The Republicancandidate for US president is a publicity seeker of note who admits to using "truthful hyperbole". This run might be a really effective way of boosting his brand, says Simon Wilson.
Is Donald Trump really a billionaire?
Probably, although it's hard to be sure. The Republican candidate for the US presidency has defied convention and refused to release his tax returns. He may well have paid no income tax for the past 18 years after registering a near-billion dollar loss in the mid-1990s.
However, Trump did have to file a "personal financial disclosure" with America's Federal Election Commission in July 2015, when he decided to run for the nomination. The press release with this 92-page document states that "as of this date Mr Trump's net worth is in excess of TEN BILLION DOLLARS [his capitals]". He also revealed that his 2014 income was $362m, "which does not include dividends, capital gains, rents and royalties".
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So he's worth around ten billion?
Not according to numerous journalists who have examined the claim. According to Fortune, which has repeatedly challenged Trump's claims about his own wealth over many years, the $362m figure is in fact Trump's overall revenues (ie, before deducting any costs), not his income.
After making extremely generous assumptions about everything from rental yields to stockmarket dividends to the value of Trump's personal brand, Fortune estimates a pre-tax income for Trump's businesses (which are in real estate and leisure) of $166m. Assuming his businesses are worth 20-times earnings, that puts Trump's overall worth at around $3.3bn. Bloomberg estimates it at $2.9bn.
Still pretty wealthy then?
Absolutely. But the bizarre thing (or one of them) about Trump is his desperation to over-egg his own status. "He lives to see his name praised in the press", a former business associate told Fortune this year. "When it comes to choosing between getting more publicity and making good deals, I'd say it's a tie." On top of genuine success in New York real estate (and plenty of flops in other areas),
Trump has dedicated his life to building what The Washington Post once called "an architecture of self-aggrandisement". To be fair to Trump, he appears to recognise this. "I play to people's fantasies," he wrote in his 1987 book The Art of the Deal. "I call it truthful hyperbole. It's an innocent form of exaggeration and a very effective form of promotion".
Is he a good businessman?
He's a curious mixture of skilful and utterly reckless. Trump has made much in the election campaign of his status as a billionaire who will get things done. But his business record is decidedly mixed. His main claim to fame (other than his role playing himself on The Apprentice) is as a Manhattan real estate developer a profession he inherited from his father, Fred. His flagship projects include Trump Tower on Fifth Avenue, Trump Tower in Chicago, and his Trump Organization owns buildings, hotels and golf courses around the world.
Yet despite his talent for self-promotion, Trump has always been a "relatively minor player", according to The New York Times. He has never been ranked among the top-ten developers in the city, and of the dozen buildings in New York that bear his name, nearly all are branding relationships; he doesn't actually own them. Still, most analysts agree he's a canny property developer and an effective manager of others' developments who has benefited from a booming market over several decades.
What about other businesses?
Here's where it gets much messier. Trump's dealings in hotels and golf courses appear successful (his companies are privately held, so details are scarce). But forays into other areas including casinos, airlines, and professional football have ended badly. In the 1990s,
Trump's entanglements in casino development and ownership led to four separate bankruptcies, which to this day (according to The New York Times) mean that Wall Street banks are hesitant to lend him money. "I think he's very good at real estate, I don't think he's very good at other things," according to his biographer Michael d'Antonio. "He tried to run casinos and failed four times. That's not evidence of brilliance when it comes to operating a complex business."
What about Trump University?
The so-called Trump University in fact a series of property development seminars that separated students from their cash with savage cynicism is the most prominent of the Trump brands to have attracted negative attention during the campaign. But Trump has also put his name on everything from steaks and ties to bottled water and perfume. Opinions divide on whether all this makes him a canny operator or not.
On the one hand, why is a billionaire getting mixed up in a seminar scam that could only end up trashing his brand? On the other, since his low point in the 1990s, he does appear to have sworn off taking on large amounts of debt, and instead used his brand to collect licensing fees on multiple projects in addition to real estate. If his brand does not now take him all the way to the White House, some speculate that his real plan is to leverage his political brand into some form of new, right-wing media empire. Trump TV? It may be just weeks away.
A debate about success
Trump claims that he took a $1m loan from his father and turned it into a $10bn empire. In fact, that's an example of semi-truthful hyperbole. He joined the business in 1968, inherited control of it in 1971, and then inherited $40m in cash from his dad in 1974. In 1978, Business Week put his net worth at $100m. Had he invested that in an index fund tracking the S&P 500 the kind many Americans use to save for retirement he would today be worth $6bn.
That's quite an underperformance and at the same time, says Robert Reich, the economist who served under Ford, Carter and Clinton, Trump has benefited from about $850m in tax subsidies in New York alone. This is "not a businessman", says Reich. This is "a con man".
