Donald Trump: Trump Nation

He is probably best known these days for his boardroom firings, but Donald Trump is the property investment king of New York, and despite his past bankruptcies, he remains a doyen of expert advice.

The Apprentice, now into its sixth season, has done much for Donald Trump’s celebrity status. The Apprentice debuted to a record audience of 20.7 million people in the US alone and has been syndicated all over the world. Yet it is his business savvy that is most interesting. His celebrity pales into comparison when matched against his business interests,  investments, branding and developments.

Trump is a brand. A license to use his name can cost upwards of a million dollars, but those who have used it say the costs are worthwhile. Even from his earliest days in real estate, Trump branded himself to convey prestige. Today, prestige equates to $240 million in 42 licensed real estate projects. Trump also lends his name to water and vodka, to clothes and real estate seminars. He makes $40 million from a line of suits (van Heusen), ties, fragrances (Estee lauder) and ringtones: This is Donald Trump. Time is money. Answer your phone.

Voted by Business Week as 2006’s most competitive businessman, ‘The Donald’s’ business aspirations have yet to wane, and as his popularity grows so too does his investment interests.

From the top
The Trump story begins in his father Fred’s real estate offi ce. The Trump family foray into real estate was borne of necessity as Trump senior was forced to start a business and support his family when Donald’s grandfather died. With the growth of the company, Donald learnt how to recognise a good deal when he saw one.

The real estate business was a success. However, encouraged by his parents to make his own stand, Donald fi nished schooling at a military academy, then headed to the University of Pennsylvania’s Wharton School of Finance.

Upon completion of his education, Trump was sent by his father to Cincinnati to fi nish renovations on an apartment building. Cincinnati was a city without rent control, unlike New York where government rental controls were putting a dent in the profits of his father’s buildings. The Cincinnati building was finished just prior to 1986 when a tax law reduced the value of investment real estate nationwide.

Trump was virtually broke when he left university, his bank account had only limited funds but he made a $6 million
(AU$8.02 million) profit on the sale of the Cincinnati apartments. He then moved back to New York to enjoy the fruits of his labour.

Bored with what he was doing, Trump decided to break away from the family business and begin his own venture. He sought out a trustee who owned a number of properties but who was having diffi culties selling them. After much persistence, the trustee, impressed by Trump’s doggedness gave him an exclusive contract to buy or lease the building next to Grand
Central Station in New York City.

Donald Trump then took the proforma he had presented to all the major hotel chains and made waves with the Pritzker family who owned the Hyatt chain and had a large expansion program under way. The Pritzkers liked the idea of building on Grand Central and the deal was consummated.

By the late 1980s, Donald Trump had literally built his fortune. He had Trump tower, Trump Parc, more than 24,000 rental and co-op apartments, the Trump Shuttle and casinos in Atlantic City, including Trump’s Castle and Trump’s Taj Mahal, as well as several private homes. In 1987 he had penned a best selling book, The Art of the Deal. He’d also purchased a 284-foot yacht and an airline. It seemed Donald could do no wrong. He was head of a billiondollar empire and his name rolled
off American tongues as easily as the word McDonald’s. It wasn’t all apple pie though, he had over-borrowed and the banks came knocking.

From the bottom
It wasn’t so much a matter of having to start again, rather it was a matter of negotiating with the banks and convincing them that sending him bankrupt would hurt too many people in the process.

This was no mean feat considering Trump found himself with a US$900 million (AU$1.26 billion) debt and defaulting on his loans during America’s recession.

Donald Trump sold some of his properties to pay the banks and began doing small deals to re-leverage his casinos. In 1995 he took two of the casinos public and called the public company Trump Hotels and Casino Resorts, which he monikered DJT. He then used the public company to purchase Trump Taj Mahal and Trump’s Castle. As a result of his
refinancing activities and with the cash he managed to make, he appeased the banks, but shareholders were livid. It did, however, allow him to start again and by 1998 the 52-storey Trump International Hotel and Tower opened its doors.

Since then, Trump’s investments, branding and licensing arrangements have only become stronger. “I try to learn from the past, but I plan for the future by focusing exclusively on the present. That’s where the fun is,” he said refl ecting on bankruptcy.

His right hand man and close friend George Ross puts Trump’s success down to his enthusiasm. “His enthusiasm and tenacity got him out of trouble, but it also got him into trouble. In 1990 he was US$990 million in the red, because at that point he thought he could never make a mistake and whatever he bought was fi ne, and the banks were so enamoured by him that they gave him more money than he needed for whatever transaction he needed. Then the market changed completely and he was out on a limb. That has changed again; he’s a billionaire today. But he learned the lesson that you have to be somewhat cautious over what you do and everything doesn’t always turn out alright.”

Today, Trump is king of many domains. His property portfolio extends from New York to Seoul. He has business interests in casinos, restaurants, travel and entertainment. Trump University is fast becoming one of the leading business and wealth creation institutes. One of his most recent enterprises has been mortgage broking. “From my standpoint, it’s tangible; it’s solid; it’s beautiful; it’s artistic. I just love real estate.” According to his website, Trump Mortgage will broker residential and commercial mortgages and homeequity loans.

2006 was a busy year. Not only did he launch his mortgage arm, he also wrote a book with another property mogul
Robert Kiyosaki, Why We Want you to be Rich, a surefi re bestseller. The sixth The Apprentice is now running and
there’s also a line of furniture. “Now the public can not only wear my clothes, they can sit on my couch,” Trump said.

Lexington Home Brands will add Trump Home to its stable. “Mr. Trump wants to make his lifestyle of elegance and luxury available to the consumer in their own home,” said Cathy Hoffman Glosser, vice president of Global Licensing for The Trump Organization.

Trump’s formula for success

If Donald were to give his own success formula it might be ‘effi ciency + discipline=power.’ Power is ability to act effectively to get things done. Trump starts each day by waking up at 6am to read several newspapers. He doesn’t leave the office until at least 6.30pm. Although he works long hours, he maintains the attitude that it’s not how many hours you put in, it’s what you get done that’s important.

As stated in The Art of the Deal, “You consistently do the things that you know will get results. You push forward, then you push forward some more, and you never let your adversaries see you worried.”

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