They say that in the casino business the house always win. Not so for the house Donald Trump built.
According to documents made public on Tuesday, the Trump Taj Mahal in Atlantic City sold for 4 cents on the dollar, changing hands from billionaire investor Carl Icahn to Florida's Seminole Indians.
They paid $50 million for it. The hotel, which Trump called "the 8th wonder of the world" back in the 1990s, cost $1.2 billion to build.
Icahn blew $100 million trying to revive the property before throwing in the towel back in August. Trump bankrupted the property twice as part of his public casino holding company Trump Entertainment Resorts.
Fool me once
The property first went bankrupt in 2009, just a few days after both Donald and Ivanka resigned from the board, citing "internal turmoil" due to the casino's poor financial performance.
Of course, the Trumps were still debt holders in the company and had a say in the bankruptcy proceedings. To make a long story short, two plans were presented to the court. One, championed by Icahn, would clear the company's balance sheet of $334 million in debt. Then the company would spend $15 million rebranding the casinos.
The other, championed by the Trumps and other debt holders, would reorganize the company with that debt still on the books. Creditors like the Trumps would make out better, though, and there was another added bonus — the casinos would get to use the Trump brand.
The court, citing the value of having the Trump name on the property, went with the latter plan, and the casinos got to use the Ivanka and Donald Trump brand and likeness free of royalties. Sort of.
"No payments were made to the Trump Parties during 2010 under the Trademark License Agreement nor were any payments made to Mr. Trump under the previous trademark license agreement during 2009 or 2010," the company said in government documents in 2011.
Fool me twice
The reality of the Trumps' arrangement with the casino was a little bit more complicated than that. The casino ended up spending a ton of money on Trump products, including about a quarter of a million dollars for Trump-branded water in both 2009 and 2010, filings show. Those payments, however, went to third-party vendors — to whoever it is that gets a cut of that particular piece of the Trump brand — and through them into the Trump universe.
From the filing:
"In the normal course of business, we engage in various transactions with other entities owned by the Trump Parties. We engaged in the following transactions: $47,000 and $79,000 for leasing certain office space in Trump Tower in Manhattan during 2010 and 2009, respectively; $3,000 and $77,000 for the periodic use of Mr. Trump's airplane and golf courses to entertain high-end customers during 2010 and 2009, respectively; and $33,000 in helicopter lease payments during 2010.
"Additionally, in the ordinary course of business during 2010 and 2009, we purchased from third party vendors $405,000 and $500,000, respectively, of Trump labeled merchandise, including $271,000 and $277,000, respectively, for Trump Ice bottled water served to our customers. While we do not directly pay royalties on such merchandise to Mr. Trump, he may be entitled to royalties from these third party vendors."
Related: Atlantic City Residents Weigh in on Trump Prior to Election
Trump Entertainment Resorts was not long for this world after that. Again sidled with debt and unable to make ends meet, the casinos went back into bankruptcy a few years later. In 2015, the Trumps sued to have their name taken off the casinos. They argued that the fact that the casinos had fallen into "disrepair" was a violation of the licensing agreement.
"The Trump name ... has become synonymous with the highest levels of quality, luxury, prestige, and success," the Trumps argued in their complaint.
This time, a judge disagreed with them. The Trumps lost that case, and the name stayed. The Trump Taj Mahal eventually ended up in Icahn's hands after the 2015 bankruptcy process, and the Trumps lost their 10% stake.
That's how you bankrupt a casino twice.
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