Donald Trump has repeatedly touted his business successes during his presidential primary campaign. But from bankrupt casinos to the short-lived “Trump Steaks”, he has also overseen a host of business failures.
Trump entered the world of business in 1968 when he began working for his millionaire father’s real estate firm, which he later went on to inherit. Since then, he has undoubtedly achieved a great deal of success in the business world, though his actual net worth may be much less than the $10 billion he claims, according to Forbes.
But the man who has said “perhaps it’s time America was run like a business” also has had his fair share of less successful ventures.
Here are some of his biggest business blunders:
In 1988, already well-established in the real estate business, Trump decided to branch out into the world of air travel, buying US regional airline Eastern Air Shuttle for $365 million and rebranding it as Trump Airlines. In business for 27 years, Eastern Air Shuttle offered low-cost flights between Boston, New York City and Washington, D.C. Trump quickly went about giving his newly acquired airline his unique personal touch, repainting the aircraft with a new “Trump“ livery and fitting them out with new interiors featuring maple wood veneer, chrome seat belt latches, and gold-coloured lavatory fixtures.
Customers who had used the airline because of its no-frills convenience were put off by the higher prices of the new luxury proposition. This combined with a mechanics’ strike and rising oil prices after the 1990 Iraqi invasion of Kuwait meant that Trump Airlines never turned a profit. Trump defaulted on the bank loans used to buy the airline, its ownership passed to the creditors and, in 1992, it ceased to exist.
Trump had high hopes for his personal brand of “super premium” vodka when it launched in 2006. By the summer, Trump said, he expected “the most called for cocktail in America to be the T&T, or the Trump and Tonic”. Trump Vodka came with the logo “Success Distilled", but the product proved to be anything but that. The trademark was abandoned just two years later, according to the Wall Street Journal, and the product reportedly went out of circulation altogether in 2011.
However, at least a few people were still interested in the billionaire’s beverage brand. In 2011, an Israeli company was found to be selling the drink in the country without Trump’s authorisation. Trump then reportedly took legal action to stop the firm selling any more bottles of Trump-branded spirit.
Billed by the man himself as “the world’s greatest steaks”, this was another attempt at diversification that Trump would probably rather forget. “Trump Steaks” were launched with much fanfare back in 2007, offering meat lovers “a taste of Donald Trump’s luxurious lifestyle” from just $199 for a pack of 12 steak burgers and four steaks, and up to $999 for a selection of 16 prime cuts.
Sold exclusively through an unlikely partner in the form of American consumer electronics retailer The Sharper Image, the steaks apparently failed to whet consumers’ appetites and are now no longer available.
It is not the only time steaks have gotten Trump into trouble. In 2013, the “DJT” steakhouse at the Trump International Hotel in Las Vegas was briefly forced to close down after health officials logged 51 violations during a routine inspection.
Failed attempts at branching out into unfamiliar territory are one thing, but since Trump made his name in real estate the failure of Trump Mortgage LLC, launched in 2006, casts a bigger shadow over his business record, one that has received significant media scrutiny of late.
With the spectacular collapse of the housing market just a couple of years away and some economists already beginning to forecast troubled times ahead, Trump launched his new home loan company with typical bravado.
“I think it’s a great time to start a mortgage company,” he told CNBC in April 2006. “The real estate market is going to be very strong for a long time to come.”
He could not have been more wrong. The company failed to do anywhere near as much business as it had initially forecast and, as the housing bubble exploded, Trump Mortgage ceased operations just 18 months after its launch.
Trump has frequently pointed out on Twitter, in interviews and in debates with fellow Republican candidates that he has never personally filed for bankruptcy. While this may be true, companies bearing his name have in fact done so – a total of at least four times.
The first instance came in 1991 when his famous Taj Mahal casino in Atlantic City, built for $1 billion and opened just a year before, filed for Chapter 11 bankruptcy protection having accrued some $3 billion of debt, largely because of the high-interest junk bonds Trump had used to finance its construction.
Trump was forced to give up half his stake in the casino in order to restructure the debts.
But it was not the last time his gambling holdings ran into trouble. The Taj Mahal later became part of Trump Hotels & Casino Resorts, an umbrella company for Trump’s hospitality and gambling properties, which has since filed for bankruptcy three times: first in 2004, then again in both 2009 and 2014 under its new name of Trump Entertainment Resorts Inc.
Trump has defended his bankruptcy record as merely part of doing business.
“I have used the laws of this country just like the greatest people that you read about every day in business have used the laws of this country, the chapter laws, to do a great job for my company, my employees, myself and my family,” he told Fox News last year.
Trump University, an enterprise that sought to teach people how to become successful business tycoons just like Donald Trump, was ironically, another failed venture. Founded in 2005, it offered unaccredited online courses in subjects such as asset management, entrepreneurship and wealth creation for fees of up to $35,000.
The “university” was beset by a host of legal problems. In 2010, it was forced to change its name to The Trump Entrepreneur Initiative after authorities decided it was “misleading" for the institution to call itself a university, while that same year four former students sued the organisation, accusing it of "offering classes that amounted to extended infomercials”.
The business closed in 2011, but that did not put an end to its legal woes. In 2013, New York Attorney General Eric Schneiderman filed a $40 million lawsuit against Trump University for allegedly defrauding its more than 5,000 customers.
Trump University’s sketchy record was used by former presidential candidate Mitt Romney on Thursday to issue a stinging criticism of Trump’s presidential credentials.
“Donald Trump is a phony, a fraud," Romney said. "His promises are as worthless as a degree from Trump University.”
Date created : 2016-03-03