. If HBO shows like The Sopranos and Boardwalk Empire help you wrap your brain around this - have at it.

The secondary, and possibly more important element, is that Trump is an excellent way to spin off the crazier elements of the Republican Party - maybe those interests lose this election to win the next one either with a renewed Republican base or by creating a new party that doesn't rely on support from fundies and crazy people that have hijacked the platform? Maybe this is just a long game plan to get rid of the Tea Party element + attract more reasonable conservatives?

It'll be at least 5 to 10 years before the smoke clears and the reason a total fakir became a viable presidential candidate. I'm very open to the fact that any powerful group in a position to move chess pieces is kinda winging it at this point.

I'm satisfied that Trump is the mob backed candidate, tho. It's his lineage. Surprised I missed it.

Carry on.
posted by jbenben at 12:25 AM on May 26, 2016

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