Trump

by Donald J. Trump

  Explaining to reporters why my site—the 34th Street railyards—was the best location for New York City’s convention center, June 1976. BILL MARK

  With architects Jordan Gruzen and Der Scutt, answering questions about the convention center at Hilton Hotel press conference, June 1976. BILL MARK

  Standing on beautiful clean newly made ice—the first in six years—after successfully turning around the city’s stalled reconstruction of the Wollman Rink in Central Park, October 1986.

  TED THAI/TIME MAGAZINE

  Ribbon-cutting at the reopening of the Wollman Rink, November 13, 1986. Left to right: Toller Cranston, Michael Seibert, Judy Blumberg, Debbi Thomas, Dorothy Hamill, Scott Hamilton, Borough President David Dinkins, Robert Douglas of the Chase Manhattan Bank, me, Commissioner Henry Stern, Mayor Koch, Aja Zanova-Steindler, Dick Button, Jayne Torvil, Christopher Dean, Robin Cousins, Peggy Fleming.

  Burning the mortgage after having raised more than $100,000 to save Mrs. Annabel Hill’s Georgia farm from foreclosure, December 23, 1986.

  With Bob Hope and Ivana, October 1986.

  In the vanguard of the Vietnam Veterans Memorial ticker-tape parade up Broadway, May 1985. I feel strongly about supporting veterans and was proud to help underwrite both the parade and the Vietnam Veterans Memorial constructed in downtown Manhattan.

  ©1985 CHASE ROE

  Signing running back Herschel Walker to play for the New Jersey Generals, September 23, 1983.

  At the Human Resources Center Twentieth Anniversary Celebrity Sports Night, May 29, 1986.

  With Mayor Ed Koch and my father, Ivana, and my mother, Mary Trump, at City Hall.

  HOLLAND WEMPLE

  Fifth Avenue ticker-tape parade that I put together to honor Dennis Conner and the crew of the yacht Stars and Stripes for recapturing the coveted America’s Cup and bringing it home from Australia. The parade brought over 500,000 New Yorkers out to cheer the victorious crew on a bitter cold day in February 1987.

  With friend and partner Lee Iacocca at a recent reception.

  Shooting a scene with Valerie Bertinelli for CBS’s highly successful miniseries I’ll Take Manhattan, July 1986.

  BOB GREENE/CBS PHOTO

  Being greeted by President and Mrs. Reagan, 1986.

  OFFICIAL WHITE HOUSE PHOTOGRAPH

  New York City’s Jacob Javits Convention Center constructed at the West 34th Street railyards. I offered to oversee the construction, but the city and state went ahead on their own. Not surprisingly, the project came in years late and hundreds of millions of dollars over budget.

  With the St. Moritz on one side of the avenue and Trump Parc on the other, the Trump Organization now controls twin towers flanking the Avenue of the Americas at Central Park South.

  Model of Trump Plaza, a 175-unit residential tower located near Bloomingdale’s at 61st Street and Third Avenue on New York’s Upper East Side.

  BAEHR

  Model of Trump Parc, generally considered the highest-priced, fastest-selling condominium in New York, containing luxurious apartments with vast terraces and all-marble baths. Adjacent to Trump Parc is 100 Central Park South, an elegant prewar building comprising 80 rental apartment units.

  ©WOLFGANG HOYT/ESTO

  Model of the Grand Hyatt Hotel. This 34-story, 1,406-room luxury convention hotel is a $100 million development located on 42nd Street between Lexington and Park avenues, adjacent to Grand Central Station.

  COPYRIGHT 1978, GRUZEN & PARTNERS ARCHITECTS, DER SCUTT, CONSULTING ARCHITECT

  Grand Central Terminal restoration we carried out in 1979 during the construction of the adjoining Grand Hyatt Hotel.

  Model of Trump Tower, flagship of the Trump Organization, located on Fifth Avenue and 56th Street adjacent to Tiffany. The 68-story building contains some of the most exclusive residential, retail, and office space in New York, and its 6-story pink marble atrium (inset above) with an 80-foot waterfall has made it a New York City landmark.

  ©KAY CHERNUSH/THE IMAGE BANK

  Model of Trump Plaza Hotel and Casino on the Boardwalk, Atlantic City’s tallest hotel and one of the most successful hotel-casinos anywhere.

  BAEHR

  October 23, 1986, the luckiest day of my life. During construction of a 2,700-car garage at the Trump Plaza Hotel and Casino in Atlantic City, the boom of a huge crane reached out too far to pick up a 22-ton beam; the crane toppled over, and a large section of the garage collapsed. Minutes before the accident, at least a hundred workers were on the site. The crew had just left for a coffee break, and no one was hurt.

  A model of the $320 million Trump’s Castle Hotel and Casino located at the Marina in Atlantic City, New Jersey. Under construction at this massive development is a major new tower containing a ballroom and super-luxury suites, and a spectacular 600-slip marina complex.

  My controlling interest in Resorts International includes the Taj Mahal in Atlantic City, scheduled for completion in September 1988, which will be the largest hotel-casino anywhere in the world, with a casino floor of approximately 120,000 square feet.

  Mar-a-Lago, our winter home in Palm Beach, Florida, was designed by Joseph Urban in the mid-twenties for Marjorie Merriweather Post, the Post cereal heiress. This magnificent 118-room home sits on property that stretches from the Atlantic Ocean on the east to Lake Worth on the west and comprises 20 acres of perfectly landscaped lawns, a 9-hole golf course, citrus groves, a greenhouse and cutting garden, guest houses, staff quarters, tennis courts, and a swimming pool. It is considered one of the most valuable parcels of land in the United States.

  Trump Plaza of the Palm Beaches, a 260-unit deluxe condominium on the Intercoastal Waterway in Florida, with spectacular views of Lake Worth and the Atlantic Ocean.

  Displaying one of the early conceptual designs of Television City.

  ©1987 THOMAS VICTOR

  West Side railyards, the largest undeveloped waterfront tract in Manhattan, encompassing approximately 100 acres and stretching from West 59th Street to West 72nd Street along the Hudson River—the projected site for Television City. On this site will be both the world’s tallest building and the most advanced television production complex, approximately 8,000 residential units, a major retail concourse, and more than 13 acres of beautifully landscaped recreational space, including a waterfront promenade. COPYRIGHT SKYVIEWS SURVEY INC.

  8

  GAMING

  The Building on the Boardwalk

  THE FIRST TIME the economics of the casino gaming business really came home to me was one day late in 1975. I was driving along in my car, to yet another meeting about the Commodore Hotel deal, when a news report came on the radio. Hotel employees in Las Vegas, Nevada, the announcer reported, had just voted to strike. Among other consequences, the stock price of Hilton Hotels, which owned two casinos in Las Vegas, had dropped tremendously. By this time I knew something about the hotel business, but I was still stunned. How was it possible that the stock of a company that owned at least a hundred hotels worldwide could be hurt so badly by a strike against just two of them?

  When I got back to my office, it took only a small amount of research to find out the answer. Hilton, it turned out, owned more than 150 hotels worldwide, but its two casino hotels in Las Vegas accounted for nearly 40 percent of the company’s net profits. By comparison, a hotel such as the New York Hilton—one of the biggest in Manhattan and one I’d always assumed was a huge success—accounted for less than 1 percent of overall Hilton profits. It was a sobering thought. For nearly two years, I’d been working day and night to try to build my own huge hotel on 42nd Street. I wasn’t getting my approvals, I wasn’t getting my financing, and it seemed highly likely that the whole deal was going to fall through. Now, for the first time, it occurred to me that even if I finally got the hotel built and it became a major success in the greatest city in the world, it still wouldn’t be nearly as profitable as a moderately successful casino hotel in a small desert town in the Southwest.

  By this point I had inve
sted a great deal of time in the Commodore deal, and I tend not to give up on something I’ve started. But what I did, shortly after I heard that radio report, was take a trip down to Atlantic City. A year earlier, a referendum to legalize gambling throughout the state of New Jersey had been badly defeated. Now a new initiative was on the 1976 ballot, to legalize gambling solely in Atlantic City.

  It certainly seemed worth checking out. I’ve never had any great moral problems with gambling because most of the objections seem hypocritical to me. The New York Stock Exchange happens to be the biggest casino in the world. The only thing that makes it different from the average casino is that the players dress in blue pinstripe suits and carry leather briefcases. If you allow people to gamble in the stock market, where more money is made and lost than in all the casinos of the world put together, I see nothing terribly different about permitting people to bet on blackjack or craps or roulette.

  To me, the key questions about legalizing gambling in Atlantic City were economic. Was the timing right, was the price of entry reasonable, and did the area make sense as a location? Atlantic City is 120 miles from New York City on the south shore of New Jersey, and once upon a time it was a great resort and convention center. But when the convention business shifted to bigger cities in warmer climates, Atlantic City fell on hard times. I wasn’t prepared for how badly things had deteriorated. It seemed almost like a ghost town, with burned-out buildings, boarded-up stores, and the feeling of despair you sense immediately in places where a lot of people are out of work.

  Ironically, the prospect of legalized gambling had already sent Atlantic City land values soaring, particularly along the Boardwalk by the ocean, Speculators—everyone from large public companies to fly-by-night con men—had moved in like vultures. Families living in tiny homes that they couldn’t have sold a year earlier for $5,000 Suddenly found themselves being offered $300,000, $500,000, and even $1 million.

  It was a little ridiculous, and I decided not to be one of the speculators. I didn’t like the idea of putting up a lot of pure risk money. Say, for example, I paid $500,000 to buy a piece of property before the referendum. If it failed, my $500,000 investment would drop in value to almost nothing the next day. If the referendum passed, that same piece of land might cost me $2 million, but I thought it was a better bet to pay more for a sure thing. The economics of a successful casino operation are so strong that paying a little more for a good site would eventually prove to be a small expense.

  Sure enough, the referendum passed in November 1976 and was signed into law by the middle of 1977. By then, however, the Grand Hyatt project was finally moving forward and the price of land in Atlantic City had become more astronomical than I had anticipated. Just as I’d done five years earlier in Manhattan when prices seemed too high, I decided to stay on the sidelines a little longer. I knew that if I was patient and kept my eyes open, a better opportunity would eventually arise.

  Nearly three years passed, but finally, in the winter of 1980, I got a call from an architect I had looking out for me in Atlantic City. He told me that a certain prime piece of Boardwalk property I’d always been interested in might be available. The timing couldn’t have been better. For one thing, the first wave of euphoria about the casino business had passed, and times were tougher. A few casinos—Resorts, Golden Nugget, Caesars—were doing terrific business, but the more recent ventures had run into all kinds of problems.

  Bally, the newest casino in town, had come in at least $200 million over budget. The Tropicana facility, owned by Ramada Inn, was experiencing severe construction delays and enormous overruns. Bob Guccione of Penthouse had announced plans to build a Boardwalk casino, only to find after acquiring a site that he couldn’t get financing. Hugh Hefner’s plans for a Playboy hotel-casino fell apart after he was turned down for a license by the Casino Control Commission. A half dozen lesser-known players had come riding into town with great plans, only to be derailed by trouble with financing and licensing, or intimidated by the huge cost of building a hotel-casino.

  Atlantic City’s reputation had also been hurt by corruption charges growing out of the FBI’s Abscam sting operation. In 1980, the vice-chairman of the Casino Control Commission, Kenneth MacDonald, resigned after admitting that he’d been in the room when a $100,000 bribe was passed to a local politician by potential investors looking for help in getting a casino license. To make matters still worse, the winter of 1980 had been particularly harsh—freezing cold and so windy that in January and February you could barely stand up on the Boardwalk.

  Suddenly, a city that had been very hot for several years turned very cold, literally and figuratively. No one was talking about building any more new casinos. It seemed possible that the gaming business in Atlantic City was going to prove to be seasonal at best—enough to sustain only a few casinos. In my view, however, that translated into an opportunity. The worst of times often create the best opportunities to make good deals.

  The two-and-a-half-acre piece of property that I got the call about was at the center of the Boardwalk, just off the main road leading into town from the Atlantic City Expressway. In addition, the site was directly alongside the convention center, the largest space available for conventions and major entertainment—and a potential funnel into any casino built next door. I was convinced that there was no better casino site in town. Perhaps not coincidentally, it had already proved to be one of the most difficult to assemble.

  By 1980, everyone and his uncle had tried, and the result was a legal mess—fragmented ownership, overlapping agreements, disputes over options, liens on individual parcels, and warring factions. The status of the site seemed almost impossible to comprehend, much less to untangle. Every lawyer and real estate broker I spoke with told me flat out that if I really wanted to build a casino in Atlantic City, I’d be far better off purchasing a site that was already assembled. I listened to the advice, but I wasn’t convinced.

  First of all, I always believe in going after the best location, if you can get it at a reasonable price. Secondly, I have an almost perverse attraction to complicated deals, partly because they tend to be more interesting, but also because it is more likely you can get a good price on a difficult deal.

  Had I tried to assemble the same site back in 1976, the story probably would have been very different. At that point, I had yet to build anything in New York, and no one really knew who I was. But by 1980, with the Hyatt under construction, and the Trump Tower project announced, I had a much higher profile and a lot more credibility. When you’re negotiating with people who’ve been promised the world a half dozen times and gotten nothing, credibility is critical.

  The site consisted of three large parcels, each one owned by a different investment group, as well as a half dozen small homes owned by individual immigrant families. The key to putting the deal together was making every parcel in the deal contingent on my getting all of the others. The only chance of building the great facility I envisioned was to put together the whole site. The last thing I wanted to do was invest a lot of money and then find myself squeezed at the end by one holdout owner who understood the value of controlling the final piece in a puzzle.

  That’s what happened to Bob Guccione, on the site next door. To this day, underneath the rusting frame of an unfinished building there remains a single-family home that Guccione never managed to purchase. Even if he’d gotten financing, he would have had a problem. Imagine spending $300 million or $400 million on a gleaming, glamorous new facility—but building it around a rotting five-room shack.

  Instead, I set out to leverage my credibility. I told the owners of the sites that I was prepared to make a fair deal, and that unlike all the others before me, I was going to follow through. I pointed out that I had a strong track record when it came to developing property. I also suggested that I might be the only person around who still had the inclination to put this deal together at all. If they couldn’t come to an agreement with me, I said, they might be sitting on their prop
erty for many years to come.

  The major part of the deal was for the three large parcels on the site. The groups that owned them were known as SSG, Magnum, and Network III, and I negotiated with the principals of each group myself. Rather than trying to purchase the pieces outright, I sought very long leases with options to purchase at a later date. My strategy was to keep my up-front investment down, and also to avoid seeking major financing at a time when banks were wary about Atlantic City. In the case of leases, I could carry the costs myself. My pitch was very simple: I was prepared to buy them out, quickly and cleanly. They, in turn, had to cooperate with me and with each other, so that all closings could be simultaneous. They also had to drop the lawsuits they were waging against each other over prior attempts to jointly sell or lease the land. I did not want to get involved, down the road, in a legal morass.

  The properties I bought outright were the individual homes. I hired local people to negotiate on my behalf, because many of those we were negotiating with were immigrants who spoke very limited English and weren’t used to dealing with outsiders. Other developers had paid up to $1 million for tiny plots in strategic locations. Because times had turned bad, I was able to purchase nearly all of the houses at much more modest prices.

  By July 1980, we had all the pieces in place. I remember closing day very well. We had arranged simultaneous closings, beginning on a Friday afternoon, in the offices of one of our attorneys in Atlantic City. The closings went on around the clock—it took twenty-eight hours before everything was signed and sealed. At that point, we had a roomful of people almost delirious from exhaustion—but I controlled the best site in Atlantic City.