Trump Made $39m While His Casino Investors Got Crushed

In the mid-1990s, Donald Trump opened his only initial public offering on the Trump Hotels & Casino Resorts (under DJT). That IPO netted $140 million from investors – all of which lost significant money, while Trump went on to make $39 million.

CNN Money recently analyzed DJT’s corporate filings from 1995 to 2004, showing that the company lost over $600 million during this span.

Despite a decade of failed casinos, Trump’s salary, bonus, and options netted him $20 million. He made an additional $18.5 million from other compensation.

The “other” includes money for consulting his own company, licensing deals where DJT paid Trump to use his name, and reimbursement for any time that the company used his private jet or golf course for VIPs.

CNN details one instance of this, when, between 1999 and 2002, DJT paid Trump $10.2 million for a “Castle Services Agreement.” This agreement boiled down to an entity called TCI-II – which Trump owned – providing advertising, marketing, and promotions to the Castle Associates.

Another example saw Trump earn $1.7 million for providing consulting services to Taj Mahal associates in 1995. The billionaire received yet another $1.3 million the same year for consulting, marketing, and licensing his name to Trump Plaza casino

In both instances, Trump was the majority owner of these casinos, meaning he was paid for working for his own company.

In late 1997, DJT paid Trump for using his facilities to “entertain high-end customers.”

The company explained the reasoning by stating: “Management believes that the ability to utilize these facilities enhances (the company).”

In 2002, another transaction saw DJT pay Trump $300,000 for using his pilot to fly his personal airplane for VIP customers. In 2005, the company racked up another $337,000 expense for use of Trump’s plane and golf course.

CNN reports that such deals aren’t unheard of between a company and a major shareholder. But the company needs to explain these transactions to shareholders.

These agreements “need to be scrutinized very carefully” since they have “an inherent conflict of interest,” says Ralph Walkling, a corporate governance professor at Drexel University.

The deals are supposed to be decided by a committee, without the majority shareholder’s presence. CNN reports that this seems to be the case with Trump’s company, although significant losses by shareholders still draw attention the matter.

Filings show that for every $100 invested in DJT in 1995, this investment would’ve been reduced to $8.72 by 2000. In contrast, investing the same amount into the S&P would be worth $232.

DJT filed for bankruptcy in 2004, which eliminated all holdings from Trump and other shareholders. However, the billionaire collected another $6.1 million profit when the company emerged as Trump Entertainment Resorts.