Donald Trump’s next moves

The outgoing US president is deep in debt and he will need new sources of income now that he is out of a job. Don’t expect him to go quietly, says Simon Wilson

How does Trump make his money?

An intensive trawl through thousands of tax filings leaked two months ago to The New York Times found that Donald Trump is more a TV star and investor than a businessman. Between 2000 and 2018, he made $197m from “playing a tycoon” on The Apprentice (he cut a great profit-sharing deal with the producers), and a further $230m in endorsement and licensing deals (on products and hotels, for example) that traded on that Apprentice-boosted brand name. He is also a highly successful investor, making a further $179m on stakes in non-Trump companies. Where he has proved less successful is in running businesses: the newspaper puts his overall losses in the same period at $175m. Trump’s big issue now is that his TV work and associated licensing deals have all but dried up. Moreover, it appears from his tax filings that much of that income was invested into loss-making golf courses, making him asset-rich but without obvious liquidity. So unless he wants to start dismantling and selling off his property empire, he urgently needs new sources of income to service and/or refinance his vast debt pile. 

How much does he owe?

According to a lengthy analysis by the FT, Trump’s known debts add up to $1.1bn, of which $900m is due to be repaid in the next four years. The biggest chunk of that is $447m, owed as part of his partnership with Vornado Realty Trust on two towers in New York and San Francisco. This debt comes due over the next two years. Next, he owes up to $340m to Deutsche Bank, financiers of his hotels in Chicago and Washington and his Miami golf resort (the latter two being especially big loss-makers). Third, he owes $257m raised on the bond markets in the form of commercial mortgage-backed securities against several of the most famous Trump properties (the biggest being a $100m loan on Trump Tower). Finally, Trump has at least $25m in mortgage debt with four small banks and one asset manager on homes and golf courses. And he has a “mysterious” $50m debt on his Chicago tower block – mysterious because the money is owed to a trust owned by Trump himself.

So he’s crazily leveraged?

Not necessarily. Forbes magazine, a longtime chronicler of America’s superwealthy, estimated that Trump’s net worth – that is, net of debts – fell by $1bn in March as Covid-19 crashed the prospects for commercial property and hospitality. But it still puts his net worth at above $2bn, and says that he has quietly paid off $67m in debt while in office. What looks likely next is a retrenchment of the property businesses, with a focus on foreign expansion that was banned on ethics grounds while Trump remained president, plus new media deals that exploit the new politicised version of the Trump brand, says The New York Times. Sources say Trump’s business will focus on the major expansion in China it was planning pre-presidency. Other deals at the exploratory stage include partnerships in Colombia, Brazil and Turkey.

What about his legal woes?

They could certainly complicate things. Potential federal charges against Trump include obstruction of justice relating to the Mueller inquiry into Russian interference in the 2016 US election; using the power of the presidency to enrich himself (for example by encouraging the spending of federal funds at Trump properties); and violating campaign laws by paying hush money to a porn star and a Playboy model. Meanwhile, two New York prosecutors are preparing charges over alleged financial and tax-related misdeeds. He also faces defamation suits from two women who accuse him of sexual misdeeds.  According to Michael Cohen, Trump’s former lawyer, who went to prison over campaign finance violations, “the man is corruption incarnate and once he leaves office, more will come to light”. If it does, it will intensify the potential conundrum ahead. No democrat (or Democrat) wants to see the US presidency become a get-out-of-jail-free card. On the other hand, the US has no history of pursuing ex-presidents in the courts, and the noises coming from the Biden team suggest no appetite for encouraging such a pursuit. It’s not impossible that any such legal wranglings might help Trump’s finances.

How so?

Because anything that plays into the Trump narrative of betrayal and martyrdom will help keep him in the spotlight and potentially boost his brand. It’s easy to forget, four years on, that Trump was not expected to win the White House. His foray into politics was seen by many commentators as a clever brand-building exercise that Trump could leverage into a right-wing media empire. Post-presidency, Trump has the opportunity to continue what his 2016 victory interrupted. And his target audience is bigger than ever, starting with the 74 million Americans who just voted for him – 12 million more than any previous Republican candidate.

How can he exploit that base?

There are rumours of a Trump TV network and investors see an opportunity to capitalise on the growing number of Americans who see Fox News as too moderate. As a businessman who has been most successful in brand licensing deals, it seems unlikely that Trump will invest the hundreds of millions needed to start his own Fox-style cable network, says Anna Nicolaou in the FT. He might instead partner with or acquire an existing channel, such as Newsmax or OANN (smaller Fox rivals). Or he might create a digital streaming service; this is the route Trump favours, say some reports. Or he could simply become a superhost on Fox (earning tens of millions) or talk radio (potentially earning even more). That way, he has no costs, and gets to tease his supporters with talk of a 2024 rematch. Whatever route he picks, Trump isn’t going quietly. 

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