Having graduated from the prestigious Wharton Business School (The University of Pennsylvania) in 1968, Trump later went on to work at his father’s real estate company, Trump Management. Shortly after becoming president of the company in 1971, Trump then went on to use The Trump Organization as an umbrella brand which held some of his most notable businesses.
From beauty pageants, to TV production and even vodka, it’s safe to say that Trump has tried his hand at many ventures. He has even built a brand so powerful that he has been able to market his name to many building projects and commercial products. Whilst not all of his ventures have been a success, some have come under major scrutiny and scandal, especially when it comes to how Trump has conducted business. Hiding behind the guise of a well-oiled money-making machine, Trump’s empire has been subject to multiple bankruptcies.
Most notably, Trump’s casino businesses had kept racking up major losses for him and his investors. Many local contractors and suppliers were put out of business in the early 1990s as a result. Ultimately, what were deemed to be great investments, turned out to be financial disasters.
So, how did it all happen?
Buying out Casinos
Trump’s turbulent reign within the casino industry started in the 1980s when he purchased properties on the Atlantic City boardwalk. Although he initially planned to open his own casino, Trump had settled in a venture with the Harrah’s-owned Holiday Inn Casino Hotel, and just a few years later he became a majority stakeholder, eventually changing the name to Trump Plaza Hotel and Casino.
Other properties that were purchased by Trump in the 1980s included The Atlantic City Hilton Hotel and Casino, and Taj Mahal, which he renamed to the Trump Marina and Trump Taj Mahal respectively. Both venues came in at a combined cost of $555 million.
Years later in 1995, Trump Hotels and Casino Resorts was established as a public trading company and the company itself purchased both the Trump Castle and Trump Taj Mahal from Trump for a total value of $1.38 billion. Shortly after that, he officially opened Trump World’s Fair but the project was cut short only after two years as Trump wanted to replace it with a much larger project.
Another deal emerged in 2001 with the Twenty-Nine Palms Band of Mission Indians and Trump. Shortly after taking over the Spotlight 29 Casino, he renamed it to Trump 29 Casino in 2002.
Bankruptcy after bankruptcy
Following several financial rollercoasters, uncertainty and a questionable track-record, Trump Hotels and Casino Resorts had to file for not one...but four Chapter 11 bankruptcies. This happened in 1991, 2004, 2009 and 2014.
Trump Taj Mahal
This opened in April 1990 and quickly closed in the summer of 1991. It was unable to generate enough revenue to cover the mounting costs of building the facility, especially in the midst of a recession. Trump was forced to give up his half of the ownership and sell his yacht and airline.
Trump Castle Hotel & Casino
The Trump Castle Hotel & Casino entered bankruptcy in 2004 after not being able to recover its operational costs. The Trump Organization ceased half of its holdings to bondholders. It had already reported a $48 million loss earlier in the year which was double its losses for the same quarter in the previous year. The company managed to reduce its debt to bondholders from $1.8 billion to $600 million.
Trump Entertainment Resorts
The casino holding company, Trump Entertainment resorts, entered Chapter 11 bankruptcy in 2009 during The Great Recession. A staggering $1.2 billion was owed without a view in sight on how this debt was going to be repaid. This was particularly harmful for the Atlantic City casinos because there was now competition from Pennsylvania state where slot machines had now been available online. With the rise of the internet and technology, Trump’s casinos had also lost any competitive edge by failing to compete with the online casinos.
Trump Plaza Hotel & Casino
Trump Plaza closed in September 2014 and this resulted in over 1,000 people losing their job. Trump reportedly sued a unit of Trump Plaza Associates and claimed that the casinos themselves were no longer good enough to “bear his name”.
The real issue
Just with any other type of business, setting up a casino can be a huge gamble (excuse the pun). As the old-age proverb says, “The greater the risk, the greater the reward” but this was not the case due to quite a few factors. The casino business was never a huge “risk” to Trump as it’s been reported that he put little to no money upfront. He was able to pocket millions of dollars in salary as well as bonuses, but when the casinos failed it was the investors and contractors who suffered.
Trump also over-promised but massively undersold. Atlantic City was once dubbed to be the new gambling capital that would overshadow Las Vegas but after setting up shop, many wanted Trump gone.
A few who had working relationships with Trump have even questioned his knowledge on the casino industry, claiming that when it comes to real estate and casinos, he was not the best dealmaker.
