Atlantic City is a resort town on New Jersey's Atlantic coast, known for its numerous casinos, expansive beaches and famous waterfront. Founded as a health resort in the 1800s, the city is filled with skyscraper hotels, nightclubs and, of course, casinos. It's the place of choice for the current and 45th president of the United States, Donald Trump, for his casinos. Despite being a real estate tycoon, Trump has had a lot of trouble and has gone bankrupt several times in his operations. In this blog, we will look at the reasons for these bankruptcies, although Trump himself said during his presidential campaign that his investment in Atlantic City brought him a large return and made him a lot of money there.
Brief review
In a short time, Trump has made a significant impact in Atlantic City, with his casinos bringing in almost a third of the city's gaming revenues. He also employed more than 8,000 people. Trump's launch of his casino empire began when he borrowed money at "such high-interest rates... companies had almost no chance of success," the New York Times reported. In the end, his casino companies filed for bankruptcy four times, and Trump's companies continued to rack up expensive debts.
Trump Plaza Casino and Hotel
This was Trump's first casino. It opened in the early 1980s after Trump won the right to a prime waterfront location. He didn't get any funding to build the casino, so he partnered with a national gaming operator called Harrah's Entertainment. Harrah's agreed to give Trump $220 million to build the project, $24 million to oversee construction and half the profits. The 39-storey Harrah's at Trump Plaza opened in 1984. In 1986, Harrah's sold its stake in Trump Plaza to Trump for $220 million. Today, that establishment is closed. And you can enjoy playing at the best online casino without a Swedish license - https://utansvensklicens.casino/.
Trump Schloss
After Trump Plaza, Trump bought the nearly completed Hilton casino for $320 million and named it Trump Castle. His company issued $352 million in bonds to complete construction and open the casino. He added another $32 million. This casino opened in 1985 and competed directly with Harrah's Marina. It was a long failed venture that was eventually sold in 2011 at a huge loss. Trump Castle was later renamed, Trump Marina. It is now known as the gold nugget.
Trump Taj Mahal
The $1 billion Trump Taj Mahal, which opened in 1990 and is Trump's third casino in Atlantic City, is now owned by a new owner. When it opened, Trump called it "the eighth wonder of the world" as it had a 42-story tower, making it New Jersey's tallest building, and the Taj Mahal was the world's largest casino at the time. On 10 October 2016, Trump's Taj Mahal closed for good. The casino was acquired by investor Carl Icahn, who later entered into an agreement with Trump to use the Trump brand.
Trump World's Fair will be his fourth casino in Atlantic City
"Almost immediately, Trump had trouble paying off the debt for Taj and his other casinos. It was also clear that the Taj would destroy the castle and the square," according to the New York Times.
Gambling revenues slowed in the early 1990s, caused in part by the national economic recession, which had a serious impact on Trump's casino operations and his real estate investments in Manhattan. At one point, his casinos had $1.3 billion of total debt of $3.4 billion. Regulators warned that "the possibility of a complete financial collapse of the Trump organization is not out of the question", the New York Times reported.
Trump's businesses seemed to be failing and his creditors insisted that he develop a business plan, appoint a Trump Organization CFO and sell personal items such as his plane, yacht and a piece in New York's Plaza Hotel, which also filed for bankruptcy.
Just a year after it opened in 1990, the Taj Mahal found itself in bankruptcy court. In 1992, the plaza and the castle came into existence. Under the bankruptcy bailout plan, Trump handed over 50% of the companies' shares to creditors in exchange for lower interest rates. The creditors agreed to defer some principal and interest payments for five years.
The story of Trump's defunded casinos
The New Jersey Casino Control Commission was concerned about Trump Taj Mahal's solvency in the face of rapidly rising spending and was considering revoking its operating license. Regulators closely monitored Trump casino's financial performance, although Trump assured them that he would review and limit spending. Within months, however, he had issued $675 million in junk bonds at a 14% interest rate. Taj Mahal's total debt exceeded $820 million. Analysts had assumed that the casino would have to earn $1.3 million a day to pay its interest - which was impossible. Accordingly, the project was "doomed to fail from the start". In November 1990 it stopped paying interest for the first time,
In 1998, Trump found himself in danger of defaulting on a loan to Donaldson, Lufkin & Jenrette. This was the bank that supplied its IPO in 1995. Trump personally owed them $13.5 million. He was in danger of defaulting because of THCR's falling share price. To recover from this situation, Trump borrowed money from the casino company to pay off his bankers. "The New York Times notes: "Indeed the company recorded losses of $66 million in 1996, $42 million in 1997, and $40 million in 1998. These losses will continue.
In November 2004, the company filed for bankruptcy for the third time. "This time the bondholders suffered losses of $500 million. Trump, who had resigned as chief executive but remained head of the board, agreed to invest $55 million of his own money in the company."
This was in early 2009, after the 2008 financial crisis when Trump's casinos went bankrupt for the fourth time. He offered to buy all or part of the casino company that bore his name. However, he was sacked shortly thereafter and resigned, the New York Times reported.
In September 2014, Trump filed for bankruptcy again. This time he shut down Trump Plaza. The company reportedly emerged from bankruptcy in February 2016 and became a subsidiary of Icahn Enterprises.
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Withdrawal
Despite Trump's business acumen, his investment in Atlantic City seems to have brought the real estate mogul more problems than rewards. Although he said he made a lot of money in this resort casino, his casino business almost collapsed because of his near-bankruptcy arrangements, and in fact, some of them are out of business today. He may have invested too much in some investments and built casinos for which there was too little demand. At first, he thought his name and Trump's brand would be a selling point for many casino-goers, but this is not necessarily the case. Due to the financial crisis in 2008, his casino business peaked and he could not pay the interest on the loans he had taken out for the casino.
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