Between meeting the Queen of England and Vladimir Putin, President Trump will spend this weekend at Turnberry, the golf course he bought in 2014 and rechristened Trump Turnberry. This property has not received the attention it deserves. It is, by far, the biggest investment the Trump Organization has made in years. It is so much bigger than his other recent projects that it would not be unreasonable to describe the Trump Organization as, at its core, a manager of a money-losing Scottish golf course that is kept afloat with funds from licensing fees and decades-old real-estate projects.
No doubt, the President will be excited to visit. After buying the property for more than sixty million dollars, he then spent a reported hundred and fifty million pounds—about two hundred million dollars total—remaking the site, adding a new course, rehabbing an old one, and fixing up the lodgings. It is possible, though, that he will have some harsh words for his staff. The Turnberry has been losing an astonishing amount of money, including twenty-three million dollars in 2016. The Trump Organization argued that these losses were the result of being closed for several months for repair. However, revenue for the months it was open were so low—about $1.5 million per month—that it is hard to understand how the property will ever become profitable, let alone so successful that it will pay back nearly three hundred million dollars in investment and losses.
This is the first edition of a weekly column in which I hope to expose, explore, and analyze the financial activity of our President and his associates—including his family, his political appointees, and business partners—and make the case for greater transparency. We know, of course, that the Trump Organization has worked with some truly questionable business associates, that it has run afoul of anti-money-laundering laws, and that its most high-profile business expansion—a line of three- and four-star hotels—has all but collapsed. But, for all the coverage of Trump’s finances, there is so much we just don’t know. And Trump Turnberry offers a tantalizing and maddeningly incomplete glimpse into the ways in which our President makes and spends money.
President Trump has proclaimed himself the “king of debt,” a proud master of “doing things with other people’s money.” So it was quite surprising when Jonathan O’Connell, David A. Fahrenthold, and Jack Gillum revealed in a Washington Post story in May that Trump had abruptly shifted strategies and begun spending hundreds of millions of dollars in cash to fund projects. In the nine years before he ran for President, the Post reported, the Trump Organization spent more than four hundred million dollars in cash on new properties—including fourteen transactions paid in full. In fifteen years, he bought twelve golf courses (ten in the U.S., one in Ireland, and a smaller one in Scotland), several homes, and a winery and estate in Virginia, and he paid for his forty-million-dollar share of the cost of building the Trump Hotel in Washington, D.C.—a property leased to Trump by the U.S. government. But his largest cash purchase was the Turnberry, followed by tens of millions of dollars in additional cash outlays for rehabbing the property.
Using what appears to be more than half of the company’s available cash to purchase Trump Turnberry makes no obvious sense for any business person, but especially for #Donald Trump. It is a bizarre, confounding move that raises questions about the central nature of his business during the years in which he prepared for and then executed his Presidential campaign.
While Trump has portrayed himself as uniquely aggressive in his use of debt, borrowing money is central to any real-estate business. By borrowing money, developers increase their profits when successful, reduce their losses when they fail, and are able to diversify their holdings to increase the likelihood of success. By 2014, Trump was seen by lenders as a high-risk bet because he had so many bankruptcies and so few successful projects. But, if he had used the three hundred million dollars he spent on Turnberry as a pledge, he could have surely received several hundred million in loans at a competitive rate. With, say, a billion dollars total, he could have invested in projects around the world. Instead, he chose to put nearly all of his available cash in an old, underperforming course in a remote corner of Scotland.
We know so little about the internal finances of the Trump Organization’s activities elsewhere that it is hard to understand where all of the money spent on Turnberry came from. Through the public disclosures required of someone running for and becoming President, many media outlets have tried to re-create a model for Trump’s business, recognizing that, by his own frequent admission, he often exaggerates his worth. Forbes came up with a figure of a net worth of just over three billion dollars, with less than two hundred million in available cash. This is an astonishing sum, of course.
However, the portfolio of assets that Trump owns does not suggest that he would have so much money that he can casually spend a few hundred million on a whim. Much of his wealth is tied up in properties that lose money or are not especially profitable. A comprehensive analysis by the Wall Street Journal, in 2016, concluded that Trump brought in about a hundred and sixty million dollars in income a year. (“The income number is wrong by a lot,” Trump said, though he provided no details.) With that money, Trump had to pay for his business, his taxes (if he paid any), his personal life style, and that of his family. His Boeing 757 alone cost more than ten thousand dollars per hour of use, not to mention the dozens of staffers at his various properties, the clothes and food and jewelry of a status-conscious family, and countless other expenses that could easily eat up all of that income. There simply isn’t enough money coming into Trump’s known business to cover the massive outlay he spent on Turnberry.