The Trump Organization and its namesake are going to be financially squeezed after the current president of the United States leaves office next week. But I suspect most of the company's challenges won't involve the Trump "brand" that has drawn so much speculation.
After all, what does the Trump brand represent? And how valuable has it been, really — even before the president alienated half of the country and untold millions overseas, bungled the federal response to a deadly pandemic and got himself impeached for the second time by convincing a confederacy of dunces, thugs and white supremacists to lay siege to the Capitol?
There is a long list of Trump-branded junk that has failed to take flight. Do you remember Donald J. Trump Eyeglasses, Donald Trump Regency Collection lighting, Select by Trump coffee, Success by Trump cologne, Trump Home mattresses and furniture, Trump Ice bottled water, Trump Steaks, Trump: The Game, Trump Vodka, or the Donald J. Trump Signature Collection of underwear, ties, shirts and suits? Does the Trump PrivaTest at-home urine test ring a bell?
You may remember Trump University (an online education scam), the Trump Network (a multi-level marketing scheme) and the Trump Foundation (a philanthro-scam), but only because those three enterprises made headlines for malfeasance. And as anybody in business school or a prison will tell you, scams are not good brand-building tools. Trump also jabbered about being a luxury purveyor to the most discerning and affluent buyers, but much of the flotsam he peddled was decidedly middle-market or involved properties packaged for arrivistes.
The Trump-branded casinos in Atlantic City are all long gone, devoured by mismanagement and bankruptcies. There's a Trump-branded hotel in Las Vegas, but it is run by its co-owner. Some of the most prominent Trump-branded hotels and golf courses in the US and overseas were stumbling even before the pandemic hit, unable to perform well despite featuring that name out front in theme park-sized letters.
Trump directly controls most of his hotels and golf courses. Some of the other one-offs that belly-flopped or disappeared were owned by someone else who paid Trump a licensing fee for his name, or were made by someone else who slapped Trump's name on the product. But those fees and gimmicks never amounted to a sizeable portion of Trump's wealth. They were good for visibility and helped with promotion, but weren't gold mines. The hotels and golf courses are more financially meaningful, but still aren't the biggest sources of his wealth. And therein lies the tale.
Trump's holdings, initially sprung from the wealth and connections he inherited from his father, are worth about $3.2 billion, according to Bloomberg News. Just five properties — all of them commercial or residential buildings — account for about $1.9 billion, or 60%, of that amount. Four are in Manhattan. Trump Tower is among them, as are 40 Wall Street and 502 Park Avenue. Another one, 6 E. 57th Street, is a cavernous retail space that used to house NikeTown. But Nike Inc. moved out three years ago, and the lease is up for renewal in 2022. Know anybody who wants to rent a massive, brick-and-mortar retail space even after the pandemic ends, regardless of whose name is on it, much less Godzilla's?
Urban real estate, now sideswiped by Covid-19, is the core of Trump's wealth, and has generated some of his most lucrative streams of income. As is his wont, he has saddled his holdings with lots of debt. Forbes estimates Trump's total indebtedness to be about $1.1 billion, and about $900 million is coming due over the next four years, some of it this year. Trump has personally guaranteed about $421 million of this debt, according to the New York Times.
Trump is not broke, as some have speculated in recent months, but he could wind up in a very nasty cash squeeze. If his properties don't generate enough money to pay down the debt, he'll have to sell something — and may have to unload trophy properties in fire sales that leave him with less than he might have secured if he'd sold them just a year ago (or if he had properly divested his businesses before he was inaugurated in 2017). If the economy continues to struggle in coming months, the valuations of everything Trump owns will be tested.
Two of Trump's most valuable holdings, perhaps worth about $685 million, are minority stakes in San Francisco and New York buildings that Vornado Realty Trust controls — stakes Trump acquired through a series of fortunate accidents. If he needed to raise cash by selling them, he'd have to rely on Vornado's founder, Steven Roth, to cut a deal. Unlike Trump, Roth is a major New York property owner, and many of the most prominent members of the New York real estate community have long looked askance at the president. It's unclear whether Roth would want to play ball.
Trump's golf courses and resorts, worth about $430 million, benefitted from his presidency because he steered government business there, and his position made them magnets for influence peddlers. But they were still plagued by problems, including the coronavirus. Golf's popularity and growth had already begun to plateau when Trump entered the business, and marquee holdings such as his course in Doral, Florida, have withered. Those aren't branding problems, per se. They're strategic and financial failures.
Trump's effort to orchestrate a political coup, and the insurrection he fomented, complicate matters further. The broader business world is turning its back on him, and reliable allies such as the PGA of America and Deutsche Bank AG are belatedly abandoning him. While the PGA's about-face may hurt Trump's pride more than his wallet, Deutsche Bank is a very different separation. Real estate guys need banks to finance deals. Major banks long ago cut ties with Trump after he stiffed them for billions in loans. Only Deutsche Bank stuck with Trump through scandal, failures and litigation. The bank's farewell will cost him.
New York City is cutting its ties with Trump as well, pulling the plug on some relatively less glamorous operations that Trump runs for about $17 million a year. Trump and his brand are deeply unloved by many in New York — he is now a Florida resident — but he was born there and the kiss-off also probably hurts his pride, even if it doesn't hurt his bank account as much as his troubled real estate.
Two other people don't care about Trump's brand: the New York State attorney general and the Manhattan district attorney. Both are investigating Trump, his children and his business for possible financial, tax and accounting fraud. These existential threats will become more pressing when Trump loses the White House's legal and institutional protections.
One market in which the Trump brand remains a sure-fire money-maker is politics. Since Election Day, Trump has discovered he can monetize lies about election-rigging by soliciting contributions to an "election defense fund" from supporters. He raised at least $207 million before shutting that effort down, and he'll surely revisit the same money geyser again. Running the long con is very much on brand for Trump — and pays better than mattresses or steaks.
Disclaimer: This article first appeared on Bloomberg Opinion, and is published by special syndication arrangement