How Donald Trump Made Millions Running Failed Casinos in Atlantic City
Matthew Yglesias, Vox: How Donald Trump made millions running failed casinos in Atlantic City
Trump made money in Atlantic City through two primary means. One was extracting management fees from companies he was involved with, and the other was transferring personal debts to companies he controlled:
The pattern started with his very first Atlantic City venture, a partnership with Harrah’s for which he was paid a $24 million construction management fee.
Over the years, the Times reports, Trump “collected millions of dollars in salary, bonuses and other payments.”
In 1993, Trump Plaza casino sold over $100 million in junk bonds and “more than half of the new money went to pay off Mr. Trump’s unrelated personal loans.”
In 1995, the company staged an IPO and then a week later “the new company began using some of the almost $300 million it had raised to clear Mr. Trump’s personal debts.”
Trump’s casinos paid $300,000 a year for the right to use Trump’s jet to transport celebrities to gigs.
Trump appears to have bilked the shareholders of Trump Casinos and Resorts out of the opportunity to share in a $1 million profit related to the sale of shares in Riviera Hotel and Casino, keeping the money for himself instead.
What Trump did not do was run successful casinos:
“Revenues at other Atlantic City casinos rose 18 percent from 1997 through 2002; Mr. Trump’s fell by 1 percent.”
“Had Mr. Trump’s revenues grown at the rate of other Atlantic City casinos, his company could have made its interest payments and possibly registered a profit.”
The public company never turned a profit, leaving behind a trail of losses for shareholders, bondholders, and unpaid bills to contractors and subcontractors.
Its basically the same con as “Trump University.” Trump used his name to extract money from people who believed the hype. Now he’s trying to run the same con on the nation.