Donald Trump’s sine qua non is dealmaking. He declares he doesn’t just make deals, he’s the authority on making deals because he literally wrote “the Art of the Deal.”
I recently picked up a copy of Trump: THE GAME by Milton Bradley. Because it’s not whether you win or lose but whether you win!
Politico shares the deal making that went into Trump’s purchases of an airline and The Plaza — both of which came within 12 months of “literally writing The Art of the Deal.”
[H]e purchased the Plaza Hotel because he openly coveted the Manhattan landmark, so much so that he paid more for it than anybody anywhere ever had spent on a hotel—$407.5 million—a hotel that wasn’t turning enough profit to service the debt to which Trump committed.
And in the fall, he agreed to buy the Eastern Airlines Shuttle, which he wanted to rename the Trump Shuttle, for a sum that analysts and even his own partners considered excessive—more than the airline itself thought the shuttle was worth.
“I went to him,” Frank Lorenzo, the former Texas Air chairman, who sold Trump the shuttle, diplomatically told me in an interview. “I think our number was 375, 385”—million—“and he negotiated it down”—to $365 million. “Your offering price is always higher than you think you’re going to get,” Lorenzo said. From Trump, he almost got it, anyway.
“The price was too high,” said Bruce Nobles, the former president of Trump Shuttle, who was involved in the negotiations—and Lorenzo, not Trump, set the tone. “He said, ‘This is what I want.’
“It was not a lengthy financial analysis,” added Nobles, describing it as “back-of-the-envelope” and “very quick.” “Lorenzo said, ‘I really want to sell it,’ and Donald said, ‘I really want to buy it.’”
Trump only put $20 million of his own money into the airline, and the airline didn’t make nearly enough to service its debt. With no buyers, Trump lost the airline and the banks that had financed the Trump Shuttle deal contracted with US Air to run the operation in 1992. US Air only part-owned the operation (they purchased the remainder in 1997), taking a 40% stake and a 10 year management contract.
Ultimately Trump lost much more than his original investment, forfeiting over $100 million he had personally guaranteed.
Trump also sought to take over American Airlines just a year into his foray as an airline operator. Trump likely never had financing for his offer, and may have been looking to simply make a trading profit on the American shares he did buy as a greenmailer (an amount below the SEC reporting threshold). He ultimately lost money on the offer, though, caught up in the 1989 Friday the 13th stock market mini-crash.
I at least expect to be able to resell my Trump board game for more than the $20 I paid for it.