In 2015 and 2016, while Donald Trump was making his pitch to the American people as to why he should become president, one of his selling points was his “tremendous success” as a businessman. Trump first made his name in the business world as the president of the Trump Organization, the real estate company started by his father. He wasn’t content, though, to stick to real estate.
Since the 1980s, Trump has regularly ventured into other business fields, including gambling, airlines and alcohol. However, his portfolio is littered with bankruptcies, failed business ventures and abandoned companies. Trump has argued that bankruptcies and unsuccessful endeavors are just part of being a risk-taking businessman.
Though Trump has frequently bounced back from his business missteps, he’s left behind a trail of unpaid contractors and devastated former employees.
Under attack for bankruptcies
During the Republican primary prior to the 2016 election, Trump was not the only businessperson attempting to win the presidency, though he was certainly the one who received the most press coverage.
One of Trump’s challengers was the former chief executive officer of Hewlett-Packard, Carly Fiorina, who used a debate performance in September 2015 to land one of the few attacks on Trump that appeared to bother him.
Discussing the issue of federal debt, Fiorina questioned if Trump was the right person to tackle the issue.
“You ran up mountains of debt, as well as losses, using other people’s money, and you were forced to file for bankruptcy not once, not twice, four times.”
Trump fired back, saying it was normal for businesses to declare bankruptcy as a strategy. “I used the law four times and made a tremendous thing,” he said. “I’m in business. I did a very good job.”
After the debate, the nonpartisan PolitiFact website ran the article, “Fact-checking claims about Donald Trump’s four bankruptcies,” in which it rated Fiorina’s statement “Mostly True.” Trump had indeed declared Chapter 11 bankruptcy four times, but, the site qualified, “Fiorina’s statement doesn’t tell the whole story.”
Trump’s four bankruptcies
In an unusually contentious 20/20 interview in 1990, Barbara Walters pressed Trump on his public business (and personal) struggles. At the time, Trump denied he was “on the verge of bankruptcy” and said the reporting on his financial struggles was proof of “how inherently dishonest the press in this country is.” Yet, a year later, Trump filed for the first of four bankruptcies.
Trump’s four bankruptcies occurred in 1991, 1992, 2004 and 2009. In three of the bankruptcies, his casinos were involved. The other bankruptcy involved the Trump Plaza Hotel in New York City.
In 1991, Trump was forced to file Chapter 11 bankruptcy, also known as reorganization, for the Trump Taj Mahal casino in Atlantic City, New Jersey. The casino, which cost US$1.2 billion to build and opened in 1990, was US$3 billion in debt within a year of opening. Trump was forced to give up half his stake in the casino after filing Chapter 11.
The Trump Taj Mahal would remain in Trump’s portfolio of properties for nearly three decades, but it remained a troubled asset. He sold most of his stake in the casino in 2009 (as a result of his fourth bankruptcy).
His name still remained on the casino, however, until March 2017 when it was sold outright for a paltry fraction of what it had initially cost. It reopened in 2018 as the Hard Rock Hotel & Casino.
Trump’s second bankruptcy came a year later after the Trump Plaza Hotel accrued a debt of US$550 million. To make paying off his debts easier, Trump gave up his 49% stake in the property. The hotel, which he paid US$390 million for in 1988, maintained his name until the Trump Organization sold it in 1995.
Trump’s third and fourth bankruptcies were both related to his hotel and resort company, Trump Hotels and Casinos Resorts (later renamed Trump Entertainment Resorts).
In 2004, the company, which included three Atlantic City casinos and the Trump Princess riverboat casino in Gary, Indiana, had US$1.8 billion in debt. Once again, the company was restructured and Trump gave up a percentage of his stake.
Following the 2008 financial crisis, Trump Entertainment Resorts missed a US$53.1 million interest payment and Trump resigned as the company’s chairman. Trump’s were not the only casinos to struggle following the Great Recession. Casinos around the Gulf Coast region of the country were hit especially hard by the downturn.
Though Trump Entertainment Resorts maintained Trump’s name after the 2009 bankruptcy, he no longer operated the company. It filed for bankruptcy again in 2014.
Trump Shuttle fails to take off
Perhaps Trump’s greatest talent as a businessman is branding. He has built his personal brand as a “tremendous success” by publishing multiple books, including “The Art of the Deal” in 1987, that claim to reveal his business acumen. He has also made licensing deals using his name so that “Trump” appears around the world on properties he doesn’t own.
However, the Trump name has hardly been a guarantee of success. Multiple products and business ventures that have had his branding have collapsed or been abandoned without him declaring bankruptcy.
One of Trump’s most high-profile misfires was the Trump Shuttle airline. He paid US$365 million to buy the flailing Air-Shuttle in 1988 from the now-defunct Eastern Air Lines. Despite annual revenues of US$30-35 million a year, by 1990, the airline had over US$120 million in losses. The market for shuttle airlines in the United States was oversaturated and the company had spent too much on renovations.
In 1991, Trump was looking to unload the airline. However, a deal with Citibank and Northwest Airlines fell through when the latter pulled out. In the end, Citibank took ownership of Trump Shuttle and its debts, relieving Trump of financial responsibility.
Other unsuccessful Trump business ventures
As outlined by Rolling Stone in 2016, the Trump brand has been associated with many business duds. Over the years, Trump has attempted to expand into multiple markets, some tangentially related to real estate, most not at all.
During the 2016 election, one of the biggest stories was a lawsuit over Trump University, a for-profit real estate seminar series that purported to teach Trump’s business techniques. Some students paid upward of US$20,000 for tuition in the pseudo-university in which Trump had essentially no role.
Despite saying he would never settle the lawsuit, shortly after winning the 2016 election, Trump did settle and agreed to pay US$25 million to former Trump University students.
Another business venture was Trump Vodka, an attempt to get into the high-dollar liquor market that completely shut down in 2011. This was an unusual endeavor because Trump has insisted throughout his career that he doesn’t drink.
Other failed ventures included Trump Steaks, Trump Magazine, two nonalcoholic beverages – Trump Fire and Trump Power – and GoTrump.com, an attempt to get into the online travel booking industry (GoTrump.com is now a campaign website for Trump’s presidency).
Employees and contractors left out in the cold
While filing for Chapter 11 reorganization is, as Trump has said, a normal part of doing business, it doesn’t wipe the slate clean for everyone. When a business fails or goes bankrupt, it can leave employees and contractors stranded without receiving payment.
So while Trump’s purchase of Trump Shuttle initially saved or created 1,000 jobs, the positive news didn’t last long for the airline’s employees. As Trump Shuttle faltered in 1990, the company laid off 100 employees. In 1991, when the deal with Northwest failed, 160 union employees found themselves fighting to attain their earned pay and benefits.
The failure of Trump’s casinos has frequently had ripple effects for employees. In Atlantic City, when the three Trump-owned casinos – Trump Taj Mahal, Trump Marina and Trump Plaza – went belly up in 2004, many workers lost their retirement savings. The Trump company had pushed employees to accept company stock in lieu of other retirement savings. When the stock crashed in the wake of the bankruptcy, 400 employees lost US$2 million.
In addition to being sued for discriminatory hiring practices at the Gary, Indiana riverboat casino, Trump was sued by eight business partners who said they were cheated out of money on the deal.
Trump and his company have also faced dozens of lawsuits for failing to pay contractors and employees for their work. Trump has further been cited for not paying overtime and minimum wage at his properties. As a rule, when these contractors and small businesses try to sue for payment, the Trump Organization ties up the lawsuits in court until the parties give up the fight.
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