Donald Trump earned more than $30 million from the TV show “The Apprentice” in 2005, a huge payday that rivals the sums paid to the biggest stars on screen. That payment helps explain why Trump made a large federal income-tax payment that year, as revealed in the recently leaked tax documents that shed new light on Trump’s income and wealth.
Yahoo Finance has obtained financial data for “The Apprentice,” the reality show that first aired on NBC in 2004, showing costs, profits and payouts from 2004 through 2007, which were peak years in ratings and profits for the show. During that time, Trump, now president, earned $65 million in “participations,” which are like royalty payments based on the amount of revenue the show took in for product placements and international distribution. Trump earned millions more in salary during that time, for total earnings during those 4 years that likely neared or exceeded $100 million, or $25 million per year, on average.
Trump’s peak income from royalty payments relating to the show occurred in 2005, the same year his overall earnings totaled $153 million, according to the first two pages of his 1040 form that recently arrived in the mailbox of journalist David Cay Johnston. Trump paid $38 million in federal income tax that year, an apparent rebuke to Trump critics who claim he’s a chronic tax evader. That would amount to 25% of his income that year, an effective tax rate that’s much higher than investors who make most of their money from capital gains or private-equity holdings often pay.
Inflated earnings from ‘The Apprentice’
But that huge 2005 tax payment may have been an anomaly, with his tax bill inflated by earnings from “The Apprentice.” That income might have been taxed at the maximum rate—35% at the time—whereas Trump’s income from real-estate investments would have qualified for many deductions and offsets available to all commercial real-estate developers. In prior years, Trump used those generous real-estate tax breaks to lower his tax bill to 0.
So despite Trump’s big income-tax payment in 2005, it’s quite possible he paid much less in other years, as his income from “The Apprentice” dropped off. And if Trump’s large tax payment that year was an aberration, it would support speculation that Trump himself leaked the two-page summary of his 2005 tax return, to make it look like he paid more taxes in the past than he actually did.
In 2015, shortly after announcing his run for president, Trump’s campaign released a one-page summary of the candidate’s wealth claiming he earned $213 million on “The Apprentice” and its successor, “Celebrity Apprentice,” from 2004 through 2015. That would amount to about $18 million per year. Some critics say that figure is impossibly high. But the figures reviewed by Yahoo Finance show Trump did earn well over $18 million per year from the show at least twice.
Yahoo Finance obtained financial data resembling an income statement from 2003 through 2007 for “The Apprentice,” from a Los Angeles financier familiar with the show’s business operations. The show was produced by Mark Burnett Productions, with Trump as executive producer. The most profitable year for “The Apprentice” was 2005, when it generated $109 million in gross revenue, with production costs and other expenses of just $26.5 million–leaving a gross profit of $82.8 million. “It was a phenomenal year in terms of how much money he made as a TV performer on ‘The Apprentice,’” says the financier. “It was an amazing amount of money those guys got.”
Rich royalty payments
Product placement and sponsorships were a huge source of revenue for the show, with companies such as Home Depot, General Motors, Burger King and Domino’s paying a total of $45.8 million to the production company in 2005 for their merchandise to be featured or promoted in conjunction with the show. There was also merchandise, such as a $14 coffee mug emblazoned with Trump’s signature line from the show: “You’re fired!” That revenue amounted to 42% of the show’s earnings. Licensing fees paid by NBC accounted for just $26.2 million, or 24% of total revenue, by comparison. International distribution, which is usually minimal for reality shows, brought in another $19.9 million for “The Apprentice” in 2005, showing Trump’s global appeal. (MGM, which bought out Burnett’s company in 2015 and now owns the rights to the “Apprentice” franchise, declined to comment on the financial figures.)
Trump got a major cut of the show’s revenue, as did Mark Burnett, creator of “The Apprentice.” In the show’s debut year, 2004, Trump’s income from such royalties was $12 million. It’s possible Trump negotiated a bigger cut for himself after the first season, pushing the royalty payments to $27.8 million in 2005. The payments dropped to $18.3 million in 2006 and $7 million in 2007, which correspond to a decline in ratings, as these figures published by The Wrap show:
In addition to royalties, Trump earned a base salary from the show, which he told the Los Angeles Times was $50,000 per episode during the first season, in 2004. He reportedly got a big raise for the second season, and with the show’s success, he could easily have been earning as much as $500,000 per episode by 2006, based on the going rate at the time for TV stars. Burnett’s company produced six seasons of “The Apprentice” between 2004 and 2007, or 90 episodes. So a reasonable estimate of Trump’s total salary during those four years is probably $35 million, at a minimum—in addition to $65 million in royalties.
Trump’s royalty earnings from “The Apprentice” dropped as the ratings did. By 2007, for instance, viewership was less than half what it was in 2005. NBC had paid Burnett’s company a ratings bonus every year from 2004 through 2006, ranging from $4.1 million to $6.3 million. But there was no ratings bonus in 2007. Product placement revenue plunged as well, from $45.8 million in 2005 to just $3.3 million in 2007, a 93% drop. Trump’s royalty payment dropped by less—about 75%—suggesting he had negotiated a larger share of revenue for himself.
As Trump’s TV earnings declined, he would have had less heavily taxed income subject to the maximum rate, and more income eligible for the many tax breaks available to developers. Trump did have some business setbacks around that time that could have generated losses he used to pare his tax payments, including casino bankruptcies in 2004 and 2009. The financial crisis of 2008 hit most commercial real-estate developers hard, with Trump most likely included. That could have generated more write-offs used to lower his tax payments, which in some cases Trump could have carried forward for years.
At the same time, Trump was using the fame that accrued from “The Apprentice” to develop more branding and licensing deals that allowed him to make money from simply putting his name on buildings and other products, without the cost and risk associated with construction projects or product rollouts. This was a key part of Trump’s evolution from developer to world-famous pitchman to renegade politician, and it all started with “The Apprentice.” Trump couldn’t have known at the time, but the millions he earned from the show generated a tax payment that now looks like an asset.
Confidential tip line: firstname.lastname@example.org
Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman