Bankrupt & Bust: Trump’s Atlantic City Adventure Explained

As Donald Trump once again goes head to head with US President Joe Biden in November, we decided to look back at the rise and fall of his Atlantic City casino empire – and the destruction he left behind.

BOOM! At 9am on Wednesday, February 17, 2021, Atlantic City finally said goodbye to Donald Trump.

It took 3,000 sticks of dynamite to demolish the building. Clearing up the mess Trump has left behind, will take generations.

Trump’s legacy in Atlantic City is debt, broken contracts, and unemployment. His aspirations, as entertainment mogul, demolished.

Bidders raised $175,000, in a charity auction, for the right to push the button and detonate the derelict Trump Plaza Hotel. But the ‘once-in-a-lifetime’ experience was cancelled by the building’s owner Carl Icahn, a fellow billionaire and Trump advisor.

Watching the event was Atlantic City Mayor Marty Small, who said: “Trump stiffed many people and he made a mockery of Atlantic City. Today is truly a great day in the great city of Atlantic City.”

New Dealers

Donald Trump.

Everything about the man splits opinion.

To many, he is the no nonsense leader, the self-made businessman; the American dream personified; the Great in MAGA.

The billionaire man-of-the-people who gets deals done, wages war on the wokeness, and stands up to the swamp.

The truth about Trump is that he fails. His touch is not golden. He is the anti-Midas. His legacy is loss. His fortunes have floundered. He inherited a silver spoon. He leaves gilt.

This isn’t political. This is pure accounting. Trump’s business career is a demolition derby of litigation, failure, bad choices, and bankruptcy.

His father Fred Trump was a ruthless and cunning businessman; a rags to riches real estate multi-millionaire, who built it all from nothing.

Donald Trump inherited the ‘ruthless’, but not the cunning.

Trump’s impressive catalogue of failure really comes into its own in the 1980s, when he tried to follow in the golden footsteps of casino entrepreneurs like Sheldon Adelson, Kirk Kerkorian, Steve Wynn, and Stanley Ho.

His failure is so extraordinary that, by 1990, the Trump Organization would be $3.4 billion in debt.

In the golden era of Atlantic City, Trump managed to hit a zero, with every number on the roulette table covered.

Trump’s First Atlantic City Casino

In 1978, Atlantic City opened its first casino.

The New Jersey seafront city had been in decline for decades. The heydays of the 1930s to 1960s washed away by economic decline, crime, and a dearth of tourism.

Casino gambling would be the key to future prosperity. Atlantic City would be the Las Vegas of the East Coast.

On March 15, 1982, Donald Trump received a casino licence from the New Jersey Casino Control Commission.

He had planned to build his own casino, but cosied up with Harrah’s CEO Mike Rose; Trump would handle the construction and Harrah’s would operate the property.

Trump got his licence application fast-tracked, by threatening not to build the casino.

John Degnan, New Jersey’s attorney general, realized the damage that delaying the project would do to Atlantic City’s blossoming betting business. He reduced the standard one-year background check to six months.

The property opened in 1984. Harrah’s at Trump Plaza had 614 rooms, seven restaurants, a health club, and a 60,000 sq ft casino.

It started to fail, from the opening day.

Trump’s Castle Hotel Casino is Added to the Roster

Trump wanted the whales. He had built 85 high roller suites to accommodate the ‘good people’. But Harrah’s was the Walmart of wagering; high rollers rolled elsewhere.

The casino made only $144,000 in the first-half of 1985. Trump was enraged.

He told the New York Times: “I gave them a Lamborghini and they didn’t know how to turn on the key.” Harrah’s insisted that Trump’s mismanagement, and the use of the Trump name, led to the business failing.

In 1986, Trump bought Harrah’s out for a cool $70 million and renamed the casino the Trump Casino Hotel.

Undeterred by a bumpy start in the Atlantic City casino business, Trump bought the Atlantic City Hilton hotel and casino, from Hilton Hotels, for $325 million.

The deal happened because the Hilton Group had been denied a gaming licence, just two months before it was due to open.

The New Jersey Gaming Commission cited charges that ‘some people connected to Hilton had associated in the past with organized-crime figures.’

Trump stepped in, paid over the odds for the building, and added a second Atlantic City hotel and casino to his roster.

The property was called Trump’s Castle Hotel Casino, later rebranded as Trump Castle.

He had wanted to call it Trumps Palace but, when threatened with a trademark infringement lawsuit from Caesars World, owners of Caesars Palace and Caesars Atlantic City, he caved in.

But – after sulking for a year, Trump did test the case in court. Of course, he lost.

Trump Castle was managed by his wife Ivana. In less than a decade, the casino would be filing for Chapter 11 bankruptcy protection.

It would eventually be renamed Trump Marina.

Enter the Taj Mahal Casino

But when it comes to turkeys, the best is left until last.

In 1983, hotel and casino company Resorts International began construction of the Taj Mahal casino, in Atlantic City, with a budget of $250 million.

When the Resorts International CEO James Crosby died in April 1986, the hotel became a takeover target.

The Taj Mahal was incomplete. Trump offered to personally finance the construction, but he would have to own the entire company. He offered to buy all the outstanding stock at $22 a share.

However, former singer, actor, and game show host Merv Griffin stepped in, offering $35 a share.

Chaos ensues. Griffin and Trump go head-to-head.

The Taj Mahal is set to be the biggest hotel and casino in the world, with construction costs exceeding $1 billion.

Trump figures that Griffin is a hotel guy. They square up, with banks of lawyers, but the settlement is fast; Trump takes the casino, Griffin has the hotel. Both sides claim victory.

The Taj Mahal Casino opened its doors on April 2, 1990. Trump described it as the 8th Wonder of the World. It was Trump’s most ambitious project to date.

On the opening night, Michael Jackson was the guest of honor.

Trump told ABC News’ Charles Gibson in 1990: “The scale, Charlie, is what brings the people. The opulence, the size, the everything is really what’s going to make the Taj Mahal the most successful hotel anywhere in the world.”

The 51-floor venue had 2012 rooms, a gaming floor the size of three football fields, more than 3,000 slots, 167 gaming tables, 17,000 players, under banks of crystal chandeliers that cost in excess of $15 million.

On the opening night, the gaming room took $2 million.

Built on Borrowed Money

Now, it’s time to pause and recap.

Trump owns three casinos in Atlantic City. It’s 1990. He has just unleashed the mother of all betting shops: the Taj Mahal.

The problem is: everything is built on debt; it’s borrowed money and pure Trumpian chutzpah; braggadocio, bluster, bombast.

Say what you like about Trump, but his chutzpah is off the scale.

It would take too long to precisely detail the financial failings that led to the decline of each casino.

Fortunately, we have Marvin Roffman, a gambling industry financial analyst and (for one very brief moment) a Trump advisor.

Trump called Roffman the day after he bought the Taj Mahal, asking for his advice.

Roffman thought the situation was unsustainable, he said to him: “Well, why would you want to have three casinos? One is going to cannibalize the other.”

Trump ignored the advice: “Marvin, you have no vision. This is going to be a monster property.”

Of course, Roffman was right.

The Taj Mahal was built on borrowed money and junk bonds. The casino would have to make close to $1.3 million a day, to barely break even.

Atlantic City is popular in the summer months but, from October to February, it doesn’t matter how good the comps are, no one is coming to the ice cold, wind-swept, north east coast of America.

Roffman conveyed his opinion to various media channels, including the Associated Press and the Wall Street Journal. The negative press caught Trump’s eye and he demanded – and got – Roffman’s dismissal.

Filing for Bankruptcy

Hardly surprising from a man who said that he believes in trashing your enemies and being loyal to your friends.

In the end, Roffman was right. He counter-sued Trump for wrongful dismissal and settled out of court.

Within two years, all three of Trump’s casinos had filed for bankruptcy. By the end of 1990, the Trump Organization was $5 billion in debt. He owed money to 70 banks.

Trump restructured his business as Trump Hotels and Casino Resorts (later renamed Trump Entertainment Resorts) from 1995 until 2009. He leveraged so much money, against his properties, that could never make a profit. The interest repayments were unsustainable.

In the end, Trump owed more than $70 million to 253 contractors who worked on the Taj Mahal. Each of these contractors would have their own staff to pay.

Trump delayed payment initially, because he feared they were cheating him. That was the excuse.

“You have to be very rough and very tough with most contractors or they’ll take the shirt right off your back.” – quotation from Trump: The Art of the Deal.

The truth is: there was no money.

Of course, Trump cleverly managed to guarantee his own wealth, by ensuring profit and loss calculations didn’t include debt.

Without the insane interest payments, the casinos showed a profit, and Donald banked his various bonuses.

Clever debt restructuring, multiple chapter 11 bankruptcy filings, and that famed chutzpah enabled Trump to get away with it.

Fortune gives one of the most detailed breakdowns of Trump’s Atlantic City debt restructuring, refinancing, and financial dark arts.

Trump’s Trail of Destruction

Unfortunately, Trump leaves devastation in his wake; broken lives, ruined businesses, and destroyed communities.

But it’s ok, because Donald was ‘smart’ to get out when he did.

As he said, he made a lot of money in Atlantic City and was proud of it: “I had the good sense, and I’ve gotten a lot of credit in the financial pages – seven years ago I left Atlantic City before it totally cratered.”

So, what about Atlantic City today?

The Taj Mahal is now the Hard Rock Hotel and Casino Atlantic City. Paraphernalia from the likes of Elvis, Elton, Gaga, Prince, Sinatra and Slash is on display, in the background 130 table games and 2,300 slots. It’s in profit but times are lean.

The Trump Marina (aka Trump Palace) is now a Golden Nugget Casino franchise. It was bought for $38 million in 2011. Remember: Trump paid $325 million for the property 40 years ago. What a deal, eh?

As for the Trump Plaza Hotel, Trump’s first foray into the Atlantic City casino business, the rubble has been cleared away and all that’s left is an empty plot and a lot of bad feelings.

Here’s the thing. If morality, ethics, social norms, and decency are not important, then Donald Trump is truly the brilliant businessman he claims to be.

Love him or loathe him, he walked away from the Atlantic City disaster and ended up as leader of the free world – and could be once again soon.

That merits some serious respect. You might disagree with him but – the chutzpah…

Maybe, he deserves the last word.

“People think I’m a gambler. I’ve never gambled in my life. A gambler is someone who plays slot machines. I prefer to own slot machines.” – Donald Trump.

One more thing: don’t ever lend him any money…