Trump The Art Of The Deal

Trump The Art Of The Deal
“THE GAMESMANSHIP OF DEALMAKING IS HIS SPORT.… Like him or hate him—just don’t
ignore him Cary Grant had his accent; Clark Gable his pencil mustache. Donald Trump has
his money and power, and like the other romantic heroes, he knows what to do with
them … we are swept into the romance.”
—Chicago Sun-Times
“FASCINATING WHOLLY ABSORBING conveys Trump’s larger-than-life demeanor so
vibrantly that the reader’s attention is instantly and fully claimed.”
—Boston Herald
Trump defines deal-making—something he clearly loves more than anything else in the world
—one of the most important factors is the ability to deliver the goods. And he does in The Art
of the Deal.”
—New York Post
“THE MAN HAS FLAIR.… It should be read because Trump is one of the Great Characters
who help define New York’s peculiar urban style.”
—The New York Times Book Review
“A COMPELLING ACCOUNT of a man who used what he gleaned from his father to become
one of the richest and highly visible men in the nation.”
—Chattanooga News-Free Press
“TRUMP UNVARNISHED—AMBITIOUS AND UNAFRAID. I found it fascinating all the way.”
look at the mind of a brilliant entrepreneur. Donald Trump is blunt, brash, surprisingly old-
fashioned in spots and always an original.”
—Milwaukee Journal
“FAST-PACED PROSE ABOUT A NO-NONSENSE COMER. Want to make a deal? Or be a big-
time real estate tycoon? If so, here is a handbook by a master wheeler-dealer and
consummate real estate entrepreneur that might give you some ideas.”
—Virginian-Pilot and Ledger-Star
—San Diego Union
—The Boston Globe
“READS LIKE A NO-HOLDS-BARRED ACCOUNT.… The world it reveals—the world of ‘doing
deals’ and moving casinos and hotels around like so many pieces on a Monopoly board—is
wonderfully glamorous.”
—New Woman
—Times Picayune, New Orleans
at aspects of financing, development and construction in big-time New York real estate.”
—Publishers Weekly
The result is a fascinating look at a hustler who credits success to hard work, the art of
persuasion and creative imagination.”
—Worcester (MA) Sunday Telegram
—Tulsa World
of bluntness), Trump offers insights as well as intelligence on what it takes to succeed in big
—Kirkus Reviews
life is dramatic proof that the rewards are there for those who dare.”
—The Berkshire Eagle
THE BUSINESS WORLD. Trump: The Art of the Deal may be worthwhile just for the insight it
gives on life in the big league.”
—Toledo Blade
“A SIZZLING READ.… He names names, spells out the zeros and fully reveals the deal-
maker’s art.”
—South Bend Tribune
—Wilmington Evening Journal
PLAN … [and] even those who have little interest in real estate, New York politics or get-rich
formulas will have to admit that this book is fun to read.”
—San Antonio Express and News
—The Washington Times
Also by Donald J. Trump
Surviving at the Top
The Art of the Comeback
The America We Deserve
How to Get Rich
Think Like a Billionaire
The Art of the Deal is a commonsense guide to personal finance. In practical-advice books, as in life, there are no guarantees,
and readers are cautioned to rely on their own judgment about their individual circumstances and to act accordingly.
A Ballantine Book
Published by The Random House Publishing Group
Copyright © 1987 by Donald J. Trump
All rights reserved.
Published in the United States by Ballantine Books, an imprint of The Random House Publishing Group, a division of
Random House, Inc., New York, and simultaneously in Canada by Random House of Canada Limited, Toronto.
Ballantine and colophon are registered trademarks of Random House, Inc.
eISBN: 978-0-307-57533-3
To my parents—Fred and Mary Trump
I owe special thanks to several people who made it possible for me to complete this book in
the face of my other responsibilities. Ivana Trump, my wonderful wife, and my three children
were understanding about the many weekends that I spent working on the book. Si Newhouse
first came to me and convinced me to do a book despite my initial reluctance. Howard
Kaminsky, Peter Osnos, and many others at Random House have been enthusiastic, energetic
supporters of the book.
Tony Schwartz wishes to thank the many people who gave generously of their time, in
particular, Robert Trump, Der Scutt, Nick Ribis, Blanche Sprague, Norman Levine, Harvey
Freeman, Tony Gliedman, Al Glasgow, John Barry, and Dan Cooper. For typing,
photocopying, copyediting, research, and fact checking, thanks to Ruth Mullen, Gail Olsen,
Adina Weinstein, Deborah Immergut, and Nancy Palmer. Without Norma Foerderer, sweet
Norma, running interference for me, I never could have gotten the time and access I needed.
My agent, Kathy Robbins, is the best at what she does, but also much more: editor,
cheerleader, confidante. Ed Kosner, the extraordinary editor of New York, has long been a
source of ideas, inspiration and sage counsel. My children, Kate and Emily, are a joy, a
challenge, and an inspiration. My wife, Deborah, is the most supportive person I’ve ever
known, my first editor, my best friend, and—after ten years still the love of my life.
Other Books by This Author
Title Page
1. Dealing: A Week in the Life
2. Trump Cards: The Elements of the Deal
3. Growing Up
4. The Cincinnati Kid: Prudence Pays
5. The Move to Manhattan
6. Grand Hotel: Reviving 42nd Street
7. Trump Tower: The Tiffany Location
Photo Insert
8. Gaming: The Building on the Boardwalk
9. Wynn-Fall: The Battle for Hilton
10. Low Rent, High Stakes: The Showdown on Central Park South
11. Long Shot: The Spring and Fall of the USFL
12. Ice Capades: Rebuilding Wollman Rink
13. Comeback: A West Side Story
14. The Week That Was: How the Deals Came Out
About the Author
A Week in the Life
DON’T do it for the money. I’ve got enough, much more than I’ll ever need. I do it to do it.
Deals are my art form. Other people paint beautifully on canvas or write wonderful
poetry. I like making deals, preferably big deals. That’s how I get my kicks.
Most people are surprised by the way I work. I play it very loose. I don’t carry a briefcase. I
try not to schedule too many meetings. I leave my door open. You can’t be imaginative or
entrepreneurial if you’ve got too much structure. I prefer to come to work each day and just
see what develops.
There is no typical week in my life. I wake up most mornings very early, around six, and
spend the first hour or so of each day reading the morning newspapers. I usually arrive at my
office by nine, and I get on the phone. There’s rarely a day with fewer than fifty calls, and
often it runs to over a hundred. In between, I have at least a dozen meetings. The majority
occur on the spur of the moment, and few of them last longer than fifteen minutes. I rarely
stop for lunch. I leave my office by six-thirty, but I frequently make calls from home until
midnight, and all weekend long.
It never stops, and I wouldn’t have it any other way. I try to learn from the past, but I plan
for the future by focusing exclusively on the present. That’s where the fun is. And if it can’t be
fun, what’s the point?
9:00 A.M. My first call is to Alan (“Ace”) Greenberg, on the trading floor of Bear Sterns, a
major Wall Street investment banking firm. Alan is the CEO of Bear Sterns, he’s been my
investment banker for the past five years, and he’s the best there is. Two weeks ago, we began
buying stock in Holiday Inns. It was selling in the 50s. As of this morning, Alan tells me, I
own just over one million shares, or slightly more than 4 percent of the company. The stock
closed Friday at $65 a share, mostly, Alan says, because word is out on the street that I’ve
been a big buyer, and there’s speculation I am planning a run at the company.
The truth is I’m keeping my options open. I may ultimately go for control of Holiday, which
I think is somewhat undervalued. At the current stock price, I could get control for less than
$2 billion. Holiday’s three casino-hotels could be worth nearly that much—and the company
owns another 300,000 hotel rooms besides.
A second option, if the stock price goes high enough, is to sell my stake and take a very
nice profit. If I did that today, I’d already be up about $7 million. The third possibility is that
Holiday may eventually offer to buy back my shares, at a premium, simply to get rid of me. If
the premium is big enough, I’ll sell.
In any case, I enjoy seeing the lengths to which bad managements go to preserve what they
call their independence—which really just means their jobs.
9:30 A.M. Abraham Hirschfeld calls me, looking for advice. Abe is a successful real estate
developer but he wants to be a politician. Unfortunately for Abe, he’s a far better developer
than politician.
This fall, Abe tried to run for lieutenant governor against Governor Cuomo’s hand-picked
candidate, Stan Lundine. Cuomo led a court fight to get Hirschfeld off the ballot on technical
grounds, and sure enough, halfway into the campaign, the court ruled Hirschfeld out. Abe
knows I’m friendly with the governor, and he wants my advice now on whether he should
endorse Cuomo or switch parties and endorse Cuomo’s opponent. I tell him it’s a no-contest
question—stick with a winner and a good guy at that.
We set a meeting for Thursday.
10:00 A.M. I call Don Imus to thank him. Imus has one of the most successful radio shows in
the United States on WNBC, and he’s been helping to raise money for the Annabel Hill fund.
I’m amazed at how this has snowballed into such a media event. It began last week when I
saw a national news report by Tom Brokaw about this adorable little lady from Georgia, Mrs.
Hill, who was trying to save her farm from being foreclosed. Her sixty-seven-year-old
husband had committed suicide a few weeks earlier, hoping his life insurance would save the
farm, which had been in the family for generations. But the insurance proceeds weren’t
nearly enough. It was a very sad situation, and I was moved. Here were people who’d worked
very hard and honestly all their lives, only to see it all crumble before them. To me, it just
seemed wrong.
Through NBC I was put in touch with a wonderful guy from Georgia named Frank
Argenbright, who’d become very involved in trying to help Mrs. Hill. Frank directed me to
the bank that held Mrs. Hill’s mortgage. The next morning, I called and got some vice
president on the line. I explained that I was a businessman from New York, and that I was
interested in helping Mrs. Hill. He told me he was sorry, but that it was too late. They were
going to auction off the farm, he said, and “nothing or no one is going to stop it.”
That really got me going. I said to the guy: “You listen to me. If you do foreclose, I’ll
personally bring a lawsuit for murder against you and your bank, on the grounds that you
harassed Mrs. Hill’s husband to his death.” All of a sudden the bank officer sounded very
nervous and said he’d get right back to me.
Sometimes it pays to be a little wild. An hour later I got a call back from the banker, and he
said, “Don’t worry, we’re going to work it out, Mr. Tramp.” Mrs. Hill and Frank Argenbright
told the media, and the next thing I knew, it was the lead story on the network news.
By the end of the week, we’d raised $40,000. Imus alone raised almost $20,000 by
appealing to his listeners. As a Christmas present to Mrs. Hill and her family, we’ve scheduled
a mortgage-burning ceremony for Christmas Eve in the atrium of Trump Tower. By then, I’m
confident, we’ll have raised all the money. I’ve promised Mrs. Hill that if we haven’t, I’ll make
up any difference.
I tell Imus he’s the greatest, and I invite him to be my guest one day next week at the
tennis matches at the U.S. Open. I have a courtside box and I used to go myself almost every
day. Now I’m so busy I mostly just send my friends.
11:15 A.M. Harry Usher, the commissioner of the United States Football League, calls. Last
month, the jury in the antitrust suit we brought against the National Football League ruled
that the NFL was a monopoly, but awarded us only token damages of one dollar. I’ve already
let the better players on my team, the New Jersey Generals, sign with the NFL. But the ruling
was ridiculous.
We argue about the approach we should take. I want to be more aggressive. “What worries
me,” I say to Harry, “is that no one is pushing hard enough on an appeal.”
12:00 noon Gerry Schoenfeld, head of the Shubert Organization, the biggest Broadway
theater owners, calls to recommend a woman for a job as an office administrator. He tells me
the woman specifically wants to work for Donald Trump, and I say she’s crazy but I’ll be
happy to see her.
We talk a little about the theater business, and I tell Gerry I’m about to take my kids to see
Cats, one of his shows, for a second time. He asks if I’m getting my tickets through his office. I
tell him that I don’t like to do that sort of thing. “Don’t be silly,” he says. “We have a woman
here whose job it is to handle tickets for our friends. Here’s her number. Don’t hesitate to
It’s a nice gesture from a very nice guy.
1:15 P.M. Anthony Gliedman stops by to discuss the Wollman Rink project. Gliedman was
housing commissioner under Ed Koch. At the time we fought a lot, and even though I ended
up beating him in court, I always thought he was bright. I don’t hold it against people that
they have opposed me. I’m just looking to hire the best talent, wherever I can find it.
Tony has been helping to coordinate the rebuilding of the Wollman Skating Rink in Central
Park, a project the city failed at so miserably for seven years. In June I offered to do the job
myself. Now we’re ahead of schedule, and Tony tells me that he’s set up a press conference
for Thursday to celebrate the last important step in construction: pouring the concrete.
It doesn’t sound like much of a news event to me, and I ask him if anyone is likely to show
up. He says at least a dozen news organizations have RSVPd yes. So much for my news
2:00 P.M. I get deposed in a lawsuit we’ve brought against a contractor on Trump Tower.
Halfway into the job we had to fire the company for total incompetence, and we’re suing for
damages. I hate lawsuits and depositions, but the fact is that if you’re right, you’ve got to take
a stand, or people will walk all over you. In any case, there’s no way I could avoid
depositions, even if I never brought a lawsuit myself. Nowadays, if your name is Donald
Trump, everyone in the world seems to want to sue you.
3:00 P.M. I ask Norma Foerderer, my executive assistant and the person who keeps my life
organized, to bring me lunch: a can of tomato juice. I rarely go out, because mostly, it’s a
waste of time.
3:15 P.M. I put in a call to Sir Charles Goldstein; he’s out, and I leave a message. He’s a
successful real estate attorney, but not one of my favorites.
I’m pretty sure Charlie Goldstein is from the Bronx, but he’s a very pompous guy and has a
tendency to act like royalty, so I call him Sir Charles. Over the weekend, I heard that Lee
Iacocca had hired Sir Charles to represent him on a deal in Palm Beach where Lee and I
intend to be partners. Lee had no way of knowing about my past experience with Sir Charles.
A while back, I was in the middle of making a deal with a guy who needed an attorney, and I
recommended Sir Charles. The next thing I knew, Sir Charles was recommending to his client
that he not make the deal with me. I couldn’t believe it!
This deal is to buy two condominium towers in the Palm Beach area. I own a house in Palm
Beach—a spectacular place called Mar-a-Lago—and one day last winter, when I was down for
the weekend, I went out to have lunch with some friends. On the way, a pair of beautiful
gleaming white towers caught my eye. I made a couple of calls. It turned out they’d been
built for about $120 million and a major New York bank had just foreclosed on the
developers. The next thing I knew I was making a deal to buy the project for $40 million.
A mutual friend, William Fugazy, first mentioned that Lee and I should do a real estate deal
together. I think Lee is an extraordinary businessman who has done wonders in turning
Chrysler around, and I also like him a great deal personally. So one thing led to another and
we began talking about the towers. It’s a substantial investment, and I’m not certain Lee is
absolutely sure yet that he wants to go forward. If that’s the case, it occurs to me, he’s done
the perfect thing by hiring an attorney I don’t like. And that’s precisely what I intend to tell
Sir Charles when he calls me back.
3:30 P.M. I call my sister, Maryanne Barry, to discuss a recent decision in a lawsuit we are
contesting in Atlantic City. Maryanne is a federal court judge in New Jersey, and her
husband, John, is a talented attorney I have used on many occasions.
“Can you believe they ruled against us?” I ask her. Maryanne is very smart, she obviously
knows a lot more about the law than I do, and she’s as surprised as I am. I tell her that I’ve
arranged to have all the materials from the case sent to John immediately, because I want
him to handle the appeal.
4:00 P.M. I go to our conference room to look at slides of potential Christmas decorations for
the atrium in Trump Tower. The spectacular six-story marble atrium has become one of the
leading tourist attractions in New York City. More than 100,000 people a week come from all
over the world to see it and shop in it, and it’s now a symbol of the Trump Organization.
That’s why I still get involved in details like what Christmas decorations we should use.
I don’t like most of what I’m shown. Finally, I see a huge and magnificent gold wreath for
the entrance to the building, and decide we should use just that. Sometimes—not often, but
sometimes—less is more.
* * *
4:30 P.M. Nicholas Ribis, a New Jersey attorney who handled the licensing of both my
Atlantic City casinos, calls to say he’s about to leave for Sydney, Australia, to pursue a deal
I’m considering. He tells me it’s a twenty-four-hour flight, and I tell him I’m very glad he’s
going instead of me.
The deal, however, may be worth the trip. The government of New South Wales is in the
midst of choosing a company to build and operate what they envision as the world’s largest
casino. We’re a front-runner for the job, and Nick is going over to meet with the key
government people. He tells me he’ll call from Australia as soon as he has any news.
5:15 P.M. I call Henry Kanegsberg, the NBC executive in charge of choosing a new site for the
network’s headquarters. We’ve been courting NBC for more than a year, trying to get them to
move to our West Side yards site—seventy-eight acres along the Hudson River that I bought a
year ago and on which I’ve announced plans to build the world’s tallest building.
I know Henry has just been shown our latest plans for the site, and I’m following up. I
mention that Bloomingdale’s is dying to become the anchor store in our shopping center,
which will give it real prestige. I also tell him the city seems very excited about our latest
plans. Then I say we expect to get our preliminary approvals in the next several months.
Kanegsberg seems enthusiastic. Before I get off, I also put in a plug for NBC’s locating its
offices in the world’s tallest building. “Think about it,” I say. “It’s the ultimate symbol.”
5:45 P.M. My nine-year-old son, Donny, calls to ask when I’ll be home. I always take calls
from my kids, no matter what I’m doing. I have two others—Ivanka, six, and Eric, three—and
as they get older, being a father gets easier. I adore them all, but I’ve never been great at
playing with toy trucks and dolls. Now, though, Donny is beginning to get interested in
buildings and real estate and sports, and that’s great.
I tell Donny I’ll be home as soon as I can, but he insists on a time. Perhaps he’s got my
genes: the kid won’t take no for an answer.
6:30 P.M. After several more calls, I leave the office and take the elevator upstairs to my
apartment in the residential part of Trump Tower. Of course, I have a tendency to make a few
more calls when I get home.
9:00 A.M. I call Ivan Boesky. Boesky is an arbitrageur, but he and his wife are also the
majority owners of the Beverly Hills Hotel and I’ve just read that he’s decided to sell it. I have
no idea when I call that just two weeks from now Boesky will plead guilty to insider trading,
and that the real reason he’s eager to sell the hotel is that he needs to raise cash fast.
My idea is to hire Steve Rubell and Ian Schrager, the creators of Studio 54 and the
Palladium, to run the Beverly Hills Hotel for me. Steve’s an incredible promoter, and he’d
make the hotel hot as hell again. I get Boesky and tell him I’m very interested. He tells me
Morgan Stanley and Company is handling the deal, and I will get a call from their people
I like Los Angeles. I spent a lot of weekends there during the 1970s, and I always stayed at
the Beverly Hills. But I won’t let my personal preferences affect my business judgment. Much
as I like the hotel, I’m interested in it only if I can get it for a much better price than they’re
now asking.
9:30 A.M. Alan Greenberg calls. We’ve bought another 100,000 shares of Holiday, and the
stock is up another point and a half. Trading is very active. I tell Alan I’ve heard that the top
guys at Holiday are in a panic and that they’re holding emergency meetings to discuss how to
react to me. Alan says that he thinks Holiday will enact some kind of “poison pill” as a way of
fending off any attempts I make at a hostile takeover.
Our call lasts less than two minutes. That’s one thing I love about Alan: he never wastes
10:00 A.M. I meet with the contractors in charge of building my 2,700-space parking garage
and transportation center across the street from Trump Plaza on the Boardwalk in Atlantic
City. It’s a $30 million job, and they’re here to give me a progress report. They tell me we’re
on schedule and under budget.
The garage will be ready in time for Memorial Day, 1987—the biggest weekend of the year
in Atlantic City—and it’s going to increase our business enormously. Right now we are doing
well with virtually no parking. The new lot is located at the end of the main road leading to
the Boardwalk, and it’s connected by a walkway to our casino. Anyone who parks in the
garage funnels directly into our facility.
11:00 A.M. I meet with a top New York banker at my office. He’s come to try to solicit
business, and we have a general talk about deals I’m considering. It’s funny what’s happened:
bankers now come to me, to ask if I might be interested in borrowing their money. They
know a safe bet.
12:15 P.M. Norma comes in and tells me that we have to switch the Wollman Rink press
conference from Thursday to Wednesday. Henry Stern, the New York City parks
commissioner, has a conflict: on Thursday he is also scheduled to dedicate a new Central Park
playground on the Upper West Side, underwritten by Diana Ross, the singer.
The problem is that there’s no way we can move our concrete-pouring, which was why we
called the press conference in the first place. But what the hell? I’ll wing it and things will
work out. I’m reluctant to give Henry a hard time. Last week, my security force refused to let
him into Wollman without my written permission. This was taking good security a step too
far. As you can imagine, Henry wasn’t thrilled.
12:45 P.M. Jack Mitnik, my accountant, calls to discuss the tax implications of a deal we’re
doing. I ask him how bad he thinks the new federal tax law is going to be for real estate,
since it eliminates a lot of current real estate write-offs.
To my surprise, Mitnik tells me he thinks the law is an overall plus for me, since much of
my cash flow comes from casinos and condominiums and the top tax rate on earned income is
being dropped from 50 to 32 percent. However, I still believe the law will be a disaster for
the country, since it eliminates the incentives to invest and build—particularly in secondary
locations, where no building will occur unless there are incentives.
1:30 P.M. I tell Norma to call John Danforth, the Republican senator from Missouri. I don’t
know Danforth personally, but he’s one of the few senators who fought hard against the new
tax bill. It’s probably too late, but I just want to congratulate him on having the courage of
his convictions, even though it might cost him politically.
Danforth isn’t in, but his secretary says he’ll call back.
1:45 P.M. Norma sees an opening between calls, and she comes in to ask me about several
invitations. Dave Winfield, the New York Yankee outfielder, has asked me to be the chairman
of a dinner to benefit his foundation, which fights drug abuse. I’m already chairing two
dinners this month, one for United Cerebral Palsy and the other for the Police Athletic
I don’t kid myself about why I’m asked to speak at or chair so many events. It’s not because
I’m such a great guy. The reason is that the people who run charities know that I’ve got
wealthy friends and can get them to buy tables. I understand the game, and while I don’t like
to play it, there is no graceful way out. However, I’ve already hit up my friends twice this
month—and there’s only so many times you can ask people to donate $10,000 for a table. I
tell Norma to turn Winfield down, with regrets.
The other invitation is from the Young President’s Organization, asking me to speak at a
dinner they’re having. YPO admits businessmen under the age of forty who are chief
executives of their companies. I turned forty two months ago, so in their eyes, I guess I now
qualify as an elder statesman.
Norma also asks me about a half dozen party invitations. I say yes to two One is being
given by Alice Mason, the real estate broker who has managed to turn herself into a major
socialite by getting the hottest people to come to her parties. The other is a reception for two
wonderful people, Barbara Walters of ABC and Merv Adelson, the head of Lorimar-
Telepictures, who were married a few months ago in California.
Frankly, I’m not too big on parties, because I can’t stand small talk. Unfortunately, they’re
part of doing business, so I find myself going to more than I’d like—and then trying hard to
leave early. A few, fortunately, I enjoy. But more often I will accept an invitation many
months in advance, thinking the date is so far off that it will never arrive. When it does, I get
mad at myself for having accepted in the first place. By then it’s usually too late to pull out.
2:00 P.M. I get an idea and call Alan Greenberg again. My idea is based on the fact that if I
make a takeover move against Holiday, I have to get licensed as a casino operator in Nevada,
where Holiday owns two casinos. “What do you think,” I ask him, “about just selling out
Holiday shares right now, taking a profit, and then rethinking a takeover bid after I get
Alan argues for holding tight with what we’ve got. I say okay, for now. I like to keep as
many options open as I can.
2:15 P.M. John Danforth calls back. We have a nice talk, and I tell him to keep up the good
2:30 P.M. I return a call from one of the owners of the Dunes Hotel in Las Vegas. They also
own perhaps the best undeveloped site on the Vegas strip. For the right price, I’d consider
buying it.
I like the casino business. I like the scale, which is huge, I like the glamour, and most of all,
I like the cash flow. If you know what you are doing and you run your operation reasonably
well, you can make a very nice profit. If you run it very well, you can make a ton of money.
2:45 P.M. My brother, Robert, and Harvey Freeman, both executive vice presidents in my
company, stop by to report on a meeting they’ve had that day with Con Edison and
executives from NBC about the West Side yards project. Con Ed has a large smokestack on the
southern end of the site, and the meeting was to discuss whether the fumes from the stack
would dissipate as effectively if a large building goes up adjacent to it.
Robert, who is two years younger than I am, is soft-spoken and easygoing, but he’s very
talented and effective. I think it must be hard to have me for a brother, but he’s never said
anything about it and we’re very close. He is definitely the only guy in my life whom I ever
call “honey.”
Robert gets along with almost everyone, which is great for me, since I sometimes have to
be the bad guy. Harvey is a different type: no-nonsense, not too big on laughs, but he’s got an
absolutely brilliant analytic mind.
The Con Ed people, I’m happy to hear, told the NBC executives that there is no reason to
believe the presence of the NBC building will affect the smokestack. Unfortunately, Con Ed
won’t be the last word. Before we can get our approvals, we’ll have to get an independent
environmental-impact statement.
3:15 P.M. I call Herbert Sturz of the City Planning Commission, which will be the first city
agency to approve or disapprove our latest plan for the West Side yards. Sturz and his people
are scheduled to have a preliminary look on Friday.
He isn’t in, so I leave a message with his secretary. I just say I’m looking forward to seeing
him Friday morning.
3:20 P.M. Gerald Schrager calls. Jerry’s a top attorney at Dreyer & Traub, one of the best real
estate firms in the country, and he’s handled nearly every one of my major deals since I
bought the Commodore Hotel back in 1974. Jerry is more than an attorney. He’s an absolute
business machine, and he can see through to the essence of a deal as fast as anyone I know.
We talk about the Holiday Inns situation and several other deals that are in various stages.
Like Alan Greenberg, Schrager isn’t big on wasting time. We cover a half dozen subjects in
less than ten minutes.
3:30 P.M. My wife, Ivana, stops in to say good-bye. She’s on her way to Atlantic City, by
helicopter. I like to kid her that she works harder than I do. Last year, when I bought my
second casino from the Hilton Corporation and renamed it Trump’s Castle, I decided to put
Ivana in charge. She’s incredibly good at anything she’s ever done, a natural manager.
Ivana grew up in Czechoslovakia, an only child. Her father was an electrical engineer and a
very good athlete, and he started Ivana skiing very early. By the age of six she was winning
medals, and in 1972 she was an alternate on the Czechoslovakian ski team at the Sapporo
Winter Olympics. A year later, after graduating from Charles University in Prague, she moved
to Montreal and very quickly became one of the top models in Canada.
We met at the Montreal Summer Olympic Games in August 1976. I’d dated a lot of
different women by then, but I’d never gotten seriously involved with any of them. Ivana
wasn’t someone you dated casually. Ten months later, in April 1977, we were married.
Almost immediately, I gave her responsibility for the interior decorating on the projects I had
under way. She did a great job.
Ivana may be the most organized person I know. In addition to raising three children, she
runs our three homes—the apartment in Trump Tower, Mar-a-Lago, and our home in
Greenwich, Connecticut—and now she also manages Trump’s Castle, which has
approximately 4,000 employees.
The Castle is doing great, but I still give Ivana a hard time about the fact that it’s not yet
number one. I tell her she’s got the biggest facility in town, so by all rights it should be the
most profitable. Ivana is almost as competitive as I am and she insists she’s at a disadvantage
with the Castle. She says she needs more suites. She isn’t concerned that building the suites
will cost $40 million. All she knows is that not having them is hurting her business and
making it tougher for her to be number one. I’ll say this much: I wouldn’t bet against her.
* * *
3:45 P.M. The executive vice president for marketing at the Cadillac Division of General
Motors is on the phone. He’s calling at the suggestion of his boss, John Gretenberger, the
president of the Cadillac Motors Division whom I know from Palm Beach. Cadillac, it turns
out, is interested in cooperating in the production of a new superstretch limousine that would
be named the Trump Golden Series. I like the idea. We set a date to sit down and talk in two
4:00 P.M. Daniel Lee, a casino analyst for Drexel Burnham Lambert, stops by with several of
his colleagues to discuss being my investment bankers on a deal to purchase a hotel company.
Michael Milken, the guy who invented junk-bond financing at Drexel, has called me
regularly for the last several years to try to get me to bring my business to Drexel. I have no
idea that Drexel is about to get enmeshed in the insider-trading scandal that will soon rock
Wall Street. In any case, I happen to think Mike’s a brilliant guy. However, Alan Greenberg is
exceptional himself, and I’m loyal to people who’ve done good work for me.
I hear Lee and his guys out on their deal, but in truth, it doesn’t excite me much. We leave
it that I’ll get back to them.
5:00 P.M. Larry Csonka, former running back for the Miami Dolphins, calls. He has an idea
for keeping the USFL alive. He wants to merge it with the Canadian Football League. Larry’s
both a bright and a nice guy, and he’s very enthusiastic, but he doesn’t convince me. If the
USFL couldn’t get off the ground with players like Herschel Walker and Jim Kelly, how is
Canadian football, with a lot of players nobody has heard of, going to help? We’ve got to win
in the courts first, to break up the NFL monopoly.
5:30 P.M. I call Calvin Klein, the designer, to congratulate him. Back when Trump Tower first
opened, Klein took a full floor of offices for his new perfume line, Obsession. It did so well
that within a year, he expanded to a second floor. Now he’s doing better than ever, and so
he’s taking over a third floor.
I have a lot of admiration for Calvin, and I tell him so. He’s a very talented designer, but
he’s also a very good salesman and businessman—and it’s the combination of those qualities
that makes him so successful.
6:00 P.M. I draft a letter to Paul Goldberger, architecture critic of the New York Times. A week
ago, in a Sunday column, Goldberger gave a great review to the design of Battery Park City,
the new development in lower Manhattan. He also called it “a stunning contrast” to what he
claimed we’re doing with the Television City project at the West Side yards. In other words,
he killed us.
There’s just one catch: we’re in the middle of designing our project with new architects and
concepts, and nobody—including Goldberger—has seen our new plan. He was knocking a
design he hadn’t even looked at yet.
“Dear Paul,” I write. “Your recent article is an obvious ‘setup’ in preparation for the
negative review you intend to do on Television City—no matter how great it is. Just think, if
you are negative enough (which I am sure you will be) you might even help convince NBC to
move to New Jersey.”
My people keep telling me I shouldn’t write letters like this to critics. The way I see it,
critics get to say what they want to about my work, so why shouldn’t I be able to say what I
want to about theirs?
9:00 A.M. I go with Ivana to look at a private school for my daughter. If you had told me five
years ago that I’d be spending mornings looking at kindergarten classrooms, I would have
11:00 A.M. I have a press conference for the Wollman Rink. When I get there, I’m amazed.
There are at least twenty reporters and photographers milling around.
Henry Stern, the parks commissioner, goes to the microphone first and he is very
complimentary to me. He says that if the city had tried to undertake the current renovation
by itself, “we would now be awaiting Board of Estimate approval for what Donald Trump has
already done.”
When it’s my turn, I explain that we’ve laid twenty-two miles of pipes, that they’ve all been
thoroughly tested and there are no leaks, that the project is ahead of schedule by at least a
month, and under budget by about $400,000. I also announce that we’ve set a grand opening
for November 13—and that we have a show planned for that day which will include most of
the world’s great skaters.
After I finish, the reporters ask a million questions. Finally Henry and I step down into the
rink. If we can’t have a real concrete-pouring, at least we’ll have a ceremonial one. A couple
of workmen pull over a wheelbarrow full of wet concrete and point it down toward us. Henry
and I shovel some concrete onto the pipes while the photographers click away.
As many times as I’ve done these things, I have to say I still find them a little ridiculous.
Think of it: a couple of guys in pinstripe suits shoveling wet concrete. But I like to be
accommodating. As long as they want to shoot, I’ll shovel.
12:45 P.M. The minute I get back to my office, I start returning calls. I want to get as much
done as I can now, because I have to leave early for Trenton, to attend a retirement dinner for
a member of the New Jersey Casino Control Commission.
The first person I call back is Arthur Barron, the president of Gulf & Western’s
entertainment group, which includes Paramount Pictures. Martin Davis, the chairman of
G&W, has been my friend for a long time, and Barron apparently called in response to a letter
I wrote to Marty two weeks ago. In the letter I explained to Marty that I’d recently purchased
a fantastic site and was in the midst of designing a building with eight motion picture
theaters at its base, and I wondered if he might be interested in making a deal for them.
“As you are aware,” I wrote, “there is no one I would rather do business with than Marty
That happened to be true, for Martin Davis is a truly talented man, but there are also a
dozen other companies who would kill to have eight theaters in a top location. In other
words, if I can’t make a deal I like with Marty, I’ve got a lot of other options.
As I anticipated, when I get Art Barron on the phone, he wants to set up a meeting to
discuss the theaters. We make a date for the following week.
1:30 P.M. I return a call from Arthur Sonnenblick, one of the city’s leading brokers. Three
weeks ago, Arthur called to say he had some foreign clients who were interested in buying
the West Side yards. He wouldn’t tell me their names, but he said they were serious people,
and they were prepared to make me a very substantial offer for the site—far more than the
$100 million I paid a year ago.
I didn’t get too excited. On the contrary, I say to Arthur, “The bid sounds low. If you can
get them higher, I might be interested.” Now Arthur’s calling to give me a status report.
The truth is, I really don’t want to sell the yards at any price. To me, those one hundred
acres overlooking the Hudson River are the best undeveloped real estate site in the world. On
the other hand, I don’t want to rule out anything. Arthur tells me his clients are still very
interested, that they may come up a little, but he doubts they’ll go much higher. “Keep
pushing,” I tell him.
2:00 P.M. The contractor who’s building my pool at Mar-a-Lago is on the phone. I’m busy, but
I take the call anyway. We’re going to great lengths to build a pool in keeping with the
original design of the house, and I want to make sure every detail is right.
Buying Mar-a-Lago was a great deal even though I bought it to live in, not as a real estate
investment. Mar-a-Lago was built in the early 1920s by Marjorie Merriweather Post, the
heiress to the Post cereal fortune and, at the time, Mrs. Edward F. Hutton. Set on twenty acres
that face both the Atlantic Ocean and Lake Worth, the house took four years to build and has
118 rooms. Three boatloads of Dorian stone were brought from Italy for the exterior walls,
and 36,000 Spanish tiles dating back to the fifteenth century were used on the exterior and
the interior.
When Mrs. Post died she gave the house to the federal government for use as a presidential
retreat. The government eventually gave the house back to the Post Foundation, and the
foundation put it up for sale at an asking price of $25 million. I first looked at Mar-a-Lago
while vacationing in Palm Beach in 1982. Almost immediately I put in a bid of $15 million,
and it was promptly rejected. Over the next few years, the foundation signed contracts with
several other buyers at higher prices than I’d offered, only to have them fall through before
closing. Each time that happened, I put in another bid, but always at a lower sum than
Finally, in late 1985, I put in a cash offer of $5 million, plus another $3 million for the
furnishings in the house. Apparently, the foundation was tired of broken deals. They accepted
my offer, and we closed one month later. The day the deal was announced, the Palm Beach
Daily News ran a huge front-page story with the headline MAR-A-LAGO’S BARGAIN PRICE ROCKS COMMUNITY.
Soon, several far more modest estates on property a fraction of Mar-a-Lago’s size sold for
prices in excess of $18 million. I’ve been told that the furnishings in Mar-a-Lago alone are
worth more than I paid for the house. It just goes to show that it pays to move quickly and
decisively when the time is right. Upkeep of Mar-a-Lago, of course, isn’t cheap. For what it
costs each year, you could buy a beautiful home almost anywhere else in America.
All of which is a long way of explaining why I take this call from the pool contractor. He
has a small question about the matching of the Dorian stone we’re using for the decking and I
care about every detail when it comes to Mar-a-Lago. The call takes two minutes, but it will
probably save two days of work—and ensure that the job doesn’t have to be ripped out and
done over later.
2:30 P.M. A prominent businessman who does a lot of business with the Soviet Union calls to
keep me posted on a construction project I’m interested in undertaking in Moscow. The idea
got off the ground after I sat next to the Soviet ambassador, Yuri Dubinin, at a luncheon held
by Leonard Lauder, a great businessman who is the son of Estée Lauder. Dubinin’s daughter,
it turned out, had read about Trump Tower and knew all about it. One thing led to another,
and now I’m talking about building a large luxury hotel, across the street from the Kremlin, in
partnership with the Soviet government. They have asked me to go to Moscow in July.
3:00 P.M. Robert stops in, and we talk about several issues relating to NBC and the West Side
3:30 P.M. A friend from Texas calls, to tell me about a deal he’s got working. He happens to
be a very charming guy—wonderful looking, wonderfully dressed, with one of those great
Texas drawls that make you feel very comfortable. He calls me Donny, a name that I hate, but
which he says in a way that somehow makes it okay.
Two years ago, this same friend called me about another deal. He was trying to put
together a group of wealthy people to take over a small oil company. “Donny,” he said, “I
want you to invest fifty million. This is a no-lose proposition. You’ll double or triple your
money in a matter of months.” He gave me all the details, and it sounded very good. I was all
set to go forward. The papers were being drawn up, and then one morning I woke up and it
just didn’t feel right.
I called my friend back and I said, “Listen, there’s something about this that bothers me.
Maybe it’s that oil is underground, and I can’t see it, or maybe it’s that there’s nothing
creative about it. In any case, I just don’t want to go in.” And he said, “Okay, Donny, it’s up
to you, but you’re missing a great opportunity.” The rest is history, of course. Oil went
completely to hell several months later, the company his group bought went bankrupt, and
his investors lost every dime they put up.
That experience taught me a few things. One is to listen to your gut, no matter how good
something sounds on paper. The second is that you’re generally better off sticking with what
you know. And the third is that sometimes your best investments are the ones you don’t
Because I held back, I saved $50 million and the two of us have remained friends. As a
result, I don’t want to reject him outright on his new deal. Instead, I tell him to send up the
papers. In reality, I’m not too likely to get involved.
4:00 P.M. I call back Judith Krantz. You’ve got to give it to her: how many authors have
written three number-one best-selling books in a row? She also happens to be a very nice
woman. Trump Tower is the setting for her latest novel, I’ll Take Manhattan, and I’m a
character in the book. At Judy’s request, I agreed to play the role of myself in a scene from
the miniseries based on her book, and filmed at Trump Tower.
Now Judy is calling to say that the scene, with Valerie Bertinelli, came off well. I’m happy
to hear it, although I’m not about to quit my day job. Still, I figure it’s not a bad way to
promote Trump Tower—on national television, in a miniseries that runs during sweeps week
and is virtually guaranteed to get huge national ratings.
4:30 P.M. My last call is to Paul Hallingby, a partner at Bear Stearns who handled the $550
million in bond issues we did successfully for our two casinos in Atlantic City during 1985.
Now we’re talking about setting up something called the Trump Fund, through which we’d
buy distressed and foreclosed real estate, particularly in the Southwest, at bargain-basement
Hallingby tells me that he’s putting together a prospectus, and that he’s confident we’ll
easily be able to raise $500 million in a public offering. What I like about the deal is that I’d
retain a large equity position in any purchase we made, but I wouldn’t be at any personal
risk, in the event that any of the deals went bad. What I don’t like is the idea of competing
with myself. What happens, for example, if I see a piece of distressed property that I want to
buy on my own but that might also be good for the fund?
In any case, I’ll look at the prospectus.
* * *
5:00 P.M. I’m driven to the 60th Street heliport, in time to catch a helicopter and be in
Trenton for cocktails at 5:30 P.M.
9:00 A.M. I sit down with Abe Hirschfeld. Basically, Abe feels hurt that Governor Cuomo
personally led a fight to push him off the ballot. I tell Abe I understand how he feels, but that
the governor is a good guy, and that in any event it would look ridiculous for Abe, who is a
Democrat, to suddenly turn around now and endorse a Republican. I also point out that as a
practical matter, Cuomo is going to win re-election by a landslide, and that it’s a lot better to
side with a winner than a loser.
Abe is a pretty stubborn guy, but finally he says, “Look, why don’t you get the governor to
call me?” I tell him I’ll do my best. Abe has always been considered difficult. But I like him
and his family a lot.
10:15 A.M. Alan Greenberg calls. The market is down 25 points less than an hour after
opening. Alan tells me everyone’s a seller, that nearly all stocks are down, but that Holiday is
holding firm. I can’t decide whether I should be happy or sad. Part of me wants Holiday to
drop off, so I can buy more at a better price. The other part of me wants it to go up, because
at this point, every time the stock rises a point, I make a lot of easy money.
* * *
10:30 A.M. Harvey Myerson, the attorney who handled our USFL antitrust case, comes in for
a meeting. Harvey is an incredible trial lawyer. He took a case in which no one gave us a
prayer going in, and he managed to win on antitrust grounds, even though we were awarded
only token damages.
Even so, I’ve wondered, since the trial, whether perhaps Harvey was just a little too sharp
for some of the jurors. Every day he’d show up in one of his beautiful pinstripe suits, with a
little handkerchief in his pocket, and I’m just not sure how well that went over.
Overall, I think he did as good a job as anyone could, and I still believe he’s our best hope
on the appeal. One thing I like about Harvey is his enthusiasm. He’s still absolutely convinced
he’s going to win the appeal.
11:30 A.M. Stephen Hyde calls. After I bought out Holiday Inns’ interest in the Trump Plaza
Hotel and Casino in Atlantic City and took over the management in June, I hired Steve to run
the facility. Steve had been working as a vice president for Stephen A. Wynn at the Golden
Nugget. Wynn is one of the best gaming guys around, and my philosophy is always to hire the
best from the best. After a long-running negotiation, I offered Hyde a bigger job and more
money, and he said yes. I think he also liked the idea of working for me, and he didn’t mind
leaving Steve Wynn.
Wynn is very slick and smooth, but he’s also a very strange guy. A couple of weeks ago, he
called and said, “Donald, I just wanted to let you know that my wife and I are getting
divorced.” So I said, “Oh, I’m sorry to hear that, Steve.” He said, “Oh, don’t be sorry, it’s
great, we’re still in love, it’s just that we don’t want to be married anymore. In fact, she’s
right here with me. Do you want to say hello?” I politely declined.
Hyde is calling to report on the August figures for the Plaza, which just came in. He tells
me that gross operating profit was just over $9,038,000 compared with $3,438,000 for the
same period a year ago, when I was still partners with Holiday Inns, and they were managing
the facility.
“Not too bad,” I say to Steve, “considering we still don’t have any parking.” Still, I can’t
resist razzing him a little: “Now all you’ve got to do is get the hotel in mint condition.” I’m a
stickler for cleanliness, and last time I visited the hotel, I wasn’t totally happy.
“We’re working on it, Donald,” Steve says good-naturedly. “It’s already improving.”
12:00 noon I walk over to the Wollman Rink, to watch the pouring of the concrete. This
morning all of the papers had stories about our press conference.
When I get to the rink, it’s surrounded by a convoy of cement trucks lined up as if they’re
in a military operation. HRH, the construction company in charge of the project, has done a
fantastic job moving things along, but this has to be the most incredible sight yet: thousands
of pounds of wet concrete being poured from truck after truck into this huge rink. It’s like
watching the world’s biggest cake get iced.
Even though the press conference was yesterday, I notice photographers and camera crews
all over the place. This is the event everyone was waiting for.
1:30 P.M. I sit down with a reporter from Fortune who is doing a story about real estate and
the new tax laws—with me on the cover. Contrary to what a lot of people think, I don’t enjoy
doing press. I’ve been asked the same questions a million times now, and I don’t particularly
like talking about my personal life. Nonetheless, I understand that getting press can be very
helpful in making deals, and I don’t mind talking about them. I just try to be very selective.
Norma must turn down twenty requests a week from all over the world. Also, when I do give
an interview, I always keep it short. This reporter is in and out in less than twenty minutes. If
I didn’t limit myself, I could spend my life talking to the press.
2:45 P.M. A friend of mine, a highly successful and very well known painter, calls to say hello
and to invite me to an opening. I get a great kick out of this guy because, unlike some artists
I’ve met, he’s totally unpretentious.
A few months back he invited me to come to his studio. We were standing around talking,
when all of a sudden he said to me, “Do you want to see me earn twenty-five thousand
dollars before lunch?” Sure,” I said, having no idea what he meant. He picked up a large
open bucket of paint and splashed some on a piece of canvas stretched on the floor. Then he
picked up another bucket, containing a different color, and splashed some of that on the
canvas. He did this four times, and it took him perhaps two minutes. When he was done, he
turned to me and said, “Well, that’s it. I’ve just earned twenty-five thousand dollars. Let’s go
to lunch.”
He was smiling, but he was also absolutely serious. His point was that plenty of collectors
wouldn’t know the difference between his two-minute art and the paintings he really cares
about. They were just interested in buying his name.
I’ve always felt that a lot of modern art is a con, and that the most successful painters are
often better salesmen and promoters than they are artists. I sometimes wonder what would
happen if collectors knew what I knew about my friend’s work that afternoon. The art world
is so ridiculous that the revelation might even make his paintings more valuable! Not that my
friend is about to risk finding out.
4:00 P.M. A group of us meet in our conference room to go over the latest plans for the West
Side yards project, which we’re scheduled to show to the city tomorrow morning. It turns out
that Herb Sturz of the planning commission won’t be able to attend, but his key people will
be there.
There are perhaps fifteen people at this meeting, including Robert and Harvey Freeman,
and Alexander Cooper and his team. Alex is the architect-city planner I hired two months ago
to take over the design of the project, after it became clear that my original architect, Helmut
Jahn, just wasn’t making it with the city. I don’t know if the reason was his Germanic style,
or the fact that he is based in Chicago rather than New York, or just that he’s a little too slick.
I do know that he wasn’t getting anywhere with the City Planning Commission.
Alex, by contrast, was formerly a city planner himself and he’s almost a legend in that
office. He’s also the guy who designed Battery Park City, which has gotten great press.
Politically, he’s a much better choice than Helmut Jahn, and I’m a very practical guy.
We’ve been meeting like this every week for the past couple of months to hash out a broad
plan, including where to locate the residential buildings, the streets, the parks, and the
shopping mall. Today Alex has brought preliminary drawings of the layout we’ve agreed on.
At the southern end are the prospective NBC studios, adjacent to the world’s tallest building.
Then, heading north, there are the residential buildings, facing east over a boulevard, and
west over a huge eight-block-long shopping mall and out at the river. Every apartment has a
great view, which I believe is critical.
I am very happy with the new layout, and Alex seems happy too. I happen to think that tall
buildings are what will make this project special, but I’m not naïve about zoning. Eventually,
I know, we’re going to have to make some concessions. On the other hand, if the city won’t
approve something I think makes sense economically, I’ll just wait for the next administration
and try again. This site is only going to get more valuable.
6:00 P.M. I excuse myself, because I am due at an early dinner, and it’s not the kind to be late
for. Ivana and I have been invited, by John Cardinal O’Connor, to have dinner at St. Patrick’s
7:00 P.M. No matter whom you’ve met over the years, there is something incredible about
sitting down to dinner with the cardinal and a half dozen of his top bishops and priests in a
private dining room at St. Patrick’s Cathedral. It’s hard not to be a little awed.
We talk about politics, the city, real estate, and a half dozen other subjects, and it’s a
fascinating evening. As we leave, I tell Ivana how impressed I am with the cardinal. He’s not
only a man of great warmth, he’s also a businessman with great political instincts.
6:30 A.M. I’m leafing through the New York Times when I come to a huge picture of the
concrete being poured onto Wollman Rink. It’s on the front page of the second section. This
story just won’t quit.
* * *
9:15 A.M. We meet with the city on the West Side yards project. Almost everyone from
yesterday’s meeting is there, and we are joined by four city planners, including Rebecca
Robinson and Con Howe, who are directly in charge of evaluating our project.
Alex does the presentation, and he’s very good. Mostly he emphasizes the things we know
the city is going to like—the public parks, the easy access to the waterfront, the ways we’ve
devised to move traffic in and out. The only time the density issue comes up—how tall the
buildings will be—Alex just says we’re still working it out.
When it’s over, we all agree it went very well.
10:30 A.M. I go back to my office for a meeting to discuss progress on construction at Trump
Parc, the condominium I’m building out of the steel shell of the Barbizon-Plaza Hotel on
Central Park South. It’s an incredible location, and the building we’re redoing will be a great
The meeting includes Frank Williams, my architect on the project, Andrew Weiss, the
project manager, and Blanche Sprague, an executive vice president, who is in charge of sales.
Frank, who is very soft-spoken, is a fine architect. Blanchette—my nickname for her—is a
classic. She’s got a mouth that won’t quit, which is probably why she’s so good at sales. I like
to tell her that she must be a very tough woman to live with. The truth is I get a great kick
out of her.
We start by talking about what color to use on the frames of the windows. Details like these
make all the difference in the look and ambience of a building. After almost a half hour, we
finally agree on a light beige that will blend right into the color of the stone. I happen to like
earth tones. They are richer and more elegant than primary colors.
11:00 A.M. Frank Williams leaves, and we turn to a discussion of the demolition work at
Trump Parc. Andy tells me it’s not finished, and that the contractor has just given us a
$175,000 bill for “extras.” Extras are the costs a contractor adds to his original bid every time
you request any change in the plan you initially agreed on. You have to be very rough and
very tough with most contractors or they’ll take the shirt right off your back.
I pick up the phone and dial the guy in charge of demolition at Trump Parc. “Steve,” I say
when I get him, “this is Donald Trump. Listen, you’ve got to get your ass moving and get
finished. You’re behind. I want you to get personally involved in this.” He starts to give me
explanations but I cut him off. “I don’t want to know. I just want you to get the job done and
get out. And listen, Steve, you’re killing me on these extras. I don’t want you to deal with
Andy anymore on the extras. I want you to deal with me personally. If you try screwing me
on this job, you won’t be getting a second chance. I’ll never hire you again.”
My second concern is the laying of floors. I ask Andy for the number of our concrete guy.
“Okay,” I say, only half joking, “I’m going to take my life in my hands now.” Concrete guys
can be extremely rough. I get the number-two guy on the line. “Look,” I say to him, “your
boss wanted this contract very badly. I was set to give it to someone else, but he told me he’d
do a great job. I walked the site yesterday, and the patches you’re making aren’t level with
the existing concrete. In some places, they’re as much as a quarter-inch off.”
The guy doesn’t have any response, so I keep talking. “Nobody has the potential to give you
more work in the future than Trump. I’m going to be building when everyone else has gone
bust. So do me a favor. Get this thing done right.”
This time the guy has a response. “Every guy on the job is a pro,” he says. “We’ve given
you our best men, Mr. Trump.”
“Good,” I say. “Call me later and let me know how you’re doing.”
12:00 noon Alan Greenberg calls to tell me that Holiday has gone ahead and enacted some
“poison pill” provisions that will weigh the company down with debt and make it much less
attractive as a takeover target. I’m not worried. No poison pill is going to keep me from going
after Holiday Inn, if that’s what I decide I want to do.
The market is still taking a drubbing. It was off 80 points yesterday, and it’s down another
25 today. But Holiday is off only a point. Alan tells me that we’ve now bought almost 5
percent of the company.
* * *
12:15 P.M. Blanche stays on after Andy leaves to get me to choose a print advertisement for
Trump Parc She shows me a half dozen choices, and I don’t like any of them. She is furious.
Blanche wants to use a line drawing that shows the building and its panoramic views of
Central Park. “I like the idea of a line drawing,” I tell her. “But I don’t like these. Also, I want
a drawing that shows more of the building. Central Park is great, but in the end I’m not
selling a park, I’m selling a building and apartments.”
12:30 P.M. Norma comes in, carrying a huge pile of forms I have to sign as part of my
application for a Nevada gaming license. While I’m signing, Norma asks who I want to use as
character references. I think for a minute, and tell her to put down General Pete Dawkins, a
great Army football hero, a terrific guy, and a good friend who’s now an investment banker at
Shearson; Benjamin Hollaway, chairman and CEO of Equitable Real Estate Group; and Conrad
Stephenson of Chase Manhattan Bank.
“Also,” I tell Norma, “put down John Cardinal O’Connor.”
12:45 P.M. Ivana rings. She’s in the office and wants me to go with her to see another school
we’re considering sending our daughter to next fall. “Come on, Donald,” she says. “You
haven’t got anything else to do.” Sometimes I think she really believes it.
“Actually, honey, I’m a little busy right now,” I tell her. It doesn’t work. Three minutes
later she’s in my office, tugging at my sleeve. I finish signing the forms, and we go.
2:30 P.M. Bill Fugazy calls. I like to call him Willie the Fug, but he doesn’t seem to appreciate
it. Fugazy’s business is limousines, but he really should have been a broker. The guy knows
everyone. He’s one of Lee Iacocca’s best friends, and he’s the person who recommended to the
cardinal that he meet with me to discuss real estate and get to know each other better.
Fugazy asks me how dinner went last night at St. Pat’s and I tell him it was great. Before
we hang up, we set a golf date for the weekend.
2:45 P.M. John D’Alessio, the construction manager on my triplex in Trump Tower, comes by
to discuss the progress. He is carrying drawings. Except for the third floor, where the kids are,
and the roof, where someday I’m going to build a park sixty-eight stories up, I’ve gutted the
whole apartment. In truth, I’ve gone a little overboard. First of all, I practically doubled the
size of what I have by taking over the adjacent apartment. What I’m doing is about as close as
you’re going to get, in the twentieth century, to the quality of Versailles. Everything is made
to order. For example, we had the finest craftsmen in Italy hand-carve twenty-seven solid
marble columns for the living room. They arrived yesterday, and they’re beautiful. I can
afford the finest workmanship, and when it comes to my own apartment, I figure, why spare
any expense? I want the best, whatever it takes.
I look over the drawings with John and mark up a few changes. Then I ask him how the job
is going. “Not bad,” he said. “We’re getting there.”
“Well, push, John,” I say. “Push hard.”
3:30 P.M. A Greek shipping magnate is on the line. “How’s the shipping business?” I ask. He
tells me he has a deal he’d like to discuss. He doesn’t say what it is, but with certain people
you don’t ask. If it wasn’t big, I assume he wouldn’t waste my time. We set a date.
4:00 P.M. I get a call from a guy who sells and leases corporate airplanes. I’ve been
considering buying a G-4, the jet that most corporations use. I tell the guy on the phone that
I’m still interested in a plane, but that he should keep his eye out for a 727, which is what I
really want.
4:30 P.M. Nick Ribis calls from Australia. He tells me things are going very well on our
negotiations to be designated builder and operator of the world’s largest casino. Nick fills me
in on the details and says that we should know more by the following Monday. “Sounds
great,” I tell him. “Call me before you fly back.”
4:45 P.M. Norma tells me that David Letterman, the talk-show host, is downstairs in the
atrium of Trump Tower, filming a day in the life of two out-of-town tourists. He’d like to
know if they could stop up and say hello.
I almost never stay up late enough to watch Letterman, but I know he’s hot. I say sure. Five
minutes later, Letterman walks in, along with a cameraman, a couple of assistants, and a very
nice-looking married couple from Louisville. We kid around a little, and I say what a great
town I think Louisville is—maybe we should all go in together on a deal there. Letterman asks
me how much an apartment goes for in Trump Tower. I tell him that he might be able to pick
up a one-bedroom for $1 million.
“Tell me the truth,” Letterman says after a few minutes of bantering. “It’s Friday afternoon,
you get a call from us out of the blue, you tell us we can come up. Now you’re standing here
talking to us. You must not have much to do.”
“Truthfully, David,” I say, “you’re right. Absolutely nothing to do.”
The Elements of the Deal
Y STYLE of deal-making is quite simple and straightforward. I aim very high, and then I
just keep pushing and pushing and pushing to get what I’m after. Sometimes I settle
for less than I sought, but in most cases I still end up with what I want.
More than anything else, I think deal-making is an ability you’re born with. It’s in the
genes. I don’t say that egotistically. It’s not about being brilliant. It does take a certain
intelligence, but mostly it’s about instincts. You can take the smartest kid at Wharton, the one
who gets straight A’s and has a 170 IQ, and if he doesn’t have the instincts, he’ll never be a
successful entrepreneur.
Moreover, most people who do have the instincts will never recognize that they do,
because they don’t have the courage or the good fortune to discover their potential.
Somewhere out there are a few men with more innate talent at golf than Jack Nicklaus, or
women with greater ability at tennis than Chris Evert or Martina Navratilova, but they will
never lift a club or swing a racket and therefore will never find out how great they could have
been. Instead, they’ll be content to sit and watch stars perform on television.
When I look back at the deals I’ve made—and the ones I’ve lost or let pass—I see certain
common elements. But unlike the real estate evangelists you see all over television these days,
I can’t promise you that by following the precepts I’m about to offer you’ll become a
millionaire overnight. Unfortunately, life rarely works that way, and most people who try to
get rich quick end up going broke instead. As for those among you who do have the genes,
who do have the instincts, and who could be highly successful, well, I still hope you won’t
follow my advice. Because that would just make it a much tougher world for me.
Think Big
I like thinking big. I always have. To me it’s very simple: if you’re going to be thinking
anyway, you might as well think big. Most people think small, because most people are afraid
of success, afraid of making decisions, afraid of winning. And that gives people like me a
great advantage.
My father built low-income and middle-income buildings in Brooklyn and Queens, but even
then, I gravitated to the best location. When I was working in Queens, I always wanted Forest
Hills. And as I grew older, and perhaps wiser, I realized that Forest Hills was great, but Forest
Hills isn’t Fifth Avenue. And so I began to look toward Manhattan, because at a very early
age, I had a true sense of what I wanted to do.
I wasn’t satisfied just to earn a good living. I was looking to make a statement. I was out to
build something monumental—something worth a big effort. Plenty of other people could
buy and sell little brownstones, or build cookie-cutter red-brick buildings. What attracted me
was the challenge of building a spectacular development on almost one hundred acres by the
river on the West Side of Manhattan, or creating a huge new hotel next to Grand Central
Station at Park Avenue and 42nd Street.
The same sort of challenge is what attracted me to Atlantic City. It’s nice to build a
successful hotel. It’s a lot better to build a hotel attached to a huge casino that can earn fifty
times what you’d ever earn renting hotel rooms. You’re talking a whole different order of
One of the keys to thinking big is total focus. I think of it almost as a controlled neurosis,
which is a quality I’ve noticed in many highly successful entrepreneurs. They’re obsessive,
they’re driven, they’re single-minded and sometimes they’re almost maniacal, but it’s all
channeled into their work. Where other people are paralyzed by neurosis, the people I’m
talking about are actually helped by it.
I don’t say this trait leads to a happier life, or a better life, but it’s great when it comes to
getting what you want. This is particularly true in New York real estate, where you are
dealing with some of the sharpest, toughest, and most vicious people in the world. I happen
to love to go up against these guys, and I love to beat them.
Protect the Downside and the Upside Will Take Care of Itself
People think I’m a gambler. I’ve never gambled in my life. To me, a gambler is someone who
plays slot machines. I prefer to own slot machines. It’s a very good business being the house.
It’s been said that I believe in the power of positive thinking. In fact, I believe in the power
of negative thinking. I happen to be very conservative in business. I always go into the deal
anticipating the worst. If you plan for the worst—if you can live with the worst—the good
will always take care of itself. The only time in my life I didn’t follow that rule was with the
USFL. I bought a losing team in a losing league on a long shot. It almost worked, through our
antitrust suit, but when it didn’t, I had no fallback. The point is that you can’t be too greedy.
If you go for a home run on every pitch, you’re also going to strike out a lot. I try never to
leave myself too exposed, even if it means sometimes settling for a triple, a double, or even,
on rare occasions, a single.
One of the best examples I can give is my experience in Atlantic City. Several years ago, I
managed to piece together an incredible site on the Boardwalk. The individual deals I made
for parcels were contingent on my being able to put together the whole site. Until I achieved
that, I didn’t have to put up very much money at all.
Once I assembled the site, I didn’t rush to start construction. That meant I had to pay the
carrying charges for a longer period, but before I spent hundreds of millions of dollars and
several years on construction, I wanted to make sure I got my gaming license. I lost time, but
I also kept my exposure much lower.
When I got my licensing on the Boardwalk site, Holiday Inns came along and offered to be
my partner. Some people said, “You don’t need them. Why give up fifty percent of your
profits?” But Holiday Inns also offered to pay back the money I already had in the deal, to
finance all the construction, and to guarantee me against losses for five years. My choice was
whether to keep all the risk myself, and own 100 percent of the casino, or settle for a 50
percent stake without putting up a dime. It was an easy decision.
Barron Hilton, by contrast, took a bolder approach when he built his casino in Atlantic
City. In order to get opened as quickly as possible, he filed for a license and began
construction on a $400 million facility at the same time. But then, two months before the
hotel was scheduled to open, Hilton was denied a license. He ended up selling to me at the
last minute, under a lot of pressure, and without a lot of other options. I renamed the facility
Trump’s Castle and it is now one of the most successful hotel-casinos anywhere in the world.
Maximize Your Options
I also protect myself by being flexible. I never get too attached to one deal or one approach.
For starters, I keep a lot of balls in the air, because most deals fall out, no matter how
promising they seem at first. In addition, once I’ve made a deal, I always come up with at
least a half dozen approaches to making it work, because anything can happen, even to the
best-laid plans.
For example, if I hadn’t gotten the approvals I wanted for Trump Tower, I could always
have built an office tower and done just fine. If I’d been turned down for licensing in Atlantic
City, I could have sold the site I’d assembled to another casino operator, at a good profit.
Perhaps the best example I can give is the first deal I made in Manhattan. I got an option to
purchase the Penn Central railyards at West 34th Street. My original proposal was to build
middle-income housing on the site, with government financing. Unfortunately, the city began
to have financial problems, and money for public housing suddenly dried up. I didn’t spend a
lot of time feeling sorry for myself. Instead, I switched to my second option and began
promoting the site as ideal for a convention center. It took two years of pushing and
promoting, but ultimately the city did designate my site for the convention center—and that’s
where it was built.
Of course, if they hadn’t chosen my site, I would have come up with a third approach.
Know Your Market
Some people have a sense of the market and some people don’t. Steven Spielberg has it. Lee
Iacocca of Chrysler has it, and so does Judith Krantz in her way. Woody Allen has it, for the
audience he cares about reaching, and so does Sylvester Stallone, at the other end of the
spectrum. Some people criticize Stallone, but you’ve got to give him credit. I mean, here’s a
man who is just forty-one years old, and he’s already created two of the all-time-great
characters, Rocky and Rambo. To me he’s a diamond-in-the-rough type, a genius purely by
instinct. He knows what the public wants and he delivers it.
I like to think I have that instinct. That’s why I don’t hire a lot of number-crunchers, and I
don’t trust fancy marketing surveys. I do my own surveys and draw my own conclusions. I’m
a great believer in asking everyone for an opinion before I make a decision. It’s a natural
reflex. If I’m thinking of buying a piece of property, I’ll ask the people who live nearby about
the area—what they think of the schools and the crime and the shops. When I’m in another
city and I take a cab, I’ll always make it a point to ask the cabdriver questions. I ask and I ask
and I ask, until I begin to get a gut feeling about something. And that’s when I make a
I have learned much more from conducting my own random surveys than I could ever have
learned from the greatest of consulting firms. They send a crew of people down from Boston,
rent a room in New York, and charge you $100,000 for a lengthy study. In the end, it has no
conclusion and takes so long to complete that if the deal you were considering was a good
one, it will be long gone.
The other people I don’t take too seriously are the critics—except when they stand in the
way of my projects. In my opinion, they mostly write to impress each other, and they’re just
as swayed by fashions as anyone else. One week it’s spare glass towers they are praising to
the skies. The next week, they’ve rediscovered old, and they’re celebrating detail and
ornamentation. What very few of them have is any feeling for what the public wants. Which
is why, if these critics ever tried to become developers, they’d be terrible failures.
Trump Tower is a building the critics were skeptical about before it was built, but which
the public obviously liked. I’m not talking about the sort of person who inherited money 175
years ago and lives on 84th Street and Park Avenue. I’m taking about the wealthy Italian with
the beautiful wife and the red Ferrari. Those people—the audience I was after—came to
Trump Tower in droves.
The funny thing about Trump Tower is that we ended up getting great architectural
reviews. The critics didn’t want to review it well because it stood for a lot of things they
didn’t like at the time. But in the end, it was such a gorgeous building that they had no choice
but to say so. I always follow my own instincts, but I’m not going to kid you: it’s also nice to
get good reviews.
Use Your Leverage
The worst thing you can possibly do in a deal is seem desperate to make it. That makes the
other guy smell blood, and then you’re dead. The best thing you can do is deal from strength,
and leverage is the biggest strength you can have. Leverage is having something the other guy
wants. Or better yet, needs. Or best of all, simply can’t do without.
Unfortunately, that isn’t always the case, which is why leverage often requires imagination,
and salesmanship. In other words, you have to convince the other guy it’s in his interest to
make the deal.
Back in 1974, in an effort to get the city to approve my deal to buy the Commodore Hotel
on East 42nd Street, I convinced its owners to go public with the fact that they were planning
to close down the hotel. After they made the announcement, I wasn’t shy about pointing out
to everyone in the city what a disaster a boarded-up hotel would be for the Grand Central
area, and for the entire city.
When the board of Holiday Inns was considering whether to enter into a partnership with
me in Atlantic City, they were attracted to my site because they believed my construction was
farther along than that of any other potential partner. In reality, I wasn’t that far along, but I
did everything I could, short of going to work at the site myself, to assure them that my
casino was practically finished. My leverage came from confirming an impression they were
already predisposed to believe.
When I bought the West Side railyards, I didn’t name the project Television City by
accident, and I didn’t choose the name because I think it’s pretty. I did it to make a point.
Keeping the television networks in New York—and NBC in particular—is something the city
very much wants to do. Losing a network to New Jersey would be a psychological and
economic disaster.
Leverage: don’t make deals without it.
Enhance Your Location
Perhaps the most misunderstood concept in all of real estate is that the key to success is
location, location, location. Usually, that’s said by people who don’t know what they’re
talking about. First of all, you don’t necessarily need the best location. What you need is the
best deal. Just as you can create leverage, you can enhance a location, through promotion
and through psychology.
When you have 57th Street and Fifth Avenue as your location, as I did with Trump Tower,
you need less promotion. But even there, I took it a step further, by promoting Trump Tower
as something almost larger than life. By contrast, Museum Tower, two blocks away and built
above the Museum of Modern Art, wasn’t marketed well, never achieved an “aura,” and
didn’t command nearly the prices we did at Trump Tower.
Location also has a lot to do with fashion. You can take a mediocre location and turn it into
something considerably better just by attracting the right people. After Trump Tower I built
Trump Plaza, on a site at Third Avenue and 61st Street that I was able to purchase very
inexpensively. The truth is that Third Avenue simply didn’t compare with Fifth Avenue as a
location. But Trump Tower had given a value to the Trump name, and I built a very striking
building on Third Avenue. Suddenly we were able to command premium prices from very
wealthy and successful people who might have chosen Trump Tower if the best apartments
hadn’t been sold out. Today Third Avenue is a very prestigious place to live, and Trump Plaza
is a great success.
My point is that the real money isn’t made in real estate by spending the top dollar to buy
the best location. You can get killed doing that, just as you can get killed buying a bad
location, even for a low price. What you should never do is pay too much, even if that means
walking away from a very good site. Which is all a more sophisticated way of looking at
Get the Word Out
You can have the most wonderful product in the world, but if people don’t know about it, it’s
not going to be worth much. There are singers in the world with voices as good as Frank
Sinatra’s, but they’re singing in their garages because no one has ever heard of them. You
need to generate interest, and you need to create excitement. One way is to hire public
relations people and pay them a lot of money to sell whatever you’ve got. But to me, that’s
like hiring outside consultants to study a market. It’s never as good as doing it yourself.
One thing I’ve learned about the press is that they’re always hungry for a good story, and
the more sensational the better. It’s in the nature of the job, and I understand that. The point
is that if you are a little different, or a little outrageous, or if you do things that are bold or
controversial, the press is going to write about you. I’ve always done things a little
differently, I don’t mind controversy, and my deals tend to be somewhat ambitious. Also, I
achieved a lot when I was very young, and I chose to live in a certain style. The result is that
the press has always wanted to write about me.
I’m not saying that they necessarily like me. Sometimes they write positively, and
sometimes they write negatively. But from a pure business point of view, the benefits of being
written about have far outweighed the drawbacks. It’s really quite simple. If I take a full-page
ad in the New York Times to publicize a project, it might cost $40,000, and in any case, people
tend to be skeptical about advertising. But if the New York Times writes even a moderately
positive one-column story about one of my deals, it doesn’t cost me anything, and it’s worth a
lot more than $40,000.
The funny thing is that even a critical story, which may be hurtful personally, can be very
valuable to your business. Television City is a perfect example. When I bought the land in
1985, many people, even those on the West Side, didn’t realize that those one hundred acres
existed. Then I announced I was going to build the world’s tallest building on the site.
Instantly, it became a media event: the New York Times put it on the front page, Dan Rather
announced it on the evening news, and George Will wrote a column about it in Newsweek.
Every architecture critic had an opinion, and so did a lot of editorial writers. Not all of them
liked the idea of the world’s tallest building. But the point is that we got a lot of attention,
and that alone creates value.
The other thing I do when I talk with reporters is to be straight. I try not to deceive them or
to be defensive, because those are precisely the ways most people get themselves into trouble
with the press. Instead, when a reporter asks me a tough question, I try to frame a positive
answer, even if that means shifting the ground. For example, if someone asks me what
negative effects the world’s tallest building might have on the West Side, I turn the tables and
talk about how New Yorkers deserve the world’s tallest building, and what a boost it will give
the city to have that honor again. When a reporter asks why I build only for the rich, I note
that the rich aren’t the only ones who benefit from my buildings. I explain that I put
thousands of people to work who might otherwise be collecting unemployment, and that I
add to the city’s tax base every time I build a new project. I also point out that buildings like
Trump Tower have helped spark New York’s renaissance.
The final key to the way I promote is bravado. I play to people’s fantasies. People may not
always think big themselves, but they can still get very excited by those who do. That’s why a
little hyperbole never hurts. People want to believe that something is the biggest and the
greatest and the most spectacular.
I call it truthful hyperbole. It’s an innocent form of exaggeration—and a very effective form
of promotion.
Fight Back
Much as it pays to emphasize the positive, there are times when the only choice is
confrontation. In most cases I’m very easy to get along with. I’m very good to people who are
good to me. But when people treat me badly or unfairly or try to take advantage of me, my
general attitude, all my life, has been to fight back very hard. The risk is that you’ll make a
bad situation worse, and I certainly don’t recommend this approach to everyone. But my
experience is that if you’re fighting for something you believe in—even if it means alienating
some people along the way—things usually work out for the best in the end.
When the city unfairly denied me, on Trump Tower, the standard tax break every
developer had been getting, I fought them in six different courts. It cost me a lot of money, I
was considered highly likely to lose, and people told me it was a no-win situation politically. I
would have considered it worth the effort regardless of the outcome. In this case, I won—
which made it even better.
When Holiday Inns, once my partners at the Trump Plaza Hotel and Casino in Atlantic City,
ran a casino that consistently performed among the bottom 50 percent of casinos in town, I
fought them very hard and they finally sold out their share to me. Then I began to think
about trying to take over the Holiday Inns company altogether.
Even if I never went on the offensive, there are a lot of people gunning for me now. One of
the problems when you become successful is that jealousy and envy inevitably follow. There
are people—I categorize them as life’s losers—who get their sense of accomplishment and
achievement from trying to stop others. As far as I’m concerned, if they had any real ability
they wouldn’t be fighting me, they’d be doing something constructive themselves.
Deliver the Goods
You can’t con people, at least not for long. You can create excitement, you can do wonderful
promotion and get all kinds of press, and you can throw in a little hyperbole. But if you don’t
deliver the goods, people will eventually catch on.
I think of Jimmy Carter. After he lost the election to Ronald Reagan, Carter came to see me
in my office. He told me he was seeking contributions to the Jimmy Carter Library. I asked
how much he had in mind. And he said, “Donald, I would be very appreciative if you
contributed five million dollars.”
I was dumbfounded. I didn’t even answer him.
But that experience also taught me something. Until then, I’d never understood how Jimmy
Carter became president. The answer is that as poorly qualified as he was for the job, Jimmy
Carter had the nerve, the guts, the balls, to ask for something extraordinary. That ability
above all helped him get elected president. But then, of course, the American people caught
on pretty quickly that Carter couldn’t do the job, and he lost in a landslide when he ran for
Ronald Reagan is another example. He is so smooth and so effective a performer that he
completely won over the American people. Only now, nearly seven years later, are people
beginning to question whether there’s anything beneath that smile.
I see the same thing in my business, which is full of people who talk a good game but don’t
deliver. When Trump Tower became successful, a lot of developers got the idea of imitating
our atrium, and they ordered their architects to come up with a design. The drawings would
come back, and they would start costing out the job.
What they discovered is that the bronze escalators were going to cost a million dollars
extra, and the waterfall was going to cost two million dollars, and the marble was going to
cost many millions more. They saw that it all added up to many millions of dollars, and all of
a sudden these people with these great ambitions would decide, well, let’s forget about the
The dollar always talks in the end. I’m lucky, because I work in a very, very special niche,
at the top of the market, and I can afford to spend top dollar to build the best. I promoted the
hell out of Trump Tower, but I also had a great product to promote.
Contain the Costs
I believe in spending what you have to. But I also believe in not spending more than you
should. When I was building low-income housing, the most important thing was to get it built
quickly, inexpensively, and adequately, so you could rent it out and make a few bucks. That’s
when I learned to be cost-conscious. I never threw money around. I learned from my father
that every penny counts, because before too long your pennies turn into dollars.
To this day, if I feel a contractor is overcharging me, I’ll pick up the phone, even if it’s only
for $5,000 or $10,000, and I’ll complain. People say to me, “What are you bothering for, over
a few bucks?” My answer is that the day I can’t pick up the telephone and make a twenty-
five-cent call to save $10,000 is the day I’m going to close up shop.
The point is that you can dream great dreams, but they’ll never amount to much if you
can’t turn them into reality at a reasonable cost. At the time I built Trump Plaza in Atlantic
City, banks were reluctant to finance new construction at all, because almost every casino up
to then had experienced tens of millions of dollars in cost overruns. We brought Trump Plaza
in on budget, and on time. As a result, we were able to open for Memorial Day weekend, the
start of the high season. By contrast, Bob Guccione of Penthouse has been trying for the past
seven years to build a casino on the Boardwalk site right next to ours. All he has to show for
his efforts is a rusting half-built frame and tens of millions of dollars in lost revenues and
squandered carrying costs.
Even small jobs can get out of control if you’re not attentive. For nearly seven years I
watched from the window of my office as the city tried to rebuild Wollman Rink in Central
Park. At the end of that time, millions of dollars had been wasted and the job was farther
from being completed than when the work began. They were all set to rip out the concrete
and start over when I finally couldn’t stand it anymore, and I offered to do it myself. The job
took four months to complete at a fraction of the city’s cost.
Have Fun
I don’t kid myself. Life is very fragile, and success doesn’t change that. If anything, success
makes it more fragile. Anything can change, without warning, and that’s why I try not to take
any of what’s happened too seriously. Money was never a big motivation for me, except as a
way to keep score. The real excitement is playing the game. I don’t spend a lot of time
worrying about what I should have done differently, or what’s going to happen next. If you
ask me exactly what the deals I’m about to describe all add up to in the end, I’m not sure I
have a very good answer. Except that I’ve had a very good time making them.
HE MOST IMPORTANT INFLUENCE on me, growing up, was my father, Fred Trump. I learned a lot
from him. I learned about toughness in a very tough business, I learned about
motivating people, and I learned about competence and efficiency: get in, get it done,
get it done right, and get out.
At the same time, I learned very early on that I didn’t want to be in the business my father
was in. He did very well building rent-controlled and rent-stabilized housing in Queens and
Brooklyn, but it was a very tough way to make a buck. I wanted to try something grander,
more glamorous, and more exciting. I also realized that if I ever wanted to be known as more
than Fred Trump’s son, I was eventually going to have to go out and make my own mark. I’m
fortunate that my father was content to stay with what he knew and did so well. That left me
free to make my mark in Manhattan. Even so, I never forgot the lessons I learned at my
father’s side.
His story is classic Horatio Alger. Fred Trump was born in New Jersey in 1905. His father,
who came here from Sweden as a child, owned a moderately successful restaurant, but he
was also a hard liver and a hard drinker, and he died when my father was eleven years old.
My father’s mother, Elizabeth, went to work as a seamstress to support her three children.
The oldest, also named Elizabeth, was sixteen at the time, and the youngest, John, was nine.
My father was the middle child but the first son, and he became the man of the house. Almost
immediately, he began taking odd jobs—everything from deliveries for a local fruit store to
shining shoes to hauling lumber on a construction site. Construction always interested him,
and during high school he began taking night classes in carpentry, plan-reading, and
estimating, figuring that if he learned a trade, he’d always be able to make a living. By the
age of sixteen, he’d built his first structure, a two-car frame garage for a neighbor. Middle-
class people were just beginning to buy cars, few homes had attached garages, and my father
was soon able to establish a very good new business building prefabricated garages for fifty
dollars apiece.
He graduated from high school in 1922, and with a family to support, he couldn’t even
consider college. Instead, he went to work as a carpenter’s helper for a home-builder in
Queens. He was better with his hands than most, but he also had some other advantages. For
starters, he was just a very smart guy. Even to this day, he can add five columns of numbers
in his head and keep them all straight. Between his night courses and his basic common
sense, he was able to show the other carpenters, most of whom had no education at all,
shortcuts, such as how to frame a rafter with a steel square.
In addition, my father was always very focused and very ambitious. Most of his co-workers
were happy just to have a job. My father not only wanted to work, he also wanted to do well
and to get ahead. Finally, my father just plain loved working. From as early as I can
remember, my father would say to me, “The most important thing in life is to love what
you’re doing, because that’s the only way you’ll ever be really good at it.
One year after he got out of high school, my father built his first home, a one-family house
in Woodhaven, Queens. It cost a little less than $5,000 to build, and he sold it for $7,500. He
called his company Elizabeth Trump & Son because at the time he wasn’t of age, and his
mother had to sign all his legal documents and checks. As soon as he sold his first house, he
used the profit to build another, and then another and another, in working-class Queens
communities like Woodhaven, Hollis, and Queens Village. For working people who’d spent
their lives in small, crowded apartments, my father offered a whole new life-style: modestly
priced suburban-style brick houses. They were gobbled up as fast as he could build them.
Instinctively, my father began to think bigger. By 1929, aiming at a more affluent market,
he started building much larger homes. Instead of tiny brick houses, he put up three-story
Colonials, Tudors, and Victorians in a section of Queens that ultimately became known as
Jamaica Estates—and where, eventually, he built a home for our family. When the Depression
hit and the housing market fell off, my father turned his attention to other businesses. He
bought a bankrupt mortgage-servicing company and sold it at a profit a year later. Next, he
built a self-service supermarket in Woodhaven, one of the first of its kind. All the local
tradesmen—butcher, tailor, shoemaker—rented concessions in the space, and the
convenience of having everything available under one roof made the operation an immediate
success. Within a year, however, eager to return to building, my father sold out to King
Kullen for a large profit.
By 1934 the Depression was finally beginning to ease, but money was still tight and so my
father decided to go back to building lower-priced homes. This time he chose the depressed
Flatbush area of Brooklyn, where land was cheap and he sensed there was a lot of room for
growth. Once again his instincts were right. In three weeks he sold 78 homes, and during the
next dozen years, he built 2,500 more throughout Queens and Brooklyn. He was becoming
very successful.
In 1936 my father married my wonderful mother, Mary MacLeod, and they began a family.
My father’s success also made it possible for him to give to his younger brother something
he’d missed himself: a college education. With my father’s help, my uncle, John Trump, went
to college, got his Ph.D. from M.I.T., and eventually became a full professor of physics and
one of the country’s great scientists. Perhaps because my father never got a college degree
himself, he continued to view people who had one with a respect that bordered on awe. In
most cases they didn’t deserve it. My father could run circles around most academics and he
would have done very well in college, if he’d been able to go.
We had a very traditional family. My father was the power and the breadwinner, and my
mother was the perfect housewife. That didn’t mean she sat around playing bridge and
talking on the phone. There were five children in all, and besides taking care of us, she
cooked and cleaned and darned socks and did charity work at the local hospital. We lived in a
large house, but we never thought of ourselves as rich kids. We were brought up to know the
value of a dollar and to appreciate the importance of hard work. Our family was always very
close, and to this day they are my closest friends. My parents had no pretensions. My father
still works out of a small, modest back office on Avenue Z in the Sheepshead Bay section of
Brooklyn, in a building he put up in 1948. It’s simply never occurred to him to move.
My sister Maryanne was the first born, and when she graduated from Mount Holyoke
College, she followed my mother’s path at first, marrying and staying at home while her son
grew up. But she also inherited a lot of my father’s drive and ambition, and when her son
David became a teenager, she went back to school, to study law. She graduated with honors,
began with a private firm, worked for five years as a federal prosecutor in the U.S. Attorney’s
Office, and four years ago became a federal judge. Maryanne is really something. My younger
sister, Elizabeth, is kind and bright but less ambitious, and she works at Chase Manhattan
Bank in Manhattan.
My older brother, Freddy, the first son, had perhaps the hardest time in our family. My
father is a wonderful man, but he is also very much a business guy and strong and tough as
hell. My brother was just the opposite. Handsome as could be, he loved parties and had a
great, warm personality and a real zest for life. He didn’t have an enemy in the world.
Naturally, my father very much wanted his oldest son in the business, but unfortunately,
business just wasn’t for Freddy. He went to work with my father reluctantly, and he never
had a feel for real estate. He wasn’t the kind of guy who could stand up to a killer contractor
or negotiate with a rough supplier. Because my father was so strong, there were inevitably
confrontations between the two of them. In most cases, Freddy came out on the short end.
Eventually, it became clear to all of us that it wasn’t working, and Freddy went off to
pursue what he loved most—flying airplanes. He moved to Florida, became a professional
pilot, and flew for TWA. He also loved fishing and boating. Freddy was probably happiest
during that period in his life, and yet I can remember saying to him, even though I was eight
years younger, “Come on, Freddy, what are you doing? You’re wasting your time.” I regret
now that I ever said that.
Perhaps I was just too young to realize that it was irrelevant what my father or I thought
about what Freddy was doing. What mattered was that he enjoyed it. Along the way, I think
Freddy became discouraged, and he started to drink, and that led to a downward spiral. At
the age of forty-three, he died. It’s very sad, because he was a wonderful guy who never quite
found himself. In many ways he had it all, but the pressures of our particular family were not
for him. I only wish I had realized this sooner.
Fortunately for me, I was drawn to business very early, and I was never intimidated by my
father, the way most people were. I stood up to him, and he respected that. We had a
relationship that was almost businesslike. I sometimes wonder if we’d have gotten along so
well if I hadn’t been as business-oriented as I am.
Even in elementary school, I was a very assertive, aggressive kid. In the second grade I
actually gave a teacher a black eye—I punched my music teacher because I didn’t think he
knew anything about music and I almost got expelled. I’m not proud of that, but it’s clear
evidence that even early on I had a tendency to stand up and make my opinions known in a
very forceful way. The difference now is that I like to use my brain instead of my fists.
I was always something of a leader in my neighborhood. Much the way it is today, people
either liked me a lot, or they didn’t like me at all. In my own crowd I was very well liked, and
I tended to be the kid that others followed. As an adolescent I was mostly interested in
creating mischief, because for some reason I liked to stir things up, and I liked to test people.
I’d throw water balloons, shoot spitballs, and make a ruckus in the schoolyard and at birthday
parties. It wasn’t malicious so much as it was aggressive. My brother Robert likes to tell the
story of the time when it became clear to him where I was headed.
Robert is two years younger than I am, and we have always been very close, although he is
much quieter and more easygoing than I am. One day we were in the playroom of our house,
building with blocks. I wanted to build a very tall building, but it turned out that I didn’t
have enough blocks. I asked Robert if I could borrow some of his, and he said, “Okay, but you
have to give them back when you’re done.” I ended up using all of my blocks, and then all of
his, and when I was done, I’d created a beautiful building. I liked it so much that I glued the
whole thing together. And that was the end of Robert’s blocks.
When I turned thirteen, my father decided to send me to a military school, assuming that a
little military training might be good for me. I wasn’t thrilled about the idea, but it turned out
he was right. Beginning in the eighth grade I went to the New York Military Academy in
upstate New York. I stayed through my senior year, and along the way I learned a lot about
discipline, and about channeling my aggression into achievement. In my senior year I was
appointed a captain of the cadets.
There was one teacher in particular who had a big impact on me. Theodore Dobias was a
former drill sergeant in the marines, and physically he was very tough and very rough, the
kind of guy who could slam into a goalpost wearing a football helmet and break the post
rather than his head. He didn’t take any back talk from anyone, least of all from kids who
came from privileged backgrounds. If you stepped out of line, Dobias smacked you and he
smacked you hard. Very quickly I realized that I wasn’t going to make it with this guy by
trying to take him on physically. A few less fortunate kids chose that route, and they ended
up getting stomped. Most of my classmates took the opposite approach and became
nebbishes. They never challenged Dobias about anything.
I took a third route, which was to use my head to get around the guy. I figured out what it
would take to get Dobias on my side. In a way, I finessed him. It helped that I was a good
athlete, since he was the baseball coach and I was the captain of the team. But I also learned
how to play him.
What I did, basically, was to convey that I respected his authority, but that he didn’t
intimidate me. It was a delicate balance. Like so many strong guys, Dobias had a tendency to
go for the jugular if he smelled weakness. On the other hand, if he sensed strength but you
didn’t try to undermine him, he treated you like a man. From the time I figured that out—and
it was more an instinct than a conscious thought—we got along great.
I was a good enough student at the academy, although I can’t say I ever worked very hard.
I was lucky that it came relatively easily to me, because I was never all that interested in
schoolwork. I understood early on that the whole academic thing was only a preliminary to
the main event—which was going to be whatever I did after I graduated from college.
Almost from the time I could walk, I’d been going to construction sites with my father.
Robert and I would tag along and spend our time hunting for empty soda bottles, which we’d
take to the store for deposit money. As a teenager, when I came home from school for
vacation, I followed my father around to learn about the business close up—dealing with
contractors or visiting buildings or negotiating for a new site.
You made it in my father’s business—rent-controlled and rent-stabilized buildings—by
being very tough and very relentless. To turn a profit, you had to keep your costs down, and
my father was always very price-conscious. He’d negotiate just as hard with a supplier of
mops and floor wax as he would with the general contractor for the larger items on a project.
One advantage my father had was that he knew what everything cost. No one could put
anything over on him. If you know, for example, that a plumbing job is going to cost the
contractor $400,000, then you know how far you can push the guy. You’re not going to try to
negotiate him down to $300,000, because that’s just going to put him out of business. But
you’re also not going to let him talk you into $600,000.
The other way my father got contractors to work for a good price was by selling them on
his reliability. He’d offer a low price for a job, but then he’d say, “Look, with me you get paid,
and you get paid on time, and with someone else, who knows if you ever see your money?”
He’d also point out that with him they’d get in and out quickly and on to the next job. And
finally, because he was always building, he could hold out the promise of plenty of future
work. His arguments were usually compelling.
My father was also an unbelievably demanding taskmaster. Every morning at six, he’d be
there at the site and he would just pound and pound and pound. He was almost a one-man
show. If a guy wasn’t doing his job the way my father thought it should be done—and I mean
any job, because he could do them all—he’d jump in and take over.
It was always amusing to watch a certain scenario repeat itself. My father would start a
building in, say, Flatbush, at the same time that two competitors began putting up their own
buildings nearby. Invariably, my father would finish his building three or four months before
his competitors did. His building would also always be a little better-looking than the other
two, with a nicer, more spacious lobby and larger rooms in the apartments themselves. He’d
rent them out quickly, at a time when it wasn’t so easy to rent. Eventually, one or both of his
competitors would go bankrupt before they’d finish their buildings, and my father would step
in and buy them out. I saw this happen over and over.
In 1949, when I was just three years old, my father began building Shore Haven
Apartments, the first of several large apartment complexes that eventually made him one of
the biggest landlords in New York’s outer boroughs. Because he built the projects so
efficiently, my father did exceptionally well with them. At the time, the government was still
in the business of financing lower- and middle-income housing. To build Shore Haven, for
example, my father got a loan of $10.3 million from the Federal Housing Administration
(FHA). The loan was based on what the agency projected as a fair and reasonable cost for the
project, including a builder’s profit of 7.5 percent.
By pushing his contractors very hard, and negotiating hard with his suppliers, my father
was able to bring the project in ahead of schedule and almost $1 million under budget. The
term “windfall profits” was actually coined to describe what my father and some others
managed to earn through hard work and competence. Eventually such profits were
In the meantime, however, my father put up thousands of good quality lower- and middle-
income apartments of the sort that no one is building today because it’s not profitable and
government subsidies have been eliminated. To this day, the Trump buildings in Queens and
Brooklyn are considered among the best reasonably priced places to live in New York.
After I graduated from New York Military Academy in 1964 I flirted briefly with the idea of
attending film school at the University of Southern California. I was attracted to the glamour
of the movies, and I admired guys like Sam Goldwyn, Darryl Zanuck, and most of all Louis B.
Mayer, whom I considered great showmen. But in the end I decided real estate was a much
better business.
I began by attending Fordham University in the Bronx, mostly because I wanted to be close
to home. I got along very well with the Jesuits who ran the school, but after two years, I
decided that as long as I had to be in college, I might as well test myself against the best. I
applied to the Wharton School of Finance at the University of Pennsylvania and I got in. At
the time, if you were going to make a career in business, Wharton was the place to go.
Harvard Business School may produce a lot of CEOs—guys who manage public companies—
but the real entrepreneurs all seemed to go to Wharton: Saul Steinberg, Leonard Lauder, Ron
Perelman—the list goes on and on.
Perhaps the most important thing I learned at Wharton was not to be overly impressed by
academic credentials. It didn’t take me long to realize that there was nothing particularly
awesome or exceptional about my classmates, and that I could compete with them just fine.
The other important thing I got from Wharton was a Wharton degree. In my opinion, that
degree doesn’t prove very much, but a lot of people I do business with take it very seriously,
and it’s considered very prestigious. So all things considered, I’m glad I went to Wharton.
I was also very glad to get finished. I immediately moved back home and went to work full-
time with my father. I continued to learn a lot, but it was during this period that I began to
think about alternatives.
For starters, my father’s scene was a little rough for my tastes—and by that I mean
physically rough. I remember, for example, going around with the men we called rent
collectors. To do this job you had to be physically imposing, because when it came to
collecting rent from people who didn’t want to pay, size mattered a lot more than brains.
One of the first tricks I learned was that you never stand in front of someone’s door when
you knock. Instead you stand by the wall and reach over to knock. The first time a collector
explained that to me, I couldn’t imagine what he was talking about. “What’s the point?” I
said. He looked at me like I was crazy. “The point,” he said, “is that if you stand to the side,
the only thing exposed to danger is your hand.” I still wasn’t sure what he meant. In this
business,” he said, “if you knock on the wrong apartment at the wrong time, you’re liable to
get shot.”
My father had never sheltered me, but even so, this was not a world I found very attractive.
I’d just graduated from Wharton, and suddenly here I was in a scene that was violent at worst
and unpleasant at best. For example, there were tenants who’d throw their garbage out the
window, because it was easier than putting it in the incinerator. At one point, I instituted a
program to teach people about using the incinerators. The vast majority of tenants were just
fine, but the bad element required attention, and to me it just wasn’t worth it.
The second thing I didn’t find appealing was that the profit margins were so low. You had
no choice but to pinch pennies, and there was no room for any luxuries. Design was beside
the point because every building had to be pretty much the same: four walls, common brick
façades, and straight up. You used red brick, not necessarily because you liked it but because
it was a penny a brick cheaper than tan brick.
I still remember a time when my father visited the Trump Tower site, midway through
construction. Our façade was a glass curtain wall, which is far more expensive than brick. In
addition, we were using the most expensive glass you can buy—bronze solar. My father took
one look, and he said to me, “Why don’t you forget about the damn glass? Give them four or
five stories of it and then use common brick for the rest. Nobody is going to look up anyway.”
It was a classic, Fred Trump standing there on 57th Street and Fifth Avenue trying to save a
few bucks. I was touched, and of course I understood where he was coming from—but also
exactly why I’d decided to leave.
The real reason I wanted out of my father’s business—more important than the fact that it
was physically rough and financially tough—was that I had loftier dreams and visions. And
there was no way to implement them building housing in the outer boroughs.
Looking back, I realize now that I got some of my sense of showmanship from my mother.
She always had a flair for the dramatic and the grand. She was a very traditional housewife,
but she also had a sense of the world beyond her. I still remember my mother, who is Scottish
by birth, sitting in front of the television set to watch Queen Elizabeth’s coronation and not
budging for an entire day. She was just enthralled by the pomp and circumstance, the whole
idea of royalty and glamour. I also remember my father that day, pacing around impatiently.
“For Christ’s sake, Mary,” he’d say. “Enough is enough, turn it off. They’re all a bunch of con
artists.” My mother didn’t even look up. They were total opposites in that sense. My mother
loves splendor and magnificence, while my father, who is very down-to-earth, gets excited
only by competence and efficiency.
Prudence Pays
N COLLEGE while my friends were reading the comics and the sports pages of newspapers, I
was reading the listings of FHA foreclosures. It might seem a bit abnormal to study lists of
federally financed housing projects in foreclosure, but that’s what I did. And that’s how I
found out about Swifton Village. It was a job that I bought with my father, while I was in
college, and it was my first big deal.
Swifton Village was a 1,200-unit apartment development in Cincinnati, Ohio, and it was a
very troubled place. There were 800 vacant apartments, the developers had gone under, the
government had foreclosed and the whole deal was a disaster. But from our perspective that
was great, because it gave us a terrific opportunity.
A lot of times, when you are dealing with a government agency on a foreclosure, they just
want to get out of it as quickly as possible. They aren’t equipped to manage it. In this case,
things had deteriorated so badly that no one else was even bidding.
Today you’ll find the same thing if you go out to the Sun Belt, where they built all that
housing during the oil boom. Now you have huge developments with 30 and 40 percent
vacancy rates. Developers are suicidal because banks are foreclosing on them. It’s a great time
for a smart buyer, because you can get unbelievable deals.
My father and I put in a very minimal bid for Swifton, and it was accepted. We ended up
paying less than $6 million for a job which had cost twice that much to build just two years
earlier. We were also immediately able to get a mortgage for what we paid, plus about
$100,000, which we put toward fixing the place up. In other words, we got the project
without putting down any money of our own. All we had to do was go and run it. And if we
did even a halfway decent job, we could easily cover our mortgage from the proceeds of the
The fact that it was such a big job appealed to my father and to me because it meant we
could focus a lot of energy on it without feeling we were wasting our time. It takes almost the
same amount of energy to manage 50 units as it does 1,200—except that with 1,200 you have
a much bigger upside.
After we negotiated the deal, success became a matter of management and marketing. The
challenge was to get the place rented, and rented to good tenants who would stay there. The
tenants who were living in the project when I took over had ripped the place apart. Many of
them had come down from the hills of Kentucky. They were very poor and had seven or eight
children, almost no possessions, and no experience living in an apartment complex. They
crammed into one-room and two-room apartments, and their children went wild. They would
just destroy the apartments and wreak havoc on the property.
The tenants not only didn’t care, many of them also didn’t see fit to pay rent. If you pressed
them, they had a tendency to take off. What we discovered is that to avoid paying rent, these
people would rent a trailer, pull it up in front of their apartments at one or two in the
morning, and disappear into the night with all their belongings. That was fine by me, but I
wanted to make sure we got paid first. Our solution was to institute a “trailer-watch.” We had
someone on round-the-clock patrol.
After we got rid of the bad tenants, we set about fixing the place up to attract a better
element. That required a substantial investment, almost $800,000 by the time we were done,
which was a lot of money in those days. But it was more than worth it. In New York the laws
prevent you from getting fair increases even when you make improvements, but in Cincinnati
we were immediately able to charge and get much higher rents for the apartments at Swifton
The first thing we did was invest in beautiful white shutters for the windows. That may not
sound like a big deal, but what the shutters did was give a bunch of cold red brick buildings a
feeling of warmth and coziness, which was important. It was also much more expensive than
you’d guess, because you’re talking about 1,200 units, each of which has eight to ten
windows. The next thing we did was rip out the cheap, horrible aluminum front doors on the
apartments and put up beautiful colonial white doors.
I made sure the whole complex was very clean and very well maintained. As I said earlier,
I’ve always had a personal thing about cleanliness, but I also believe it’s a very good
investment. For example, if you want to sell a car and you spend five dollars to wash and
polish it and then apply a little extra elbow grease, suddenly you find you can charge an extra
four hundred dollars—and get it. I can always tell a loser when I see someone with a car for
sale that is filthy dirty. It’s so easy to make it look better.
It’s no different in real estate. Well-maintained real estate is always going to be worth a lot
more than poorly maintained real estate. That’s been less true during the past few years in
New York, when there’s been such a fever for real estate that people buy anything. But it’s a
mistake to be lulled by good times. Markets always change, and as soon as there’s a
downturn, cleanliness becomes a major value.
We painted the hallways, we sanded and stained the floors, we kept the vacant apartments
immaculately clean, and we landscaped the grounds. We also ran beautiful newspaper ads for
the project—at a time when not many people in Cincinnati were advertising real estate.
People came to check us out, and the word of mouth started getting good. Within a year, the
buildings were 100 percent rented.
Along the way we went through a half dozen different project managers before we found
the one we wanted. We had managers who were honest but dumb, including one guy who
literally painted himself into the corner of an apartment. Others were smart but didn’t know
the first thing about managing. Fortunately, we went through them fast, because I tend to size
people up pretty quickly.
Ultimately, we got a fabulous man whom I’ll call Irving. Irving was sixty-five years old and
a real character. He was one of the greatest bullshit artists I’ve ever met, but in addition to
being a very sharp talker and a very slick salesman, he was also an amazing manager. Irving
was the kind of guy who worked perhaps an hour a day and accomplished more in that hour
than most managers did in twelve hours. I learned something from that: it’s not how many
hours you put in, it’s what you get done while you’re working.
The problem with Irving was that he wasn’t the most trustworthy guy in the world. I
suspected as much from the first day, but it wasn’t until I tried to put a bond on him—
something I do with any employee who handles money—that my instincts were confirmed.
My insurance agent called me back after running a check, and he said, “Donald, you’ve got to
be kidding about a bond. This guy is a con man.” It turned out that Irving had done all sorts
of con jobs and swindles, and he’d often been in trouble with the law.
My philosophy has always been that if you ever catch someone stealing, you have to go
after him very hard, even if it costs you ten times more than he stole. Stealing is the worst.
But with Irving I had a dilemma: he was far and away more capable than any honest manager
I had found, and so long as he was in charge, no one under him would dare steal. That meant
I only had to keep my eye on him. I used to kid Irving. I’d say, “We pay you $50,000 and all
you can steal.” And he would act all upset.
If I’d caught him in the act, I would have fired Irving on the spot, but I never did. Still, I
figure he managed to steal at least another $50,000 a year. Even so, I was probably getting a
One day I walked into the office, and one of the girls who worked there was crying. It
turned out that there was something they called a funeral fund, to which they all contributed
in order to buy flowers for anyone they knew who’d died. They had about $80 in the fund.
When I asked the girl what she was crying about, she said, “Oh, that Irving, he stole our
funeral fund.”
I went to Irving and I said, “Irving, dammit, did you steal their money?” Of course he just
denied it. He swore he’d get those girls, and he ranted and raved for half an hour. But I
always assumed the girls were telling the truth. Irving was a classic. He had problems, but he
was a classic.
I’ll give you an example of how Irving worked. You’ve got to understand that we are
talking about a short, fat, bald-headed guy with thick glasses and hands like Jell-O, who’d
never lifted anything in his life beside a pen, and who had no physical ability whatsoever.
What he did have, however, was an incredible mouth.
As I mentioned, in the early days we had a good number of tenants who didn’t believe in
paying rent. Sometimes, Irving would go out and collect himself. He’d ring the doorbell, and
when someone came to the door, he’d go crazy. He’d get red in the face, use every filthy word
he could think of, and make every threat in the book. It was an act, but it was very effective:
usually they paid up right then and there.
One day, while Irving was on his rounds, he knocked on a door, and a little ten-year-old
girl answered. Irving said, “You go tell your father to pay his f———ing rent or I’m going to
knock his ass off.” And he went on like that, until the girl’s mother came out to see what was
going on. As it happened, she was an absolutely beautiful woman.
Now Irving had a weakness for all women, and this woman was quite exceptional. So
immediately, Irving started putting the move on her. He invited her out to dinner. The
woman, whose husband was either a truck driver or a construction worker, had never
experienced anyone like Irving and obviously didn’t know what to make of him. There was no
way, however, that she was interested in Irving, and finally he gave up and we left.
About an hour later, Irving and I were sitting in his office when this huge guy, a monster,
maybe 240 pounds, burst through the door. He was furious that Irving had cursed in front of
his daughter, and he was ready to strangle him for coming on to his wife. The guy had
murder in his eyes.
I expected Irving, if he had any sense, to run for his life. Instead, he started verbally
attacking the man, flailing and screaming and chopping his hands in the air. “You get out of
this office,” he said. “I’ll kill you. I’ll destroy you. These hands are lethal weapons, they’re
registered with the police department.”
I’ll never forget how the guy looked at Irving and said, “You come outside, you fat crap, I
want to burn grass with you.” I always loved that phrase: “burn grass.” And I thought to
myself, Irving is in serious trouble. But Irving didn’t seem to think so. “I’d fight you any time
you want,” he said, “but it’s unlawful for me to fight.”
All you had to do was look at Irving to know those hands were hardly registered weapons.
But Irving was very much like a lion tamer. You’ve seen these guys, maybe 150 pounds, who
walk blithely into a cage where there’s a magnificent 800-pound lion pacing around. If that
animal sensed any weakness or any fear, he’d destroy the trainer in a second. But instead the
trainer cracks his whip, walks with authority, and, amazingly, the lion listens. Which is
exactly what Irving did with this huge guy, except his whip was his mouth.
The result was that the guy left the office. He was still in a rage, but he left. Irving probably
saved his own life, just by showing no fear, and that left a very vivid impression on me. You
can’t be scared. You do your thing, you hold your ground, you stand up tall, and whatever
happens, happens.
As for Swifton Village, once Irving had it running well, I began spending less and less time
there. I wasn’t really needed anymore in Cincinnati. So I cut back my visits to Swifton, first to
once a week, and eventually to once a month.
Early on, I’d become particularly friendly with one of the newer tenants at Swifton. He was
Jewish, an older man who’d been in a concentration camp in Poland. He’d started off in
America as a butcher, then bought the shop, and by the time I met him, he owned perhaps
fourteen butcher shops. He and his wife had taken two apartments in Swifton and put them
together, and they had a great place, and they were very happy there. I had a lot of respect
for this guy, because he had street smarts, he’d been around, and he was obviously a true
One day, a number of years after we first bought the place, I was out visiting. I ran into my
friend. “How are you doing, how are you feeling?” I asked. “Good, good,” he replied, but then
he took me aside and whispered, “Donald, you are a friend of mine and I have to tell you, sell
this job.” And I said, “Why?”
“Because it’s going real bad—not the job but the area. It’s being surrounded by people who
are so bad they will cut your throat and walk away and not even think about it. I’m talking
about people who enjoy cutting throats.” That was the exact expression. I never forgot it.
Now, I’m someone who responds to people I have respect for, and I listen. Again, it’s
instincts, not marketing studies. So I spent an extra two days in Cincinnati, and I rode around,
and I saw that there was trouble brewing, that neighborhoods were getting rough.
I put the job up for sale, and almost immediately we got an offer. We’d already done very
well with Swifton Village, because our debt was very small relative to the size of the complex,
and our rent roll, by the end, had reached about $700,000 a year. But selling was how we
made a real killing.
The buyer was the Prudent Real Estate Investment Trust. Those were the go-go days when
real estate investment trusts—partnerships that invested in real estate—were very hot. The
banks were loaning money to any REIT. The only problem was that many of the people
running the REITs were neither knowledgeable nor competent. I called them the guys with
the white bucks. They were the sort of people who’d throw money into a project in Puerto
Rico without even going to see it. Eventually they’d discover that the building they thought
they’d bought had never even been built.
In the case of Prudent, they sent a young man out to inspect and evaluate the property
prior to making a final decision on whether to go forward with the sale. This kid was about
my age, but he looked like a teenager. Frankly, I was surprised they’d entrusted such a big
decision to him.
It turned out that what he wanted to do more than anything was go out for lunch. He’d
heard about this restaurant in downtown Cincinnati called the Maisonette, which was
supposed to be one of the five best restaurants in the country. He really wanted to eat there,
and when he called to say he was coming, he asked me to make a lunch reservation. I said
His flight came in a little late, about midday, and I met him, and I took him over to Swifton
Village and showed him the job. We still had 100 percent occupancy at the time, and he
wasn’t interested in asking a lot of questions beyond that. He was anxious to get to the
Maisonette. It took about half an hour to get there from Swifton, and we ended up spending
about three hours over lunch, which is the opposite of the way I normally work. If I’d had
only one day to look over a big job like Swifton, I’d sure as hell skip lunch and spend my time
learning everything I could about what I was thinking of buying.
By the time we were done with lunch, it was almost four o’clock, and I had to take him to
his plane. He returned to New York well fed and feeling great, and he strongly recommended
going ahead with the purchase. He told his bosses that the area was wonderful and that
Swifton was a great deal. They approved the sale. The price was $12 million—or
approximately a $6 million profit for us. It was a huge return on a short-term investment.
What happened next is that we signed a contract. By then, I could see the dark clouds
clearly on the horizon. A lot of tenants had their leases coming up and weren’t planning to
renew. We put a clause in the contract of sale saying that all representations contained in it
were as of the signing of the contract—not as of the closing, which is what’s typically
required. In other words, we were willing to represent that the project was 100 percent
rented at the time of the contract signing, but we didn’t want to make the same promise at
the time of closing, three or four months down the line.
The other thing I did was to insist on a clause in the contract in which they guaranteed
they’d close, or else pay a huge penalty. That was also very unusual, because in nearly every
other deal, the buyer puts up a 10 percent deposit, and if he fails to close, all he forfeits is the
Frankly, the Prudent people should have been more prudent. But, as I said, the REITs were
hot to trot, and they couldn’t make deals fast enough. In the end, of course, it never pays to
be in too much of a hurry. On the day we closed, there were dozens of vacant apartments.
HAD MY EYE on Manhattan from the time I graduated from Wharton in 1968. But at that
point, the market in the city was very hot, the prices seemed very high, and I was unable
to find a deal I liked—meaning a good piece of property at a price I found affordable. My
father had done very well for himself, but he didn’t believe in giving his children huge trust
funds. When I graduated from college, I had a net worth of perhaps $200,000, and most of it
was tied up in buildings in Brooklyn and Queens. So I waited. I went to work helping to run
my father’s business, and I continued to spend as much time as possible in Manhattan.
The turning point came in 1971, when I decided to rent a Manhattan apartment. It was a
studio, in a building on Third Avenue and 75th Street, and it looked out on the water tank in
the court of the adjacent building. I jokingly referred to my apartment as a penthouse,
because it did happen to be near the top floor of the building. I also tried to divide it up so
that it would seem bigger. But no matter what I did, it was still a dark, dingy little apartment.
Even so, I loved it. Moving into that apartment was probably more exciting for me than
moving, fifteen years later, into the top three floors of Trump Tower on Fifth Avenue and
57th Street overlooking Central Park.
You have to understand; I was a kid from Queens who worked in Brooklyn, and suddenly I
had an apartment on the Upper East Side.
The really important thing was that by virtue of this move I became much more familiar
with Manhattan. I began to walk the streets in a way you never do if you just come in to visit
or do business. I got to know all the good properties. I became a city guy instead of a kid
from the boroughs. As far as I was concerned, I had the best of all worlds. I was young, and I
had a lot of energy, and I was living in Manhattan, even though I commuted back to Brooklyn
to work.
One of the first things I did was join Le Club, which at the time was the hottest club in the
city and perhaps the most exclusive—like Studio 54 at its height. It was located on East 54th
Street, and its membership included some of the most successful men and the most beautiful
women in the world. It was the sort of place where you were likely to see a wealthy seventy-
five-year-old guy walk in with three blondes from Sweden.
I’ll never forget how I became a member. One day I called up Le Club and I said, “My name
is Donald Trump and I’d like to join your club.” The guy on the other end of the phone just
laughed and said, “You’ve got to be kidding.” Nobody, of course, had heard of me. The next
day I got another idea, and I called back and I said to the guy, “Listen, could I have a list of
your members? I may know someone who is a member.” And he said, “I’m sorry, we don’t do
that,” and he hung up.
The next day I called again and said, “I need to reach the president of the club. I want to
send him something.” For some reason, the guy gave me the president’s name and his
business number, and I called him up. I introduced myself. I said, very politely, “My name is
Donald Trump, and I’d like to join Le Club.” And he said, “Do you have any friends or family
in the club?” and I said, “No, I don’t know anybody there.”
He said, “Well, what makes you think you should be admitted as a member?” I just kept
talking and talking, and finally this fellow said to me, “I’ll tell you what, you sound like a
nice young man, and maybe it would be good to have some younger members, so why don’t
you meet me for a drink at Twenty-one?”
The next night we met for a drink. There was just one small problem. I don’t drink, and I’m
not very big on sitting around. My host, on the other hand, liked to drink, and he had brought
along a friend who also liked to drink. For the next two hours, we sat there as they drank and
I didn’t, until finally I said, “Listen, fellas, can I help you get home?” and they said, “No, let’s
just have one more.”
Now, I just wasn’t used to that. I have a father who has always been a rock, very straight
and very solid. My father would come home every night at seven, have his dinner, read the
newspaper, watch the news, and that was that. And I’m as much of a rock as my father. This
was a totally different world. I remember wondering if every successful person in Manhattan
was a big drinker. I figured it that was the case, I was going to have a big advantage.
Finally, about ten, these guys had enough, and I practically had to carry them home. Two
weeks passed, and I never heard from the president. Finally, I called him, and he didn’t even
remember who I was. So now I had to go through the whole thing all over again, back to 21,
only this time he didn’t drink as much, and he agreed to put me up for membership. He had
only one misgiving. He said that because I was young and good-looking, and because some of
the older members of the club were married to beautiful young women, he was worried that I
might be tempted to try to steal their wives. He asked me to promise that I wouldn’t do that.
I couldn’t believe what I was hearing. My mother is as much of a rock as my father. She is
totally devoted to my father—they recently celebrated fifty years of marriage. That’s what I
grew up with, and here’s this guy talking about stealing wives.
Anyway, I promised. I was admitted to the club, and it turned out to be a great move for
me, socially and professionally. I met a lot of beautiful young single women, and I went out
almost every night. Actually, I never got involved with any of them very seriously. These
were beautiful women, but many of them couldn’t carry on a normal conversation. Some
were vain, some were crazy, some were wild, and many of them were phonies. For example, I
quickly found out that I couldn’t take these girls back to my apartment, because by their
standards what I had was a disaster, and in their world appearances were everything. When I
finally did get married, I married a very beautiful woman, but a woman who also happens to
be a rock, just like my mother and father.
During that same period, I also met a lot of very successful, very wealthy men at Le Club. I
had a good time when I went out at night, but I was also working. I was learning how the
New York scene operates and I was meeting the sort of people with whom I’d eventually work
on deals. I also met the sort of wealthy people, particularly Europeans and South Americans,
who eventually bought the most expensive apartments in Trump Tower and Trump Plaza.
It was at Le Club that I first met Roy Cohn. I knew him by reputation and was aware of his
image as a guy who wasn’t afraid to fight. One night I found myself sitting at the table next to
him. We got introduced, and we talked for a while, and I challenged him. I like to test people.
I said to him, “I don’t like lawyers. I think all they do is delay deals, instead of making deals,
and every answer they give you is no, and they are always looking to settle instead of fight.”
He said he agreed with me. I liked that and so then I said, “I’m just not built that way. I’d
rather fight than fold, because as soon as you fold once, you get the reputation of being a
I could see Roy was intrigued, but he wasn’t sure what the point of it all was. Finally he
said, “Is this just an academic conversation?”
I said, “No, it’s not academic at all. It so happens that the government has just filed suit
against our company and many others, under the civil rights act, saying that we discriminated
against blacks in some of our housing developments.” I explained to him that I’d spent that
afternoon with my father, talking to lawyers in a very prestigious Wall Street firm, and that
they’d advised us to settle. That’s exactly what most businessmen do when the government
charges them with anything, because they just don’t want bad publicity, even if they believe
they can beat a phony rap.
The idea of settling drove me crazy. The fact was that we did rent to blacks in our
We wanted tenants who we could be sure would pay the rent, who would be neat and clean
and good neighbors, and who met our requirement of having an income at least four times
the rent. So I said to Roy, “What do you think I should do?”
And he said, “My view is tell them to go to hell and fight the thing in court and let them
prove that you discriminated, which seems to me very difficult to do, in view of the fact that
you have black tenants in the building.” He also told me, “I don’t think you have any
obligation to rent to tenants who would be undesirable, white or black, and the government
doesn’t have a right to run your business.”
That’s when I decided Roy Cohn was the right person to handle the case. I was nobody at
the time, but he loved a good fight, and he took on my case. He went to court, and I went
with him, and we fought the charges. In the end the government couldn’t prove its case, and
we ended up making a minor settlement without admitting any guilt. Instead, we agreed to
do some equal-opportunity advertising of vacancies for a period of time in the local
newspaper. And that was the end of the suit.
I learned a lot about Roy during that period. He was a great lawyer, when he wanted to be.
He could go into a case without any notes. He had a photographic memory and could argue
the facts from his head. When he was prepared, he was brilliant and almost unbeatable.
However, he wasn’t always prepared. Even then, he was so brilliant that he could sometimes
get away with it. Unfortunately, he could also be a disaster, and so I would always question
Roy very closely before a court date. If he wasn’t prepared, I’d push for a postponement.
I don’t kid myself about Roy. He was no Boy Scout. He once told me that he’d spent more
than two thirds of his adult life under indictment on one charge or another. That amazed me.
I said to him, “Roy, just tell me one thing. Did you really do all that stuff?” He looked at me
and smiled. “What the hell do you think?” he said. I never really knew.
Whatever else you could say about Roy, he was very tough. Sometimes I think that next to
loyalty, toughness was the most important thing in the world to him. For example, all Roy’s
friends knew he was gay, and if you saw him socially, he was invariably with some very
good-looking young man. But Roy never talked about it. He just didn’t like the image. He felt
that to the average person, being gay was almost synonymous with being a wimp. That was
the last thing he wanted to project, so he almost went overboard to avoid it. If the subject of
gay rights came up, Roy was always the first one to speak out against them.
Tough as he was, Roy always had a lot of friends, and I’m not embarrassed to say I was
one. He was a truly loyal guy—it was a matter of honor with him—and because he was also
very smart, he was a great guy to have on your side. You could count on him to go to bat for
you, even if he privately disagreed with your view, and even if defending you wasn’t
necessarily the best thing for him. He was never two-faced.
Just compare that with all the hundreds of “respectable” guys who make careers out of
boasting about their uncompromising integrity but have absolutely no loyalty. They think
only about what’s best for them and don’t think twice about stabbing a friend in the back if
the friend becomes a problem. What I liked most about Roy Cohn was that he would do just
the opposite. Roy was the sort of guy who’d be there at your hospital bed, long after everyone
else had bailed out, literally standing by you to the death.
In any case, I got to know a lot of people when I moved to Manhattan, and I got to know
properties, but I still couldn’t find anything to buy at a price I liked. Then, suddenly, in 1973
things began to turn bad in Manhattan. I’d always assumed the market would cool off,
because everything runs in cycles and real estate is no different. Even so, I never expected
things to get as bad as they did. It was a combination of factors. First, the federal government
announced a moratorium on housing subsidies, which they had been giving out by the
bushel, particularly in the city. At the same time, interest rates began to rise, after being so
stable for so many years that it was easy to forget they could move at all. Then, to make
things worse, there was a spurt of inflation, particularly in construction costs, which seem to
rise even when there’s no inflation anywhere else.
But the biggest problem by far was with the city itself. The city’s debt was rising to levels
that started to make everyone very nervous. For the first time you heard people talk about the
city going bankrupt. Fear led to more fear. Before long New York was suffering from a crisis
of confidence. People simply stopped believing in the city.
It wasn’t an environment conducive to new real estate development. In the first nine
months of 1973, the city issued permits for about 15,000 new apartments and single-family
homes in the five boroughs. In the first nine months of 1974, the number dropped to 6,000.
I worried about the future of New York City too, but I can’t say it kept me up nights, I’m
basically an optimist, and frankly, I saw the city’s trouble as a great opportunity for me.
Because I grew up in Queens, I believed, perhaps to an irrational degree, that Manhattan was
always going to be the best place to live—the center of the world. Whatever troubles the city
might be having in the short term, there was no doubt in my mind that things had to turn
around ultimately. What other city was going to take New York’s place?
One of the pieces of property that had always fascinated me was the huge abandoned
railyard along the Hudson River beginning at 59th Street and extending all the way up to
72nd Street. Every time I drove along the West Side Highway, I found myself dreaming about
what could be built there. It didn’t take a genius to realize that one hundred acres of
undeveloped riverfront property in Manhattan had a lot of potential. But it was another story
to consider trying to develop such a huge piece of property when the city was in the midst of
a financial crisis.
I don’t believe that you can ever be hurt by buying a good location at a low price. At the
time, a lot of neighborhoods on the West Side were considered dangerous places to live.
There were welfare hotels on every side street, and drug dealers in every park. I remember
the New York Times running a long series of articles about the block between Central Park
West and Columbus Avenue at 84th Street—what a tough area it was.
Even so, you didn’t have to look very far to see how easily it could all change. Even on the
tough side streets, like West 84th, there were magnificent old brownstones only a few steps
away from Central Park. And on the avenues, especially Central Park West and Riverside
Drive, there were beautiful old buildings with huge apartments and spectacular views. It was
only a matter of time before people discovered the value.
One day, in the summer of 1973, I came across a newspaper story about the Penn Central
Railroad, which was in the middle of a massive bankruptcy filing. This particular story said
that the Penn Central trustees had hired a company headed by a man named Victor Palmieri
to sell off the assets of the railroad. Among the assets, it turned out, were those abandoned
yards in the West Sixties, as well as more yards in the West Thirties. The deal Victor made
with the Penn Central was that each time his company managed to find a buyer for an asset,
he got a percentage of the sale.
I had never heard of Victor Palmieri, but I realized immediately that he was someone I
wanted to know. I called his representatives and said, “Hello, my name is Donald Trump, and
I’d like to buy the Sixtieth Street yards.” The simplest approach is often the most effective.
I think they liked my directness and my enthusiasm. I hadn’t built anything yet, but what I
did have was the willingness to go after things that people in a better position than mine
wouldn’t have considered seeking.
I went to meet Victor, and we got on very well right from the start. He was a very smooth,
attractive guy, an Italian who looked like a WASP. I told him how bad the 60th Street yards
were, that the neighborhood was in trouble and the city was in trouble, and that I was
probably crazy to be interested in the property at all. If you want to buy something, it’s
obviously in your best interest to convince the seller that what he’s got isn’t worth very much.
The second thing I told Victor was how incredibly hard it was going to be politically to get
zoning approvals for such a big piece of undeveloped land. I pointed out that the community
board would fight any development, and that the process of going before the City Planning
Commission and the Board of Estimate would be endless.
The third thing I did, and probably the most important, was to sell myself to Victor and his
people. I couldn’t sell him on my experience or my accomplishment, so instead I sold him on
my energy and my enthusiasm.
Victor banks on people and he decided to take a shot on me. He ended up suggesting that I
develop not only the 60th Street yards but also the yards on West 34th Street. In truth, I
probably oversold myself to him. I had no other choice. I was twenty-seven years old at the
time, and I had never built anything in Manhattan, nor had my father. Much as Victor liked
me, I don’t think he could have justified going with me if he hadn’t believed our company
was big and powerful. We had no formal name for the company when I met Victor, so I began
to call it the Trump Organization. Somehow the word “organization” made it sound much
bigger. Few people knew that the Trump Organization operated out of a couple of tiny offices
on Avenue Z in Brooklyn.
The other thing I promoted was our relationship with politicians, such as Abraham Beame,
who was elected mayor of New York in November of 1973. My father did belong to the same
Democratic club that Abe Beame came out of, and they did know each other. Like all
developers, my father and I contributed money to Beame, and to other politicians. The simple
fact is that contributing money to politicians is very standard and accepted for a New York
City developer. We didn’t give any more to Beame than a lot of other developers did. In fact,
it often seemed to me that, perhaps because we knew Beame personally, he almost went out
of his way to avoid any appearance that he was doing us any special favors.
Instead I spent most of the four years when Beame was mayor trying to promote the West
34th Street site for a convention center. It was by far the best site on the merits, and we
eventually got nearly every big-name New York City businessman behind us. Still, Beame
never came out in support of the site until a few weeks before he left office. Nor did he ever
give it his official approval. It was Ed Koch, newly elected in 1978, who finally chose our site
for the convention center. No one, so far as I know, has ever suggested that Donald Trump
and Ed Koch are close personal friends. But that’s getting well ahead of the story.
By building a close relationship with Victor from the start, I was able, in effect, to work for
him, rather than to be just another buyer. That was terrific for me. For example, we drew up
agreements giving me an exclusive option to purchase the 60th Street and 30th Street yards—
but subject to zoning, subject to approval by the court handling the Perm Central bankruptcy,
subject to everything except my having to put up any money. The Penn Central even agreed
to pay my development costs. It was remarkable in a way: the seller paying for the costs of
the potential buyer. Still, you have to put it into perspective. What sounds like a stupid deal
today was very different at a time when no one wanted to build anything, and the city was
Palmieri, in turn, helped give me credibility with the press. When he was asked by a
reporter from Barrons why he chose Trump over others, he said, “Those properties were
nothing but a black hole of undefinable risk. We interviewed all kinds of people who were
interested in them, none of whom had what seemed like the kind of drive, backing, and
imagination that would be necessary. Until this young guy Trump came along. He’s almost a
throwback to the nineteenth century as a promoter. He’s larger than life.”
At one point, when I was hyping my plans to the press but in reality getting nowhere, a big
New York real estate guy told one of my close friends, “Trump has a great line of shit, but
where are the bricks and mortar?”
I remember being outraged when I heard that, and I didn’t speak to this guy for more than
a year. But looking back, I can see he was right. It could all have gone up in smoke. If I hadn’t
managed to make one of those first projects happen, if I hadn’t finally convinced the city to
choose my West 34th Street site for its convention center and then gone on to develop the
Grand Hyatt, I’d probably be back in Brooklyn today, collecting rents. I had a lot riding on
those first projects.
On July 29, 1974, we announced that the Trump Organization had secured options to
purchase the two waterfront sites from the Penn Central—West 59th Street to West 72nd
Street, and West 34th Street to West 39th Street—at a cost of $62 million. With no money
down. The story made the front page of the New York Times.
My original idea was to build middle-income housing on the sites at rents that seem
ridiculously cheap today—$110 to $125 a room—but were considered moderately high at the
time. I planned to seek financing from the Mitchell-Lama program, through which the city
provided low-interest long-term mortgages and tax abatements to builders. The program had
been initiated to encourage middle-income housing.
The month before our announcement, Victor and I and some of his people met with Abe
Beame to sound him out about our development plans. Although he was encouraging, from
the moment we went public he refused to take any position until our plan had been
considered by city agencies, including the City Planning Commission, the Board of Estimate,
and the local community boards. He was a politician, and he wanted to see which way the
winds were blowing before he took a stand.
No sooner had I announced my plans publicly than other bidders for the railyards suddenly
came out of the woodwork. Starrett Housing, for example, a company we were partners with
on the Starrett City housing project in Brooklyn, made a bid of $150 million, contingent on
financing and city approvals and all the rest. On the face of it, their bid was a lot higher than
I’m the first to admit that I am very competitive and that I’ll do nearly anything within
legal bounds to win. Sometimes, part of making a deal is denigrating your competition. In
this case, I happened to genuinely believe that the Starrett bid wasn’t legitimate, that the
company would never close the deal and would not be able to successfully develop the site
even if the deal did go through. The fact is that anyone can bid anything, particularly when
there are all sorts of contingencies. The same thing could be said about my bid, except that by
then I’d put in enough time and effort to have convinced Palmieri’s people that I was very
serious and very committed.
In the end, I managed to convince Palmieri that it made more sense to stick with my $62
million bid than to take a flier on Starrett.
The irony is that less than a year after I announced my plans for the site—and beat my
competition—the economic situation in New York City turned from bad to much worse.
In February 1975, the Urban Development Corporation, the state agency that sold bonds to
finance public housing, defaulted on more than $100 million of repayment on its bonds.
In September 1975, Beame announced that because of the fiscal crisis, the city was
suspending its own plans to finance the construction of virtually all new housing.
In November 1975, the state announced that it, too, was suspending any financing of
lower- and middle-income housing for the next five years—including a huge number of city
projects that had already received preliminary approval.
You couldn’t get up in the morning without running across some new headline about the
city’s fiscal crisis. I can’t say that any of this made me truly fearful about the city’s future.
Still, when it became clear that I wasn’t going to get any subsidies to build housing, I decided
to try a new tack.
I’d always thought that the West 34th Street site would be perfect for a new convention
center. The problem was that nearly everyone else had other ideas. For starters, the city—
with the support of many prominent local businessmen—had already spent more than three
years studying and trying to develop another site by the Hudson River, at 44th Street. In the
planning process alone, the city acknowledged, $13 million had been spent, but people I
knew told me that the number was actually closer to $30 million.
Then, just weeks after the city said it wouldn’t finance any new housing, Beame announced
that the city was also freezing further spending on development of the 44th Street location. I
immediately hired Samuel H. Lindenbaum, a talented attorney who specialized in zoning, and
who had been working until then on the 44th Street site.
The other person I hired to help with the convention center was a highly dedicated woman
named Louise Sunshine, who had extraordinary political connections. Louise had been the
finance director for Hugh Carey when he ran for governor in 1974. She was also treasurer of
the state Democratic party. At first, she worked for me for practically no pay. Later, she
became an executive in our company.
But even as I was assembling a team to promote my site, the city and state were hatching
their own alternative: to put the convention center in Battery Park City, opposite the World
Trade Center in southern Manhattan. In my opinion, both sites—West 44th Street and Battery
Park—were terrible choices. Malting my case was another matter. I wanted to wage the battle
in public, but I was an unknown. If I was going to attract attention for my site and win
support for it, I had to raise my profile.
I decided to call my first news conference. Louise and Howard Rubenstein, a major New
York public relations executive, helped attract support from several powerful people,
including Manfred Ohrenstein, majority leader of the state senate, and Theodore Kheel, the
labor negotiator, who was very powerful in New York politics. Kheel delivered a classic line
at the press conference. “Placing the new convention center in Battery Park,” he said, “is like
putting a nightclub in a graveyard.” For our part, we put up a huge banner that said, “Miracle
on 34th Street,” and I announced, before a ton of reporters, that I could build my convention
center for $110 million—or at least $150 million less than the city had estimated it would
cost to build at West 44th Street.
Not surprisingly, that raised some eyebrows and even got us some attention in the press.
But there was scarcely an approving peep from the politicians. I discovered, for the first time
but not the last, that politicians don’t care too much what things cost. It’s not their money.
In promoting my site, the first thing I pointed out wherever I went was how important it
was to build a convention center. A lot of people were saying that the best solution, in light of
the city’s fiscal crisis, was to scrap the idea altogether.
To me, that was classic shortsightedness. For example, in the face of a sales drop, most
companies cut back on their advertising budgets. But in fact, you need advertising the most
when people aren’t buying. Essentially, that’s what I said about a convention center. Building
one, I argued, was critical to reviving the city’s image and, ultimately, to putting its economy
back on track.
I also told anyone who would listen how great my site was, and how horrible the
alternatives were. I pointed out that at 44th Street the convention center would have to be
built on platforms over the water, which would be more costly, more problematic, and
ultimately more time-consuming. I said that the 44th Street site was too small, that there was
no room to expand it, and that because it was on the water, you’d have to cross under the
crumbling West Side Highway to get to it. Finally, I made a big deal out of the fact that you
needed something called a nonnavigable permit to build on the 44th Street site. A
nonnavigable permit, which I became an expert about very quickly, is the federal approval
required to build on certain waterways, and getting it requires an act of Congress.
I was just as rough on the Battery Park site, which was an even more ridiculous location at
the absolute southern tip of the city. I pointed out how remote it was from midtown, how far
from hotels and entertainment, and how inconvenient to public transportation. I also
circulated a state study which concluded that building a convention center at Battery Park
would require major reconstruction of the West Side Highway leading to it, as well as the
addition of at least 2,000 new hotel rooms.
Most of all, I talked about what a wonderful location I had on West 34th Street. It was on
the right side of the highway—the eastern side—which meant it was easily accessible. It was
closer to subways and buses than the alternative sites. I continued to make the case that the
center could be built more cheaply on my site, without dispossessing any tenants. Also,
because my site was so big, there was plenty of room for expansion in the future. When a
group of graduate students in a class taught by City Councilman Robert Wagner did a little
study that rated our site the best, I managed to get hold of it and immediately christened it
the Wagner Report. Its namesake wasn’t thrilled.
Before long, I had everything going for me except the support of a few absolutely key
people. Abe Beame was at the top of the list. Once he gave up on West 44th Street, Beame got
behind Battery Park, and no matter how many great arguments I came up with for my site, he
wouldn’t budge. Another major opponent was John Zuccotti, a deputy mayor under Beame.
He began going around town bad-mouthing my site. The reason, I’m convinced, was that he
didn’t want to admit that he’d wasted several years of his life and millions of dollars of public
money on a location that never made sense in the first place. And that’s exactly what I said
publicly. I accused him of being self-serving and petty and a half-dozen other things. He got
pretty riled up. The battle received a lot of media attention, and ultimately, I think, it was
good for my site. It became just another way to promote my site’s many advantages.
In the end, we won by wearing everyone else down. We never gave up, and the opposition
slowly began to melt away. In 1977 Beame appointed yet another committee to study the
alternative sites, and it concluded that we did have the best site. On that basis, Beame finally
gave us his support—although not his signature—just before leaving office at the end of the
In January of 1978, Ed Koch took over as mayor and decided to do his own study. I figured
we were back to square one. But things moved fast and once again our site came out ahead.
Finally, in April 1978, the city and state announced that they had decided to purchase the
34th Street site and build the convention center there. It was a victory for me, but more
symbolically than financially. For all the time I’d invested, I earned much less than I deserved
—and nowhere near enough to justify the effort financially.
As my deal with the Penn Central was structured, I was paid total compensation of about
$833,000 based on the $12 million price for the site that the city negotiated with Penn
Central. In the end I offered to forgo my fee altogether, if the city would agree to name the
convention center after my family. I’ve been criticized for trying to make that trade, but I
have no apologies. There wouldn’t be a new convention center in New York today if it hadn’t
been for the Trumps.
More important, the city would have saved a fortune by letting me build the center, which
I very much wanted to do. Instead, Ed Koch decided, by some logic I could never understand,
that because I’d helped arrange the sale of the property, it was a conflict for me to be the
builder as well. Eventually, I offered the city a deal that, frankly, was ridiculous for me. I said
I would bring the entire job in for less than $200 million, and that if there were any overruns,
I’d pay for them myself. You won’t find many builders willing to put themselves on the line
that way.
Instead, the city and state decided to oversee the job—and the result was perhaps the most
horrendous construction delays and cost overruns in the history of the building business. A
man named Richard Kahan was put in charge of the Urban Development Corporation, and
ultimately it was his job to oversee the convention center project. Richard Kahan is a nice
man, but he had visions of being the next Robert Moses. It wasn’t clear that he had the
experience or the talent.
One of the first things Kahan did was to hire I. M. Pei as his architect. I. M. Pei is a man
with a terrific reputation, but in my view he often chooses the most expensive solution to a
problem—and is virtually uncontrollable. Immediately, Pei decided to design a space frame
for the center—a structural system that any professional builder will tell you is one of the
most difficult to build and is especially vulnerable to cost overruns. This is particularly true
when you’re dealing with the sort of huge space frame they needed for a convention center.
From the very start, I told Kahan and his people that it was critical to build a parking
garage simultaneously. How can you have a convention center without parking? They told
me that a garage would hold up the city’s environmental-impact approval. “Look,” I said to
them, those approvals are only going to be tougher to get later, and at the very least you
should begin a separate filing for the garage now, so you can at least start the process.” They
ignored me, and now they have no parking, and no prospect of building any in the near
The choice of where to put the entrance was equally ill-considered. If you put the entrance
at the west, the whole center faces the Hudson River, which is a beautiful view. Instead, they
built the entrance on the eastern side of the building—facing the traffic on Eleventh Avenue.
As I watched all these mistakes being made, I became very angry and frustrated. In 1983,
when it was clear the construction of the convention center was already a disaster of delays
and overruns, I wrote a letter to William Stern, who by then had replaced Richard Kahan as
president of the Urban Development Corporation. For a second time I offered, this time for no
fee at all, to oversee the project and to assure that it would get completed quickly and
without further cost overruns.
My offer was refused—and a disaster eventually turned into a catastrophe. By the time the
convention center was finally finished last year, it was four years behind schedule—and at
least $250 million over budget. When you add interest—the carrying costs for all those years
of construction—the total cost was probably $1 billion, or $700 million over budget.
The construction was a terrible disgrace, and all the worse because no one raised a fuss
about it. When I was invited to attend opening-day ceremonies in 1986, I refused. What
happened at the convention center is that the city and state took a great piece of property and
a great project and ruined it through terrible planning and ridiculous cost overruns. Even if
the convention center is ultimately a success, it can never earn back all the money that was
unnecessarily squandered to build it.
The funny thing about devoting so much time and energy to the 34th Street site is that I
never considered it anything to compare with the 60th Street yards. The problem was that
developing 60th Street proved even more difficult than promoting 34th Street. The
community opposition was stronger, the zoning was more complicated, and the banks were
highly reluctant to finance a huge residential housing project in a city still teetering on the
verge of bankruptcy.
In 1979 I reluctantly let my option on the 60th Street yards expire so that I could
concentrate on other deals that seemed more immediately promising.
The first one, fittingly, was with Palmieri and the Penn Central—for the purchase of the
Commodore Hotel.
Reviving 42nd Street
URING THE PERIOD when I was trying to make something happen with the two West Side
yards, I got more and more friendly with Victor Palmieri and his people. One day, late
in 1974, I was in Victor’s office, and I said to him, half-jokingly, “Listen, now that I’ve
got the options on the two yards, what other properties does the Penn Central own that I can
buy for nothing?”
“As a matter of fact,” said Victor, “we have some hotels you might be interested in.”
It so happened that the Penn Central owned several old hotels within a few blocks of each
other in midtown: the Biltmore, the Barclay, the Roosevelt, and the Commodore. The first
three were at least moderately successful, which meant buying them was likely to cost more
money than I wanted to spend. The only one in real trouble was the Commodore, which had
been losing money and defaulting on its property taxes for years.
As it turned out, that was the best news Victor could have given me. I decided very quickly
that the Commodore, in the heart of New York at 42nd Street and Park Avenue, next to Grand
Central Station, had potentially the best location of any of the four hotels.
I still remember walking over to look at the Commodore the day Victor first mentioned it to
me. The hotel and the surrounding neighborhood were unbelievably run-down. Half the
buildings were already in foreclosure. The brick façade of the Commodore was absolutely
filthy, and the lobby was so dingy it looked like a welfare hotel. There was one of those
sleazy flea markets operating on the ground floor with a bunch of boarded-up storefronts on
either side and derelicts lying in the doorways. To most people, it would have been a very
depressing scene.
But as I approached the hotel, something completely different caught my eye. It was about
nine in the morning, and there were thousands of well-dressed Connecticut and Westchester
commuters flooding onto the streets from Grand Central Terminal and the subway stations
below. The city was on the verge of bankruptcy, but what I saw was a superb location. Unless
the city literally died, millions of affluent people were going to keep passing by this location
every day. The problem was the hotel, not the neighborhood. If I could transform the
Commodore, I was sure it could be a hit. Convenience alone would assure that.
I went back and told Victor I was interested in making a deal for the Commodore. He was
pleased, because everyone else considered it a loser. I also went to my father and told him I
had a chance to make a deal for this huge midtown hotel. At first, he refused to believe I was
serious. Later, he told a reporter that his initial reaction to my idea was that “buying the
Commodore at a time when even the Chrysler Building is in receivership is like fighting for a
seat on the Titanic.”
I wasn’t naïve. I saw potential, but I also recognized a downside. I could envision a huge
home run, but I also knew that failing could bury me. From the very first day I went to work
on the deal, I tried to keep my risk to an absolute minimum, and financially, I succeeded. But
as the months went by, the deal became more and more complicated and difficult. I kept
investing more time and more energy, and the stakes rose for reasons unrelated to money. I
could talk big for only so long. Eventually I had to prove—to the real estate community, to
the press, to my father—that I could deliver the goods.
The Commodore deal was basically a juggling act, but a much trickier one than I originally
imagined. First, I had to keep Palmieri’s people believing I was their best bet to buy the hotel,
while trying to avoid, for as long as I could, putting down any cash. At the same time, I had
to convince an experienced hotel operator to come in with me before I actually had a deal,
knowing that such a partner would give me more credibility with the banks when I went to
seek financing. And even a great partner wasn’t enough. I also had to try to persuade city
officials that it was in their interest to give me a totally unprecedented tax break. That
savings, I knew, would make it far easier to prove to the banks that the numbers for my hotel
made sense—at a time when they were loathe to lend money even for projects in good
The funny thing is that the city’s desperate circumstances became my biggest weapon. With
Palmieri, I could argue that I was the only developer around who would even consider buying
a loser hotel in a decaying neighborhood in a dying city. With the banks, I could point to
their moral obligation to finance new developments as a way to help get the city back on its
feet. And with city officials, I could legitimately argue that in return for a huge tax
abatement, I’d be able to create thousands of new construction and service jobs, help save a
neighborhood, and ultimately share with the city any profits the hotel earned.
In the late fall of 1974, I began talking seriously with Palmieri about a deal. Eight or nine
months before, the Penn Central had invested $2 million on a renovation of the Commodore
that was the equivalent of applying a coat of wax to a car that’s just been in a major accident.
Even after the renovation, the Penn Central was projecting a huge loss for 1974, and that
didn’t even include the $6 million that the hotel already owed in back taxes. The Commodore
was a terrible cash drain on a bankrupt company.
In a short time we came up with a basic structure for a deal. In simple terms, I would take
an option to purchase the hotel at a price of $10 million, subject to my being able to get tax
abatement, financing, and a hotel company partner—subject, in other words, to my putting
the entire deal together before I made the purchase. In the meantime, I would put down a
nonrefundable $250,000 for an exclusive option. There was just one problem: I wasn’t too
eager to fork over even $250,000 on a deal that was still very much a long shot. In 1974,
$250,000 was a huge sum of money for me. So I stalled. Contracts were drawn up, but I had
my lawyers find plenty of little legal points to argue back and forth over. In the meantime, I
went to work to try to put the rest of the deal together.
What I needed first, I decided, was a really fantastic design—one that would get people
excited. I set up a meeting with a young, talented architect named Der Scutt. We met at
Maxwell’s Plum on a Friday night, and right away I liked Der’s enthusiasm. When I told him
what I had in mind, he immediately started making sketches on one of the menus.
The key thing, I told Der, was to create something that looked absolutely brand-new. I was
convinced that half the reason the Commodore was dying was because it looked so gloomy
and dark and dingy. My idea, from the beginning, was to build a new skin directly over the
brick—bronze, if it could be done economically, or glass. I wanted a sleek, contemporary
look, something with sparkle and excitement that would make people stop and take notice.
And it was obvious to me that Der understood what I had in mind.
After we ate, I took Der and another friend back to my apartment, the tiny studio I was still
living in on Third Avenue, and I asked him what he thought about my furniture. Some people
would just have said, “Fantastic, great,” but Der didn’t do that. “There’s too much of it,” he
said, and he started moving furniture around, and even pushed several pieces out into the
hallway. When he finished, he’d managed to make the apartment look much bigger, which I
I hired Der and paid him to come up with sketches that we could use in our presentations
to the city and to banks. I also told him to make it appear that we’d spent a huge sum on the
drawings. A good-looking presentation goes a long way.
By the spring of 1975, we were pretty far along on a design. Then, one evening in the
middle of April, Der called to tell me that he’d been fired from the architectural firm he
worked for, Kahn & Jacobs/Hellmuth, Obata & Kassabaum. I knew he hadn’t been getting
along with his bosses. At the same time, I didn’t want to hold up the project. I needed the
resources and the prestige of a big firm to do a job this size, and I figured it was going to be a
while before Der made a new association. But he formed an association very quickly with a
firm named Gruzen & Partners, and I was able to use the situation to my advantage. The
Obata group desperately wanted to keep the job, and so, of course, did Der. The competition
gave me an opportunity to negotiate a lower architectural fee, which I did. In the end I went
with Der, and paid him a very modest fee. I also told him that doing this job would pay off
big in the end. “This is going to be a monumental project,” I said. “It’s going to make you into
a star.” Der wasn’t thrilled about his fee, but later he admitted that I’d been right about the
impact that doing the Hyatt—and subsequently Trump Tower—had on his career.
During this same period, early 1975, I began to look for an operator for the hotel. The truth
was that I knew nothing about the hotel business. I’ve learned a lot since then, and today I
operate my own hotels. But at the time, I was only twenty-seven years old, and I’d hardly
even slept in a hotel. Nonetheless, I was trying to buy this monster building, 1,500,000
square feet, and proposing to create a 1,400-room hotel—the largest since the construction of
the New York Hilton twenty-five years earlier. It seemed clear that I needed an experienced
operator. I also figured it probably had to be one of the large chains, and I wasn’t totally
wrong. The chains may not be very exciting, but they do give you access to a national
reservations system, good referral business, and basic management expertise.
From the start, Hyatt was at the top of my list. Hilton seemed a little backward and old,
Sheraton didn’t excite me for much the same reasons, and Holiday Inns and Ramada Inn
didn’t have enough class. I liked the Hyatt image. Their hotels had a modern look, light and
clean and a little glossy, and that was what I had in mind architecturally for the Commodore.
In addition, Hyatt was very strong on conventions, which I thought could be a big business
for a hotel in the Grand Central area.
I also liked Hyatt because I thought I might have more leverage with them in making a
deal. Chains like Hilton and Sheraton already had hotels in New York City, and they weren’t
necessarily hungry to build new ones, particularly with the city in the dumps. Hyatt, on the
other hand, was very successful in other cities but still had no flagship presence in New York
City, and I’d heard they wanted one very badly.
In late 1974 I called up the president of Hyatt, a guy named Hugo M. Friend, Jr., and we
arranged to meet. I wasn’t terribly impressed with Skip Friend, but it turned out that I was
right about Hyatt’s desire for a New York flagship, and we began to discuss a partnership on
the Commodore. Fairly rapidly, I made a tentative deal with him, full of contingencies. I was
very happy and very proud of myself. Then two days later I got a call and Skip said, “No, I’m
sorry, we can’t do the deal that way.” This became a pattern. We’d negotiate new terms,
shake hands, a few days would go by, and the deal would suddenly be off again. Finally, a
guy I’d become friendly with at Hyatt, a high-level executive, called. “I’d like to make a
suggestion,” he said. “I think you should call Jay Pritzker and deal with him directly.”
I’d barely heard of Pritzker, which tells you something about how young I was at the time.
I knew, vaguely, that the Pritzker family owned a controlling interest in Hyatt, but that was
about all. My Hyatt friend explained that Pritzker was the guy who really ran the company.
Suddenly it dawned on me why my deals kept coming apart: if you’re going to make a deal of
any significance, you have to go to the top.
It comes down to the fact that everyone underneath the top guy in a company is just an
employee. An employee isn’t going to fight for your deal. He’s fighting for his salary increase,
or his Christmas bonus, and the last thing he wants to do is upset his boss. So he’ll present
your case with no real opinion. To you, he might be very enthusiastic, but to his boss he’ll
say, “Listen, a guy named Trump from New York wants to make such and such a deal, and
here are the pros and cons, and what do you want to do?” If it turns out his boss likes the
idea, he’ll keep supporting you. But if the boss doesn’t like it, the employee will say, “Yes, I
agree, but I wanted to present it to you.”
By now it was the early spring of 1975, and I called Jay Pritzker, and he seemed happy to
hear from me. Hyatt was based in Chicago, but Pritzker told me he was coming to New York
the next week, and we should meet. Could I pick him up at the airport? I didn’t go around in
limousines at the time, so I picked him up in my own car. Unfortunately it was a very hot
day, and it was extremely uncomfortable in the car. If it bothered Jay, though, he didn’t show
it. I realized right then that Jay is very focused when it comes to business. He can be fun-
loving when he’s relaxed, but mostly he’s tough and sharp, and he plays very close to the
vest. Fortunately I had no problem with that, so we got along pretty well. The other thing
about Jay is that he doesn’t much trust people in business, which is the way I tend to be. We
were wary of each other, but I think there was also a mutual respect from the start.
We managed to make a deal in a short time. We agreed to be equal partners. I’d build the
hotel and Hyatt would manage it once it was built. More important than coming to a
tentative agreement was the fact that from then on I was able to deal directly with Jay when
difficulties arose. To this day, though we’ve had our disagreements, the partnership is strong
because Jay and I can talk straight to one another.
On May 4, 1975, we called a joint press conference and announced that we’d agreed, as
partners, to purchase, gut, and fully renovate the Commodore—assuming we could get
financing and tax abatement. The announcement of the partnership with Hyatt, coupled with
Der’s preliminary drawings and rough construction-cost estimates, finally gave me some
ammunition to bring to the banks. By then I had hired Henry Pearce, a real estate broker with
a special expertise in financing. Together, we went calling.
Henry Pearce was the head of a firm called Pearce, Mayer, and Greer, and he was a
fantastic guy. He was in his late sixties, but he had more energy than most twenty-year-olds,
and he was unrelenting in his quest for financing for this job. His persistence helped, and so
did his age. We’d go in together to see these very conservative bankers, most of whom had
never heard of Donald Trump. In many ways I was much more conservative than Henry, but
it reassured these bankers to see me alongside this white-haired guy with whom they’d been
dealing forever.
Our pitch was very much the one I made when I first met Victor Palmieri. I would talk
about the great Trump Organization and all we had done. I would push very hard the fact
that we built on time and on budget, because I knew that the banks were scared to death of
cost overruns, which can kill even a good loan. We would show these bankers drawings and
scale models of this huge gleaming new hotel I planned to build. We would talk about how
the job was going to turn the neighborhood around, how it would create thousands of jobs.
We would go on and on about the fantastic, incomparable Hyatt Company, and we’d even
mention the great tax abatement we hoped to get from the city. This last point would usually
stir some interest, but unfortunately we were in something of a Catch-22. Until we had our
financing in place, the city wasn’t interested in seriously discussing tax abatement. And
without tax abatement, the banks weren’t very interested in talking about financing.
Eventually we decided to take a new tack. Realizing that the positive approach wasn’t
working, we tried to play to their guilt and their fear and their sense of moral obligation.
Forget us, we’d say; you owe it to New York. The city is in trouble, but it’s still a great city,
and it’s our city, and if you don’t believe in it, if you won’t invest in it, how can you expect it
to turn around? If you lend millions of dollars to Third World countries and suburban-
shopping-mall magnates, don’t you also owe some obligation to your own city?
Nothing seemed to work. On one occasion, we found a bank that seemed ready to say yes.
Then, at the last moment, the guy in charge raised some trivial technical issue that just killed
the whole deal. This guy was what I call an institutional man, the type who has virtually no
emotion. To him it’s purely a job, and all he wants to do is go home at five and forget about
it. You’re better off dealing with a total killer with real passion. When he says no, sometimes
you can talk him out of it. You rant and you rave, and he rants and raves back, and you end
up making a deal. But when a machine says no, it’s very tough. We gave this guy every
argument in the world, and after listening, he didn’t flinch and he didn’t move. He just said
very slowly and steadfastly, “The answer is no, Donald. No. No. No.” After that experience, I
remember saying to Henry, “Let’s just take this deal and shove it.” But Henry refused to give
up. He and Jerry Schrager, my lawyer, kept me going, and we continued to push.
It was increasingly clear that the only way I was going to get financing was if the city gave
me tax abatement. My hope rested in a program called the Business Investment Incentive
Policy, which the city adopted in early 1975. It was designed, in a bad market, to encourage
commercial development by providing tax abatements to developers. In the middle of 1975, I
decided to approach the city, even though I hadn’t found financing. To most people, that
would have been ridiculous. I took it one step further. I went in and asked for the world—for
an unprecedented tax abatement—on the assumption that even if I got cut back, the break
might still be sufficient. In a funny way, it was like a high stakes poker game in which neither
side has very strong cards so both are forced to bluff. By this point, I almost couldn’t afford to
walk away from the deal if I wanted to maintain any credibility. The city, meanwhile, was
more desperate than ever to encourage development.
I first made my case to the city in October 1975, and it was direct. The Commodore was
losing money and deteriorating fast. The Grand Central neighborhood was turning into a
slum. The Hyatt hotel chain was ready to come to New York, but there was no way we could
afford to put up millions to build a new hotel unless the city gave me some relief on property
The city’s economic development people agreed to structure a program in which we’d
effectively be partners. The city would give me a total abatement of property taxes for forty
years. In return, I would pay the city a yearly fee, and a share of any profits the hotel made.
The mechanism was fairly complicated. First, I would buy the Commodore from the Penn
Central for $10 million, $6 million of which would immediately go to the city to pay off the
back taxes. Then I would sell the hotel to the city for one dollar and they would lease it back
to me for ninety-nine years. My rent, paid in lieu of all property taxes, would begin at
$250,000 a year and rise by the fortieth year to $2.7 million. Also, I would pay the city a
percentage of the profits. At the end, I’d be paying the equivalent of full property taxes based
on the hotel’s assessed value as of the time we were making our deal.
The whole arrangement was subject to approval by the city’s Board of Estimate, which met
to consider it for the first time in late December 1975. A week before the meeting, I went to
Victor Palmieri and explained that if he wanted the city to take our abatement seriously, we
had better make it clear that the Commodore was in deep trouble and that it might not
survive much longer. He agreed with me. On December 12, Palmieri announced that the Penn
Central had lost another $1.2 million on the Commodore during 1975, was anticipating worse
losses for 1976, and as a result intended to close the hotel permanently no later than June 30,
Two days later, there was another significant announcement, which I hadn’t anticipated.
Portman Associates, a company that had spent the past two years trying to get financing for a
huge new hotel across town in Times Square, revealed that it was scrapping the project
because it had been unable to get bank support. In a way, that was bad for me, because I
needed all the evidence I could get that investing in New York made sense. On the other
hand, in dealing with the city, I could point to the Portman fiasco as clear proof that the only
chance I had to get financing was if they gave me my tax abatement.
Early in 1976, the Board of Estimate decided to switch the structure of the tax-abatement
program. Instead of my selling the hotel to the city and then leasing it back, I would do the
whole deal through the state’s Urban Development Corporation. The reasons were technical,
but actually the change was advantageous to me. Unlike the city, the UDC has the power of
condemnation, meaning the statutory right to evict quickly and efficiently—something that a
private developer can spend months or even years trying to do.
By April, however, the Board of Estimate still hadn’t considered my tax abatement, and
opposition to it had begun to intensify. The loudest chorus came from other hotel owners.
Albert Formicola, head of the city’s Hotel Association, argued that the tax abatement would
give me an unfair advantage competing against the other hotel owners in the city who paid
Ml property taxes. The head of the Hilton, Alphonse Salamone, said he could understand a
ten-year tax abatement, but that everyone ought to compete as equals after that. Even Harry
Helmsley, who was more successful and less envious than most of my competitors, said he
thought the deal was a little excessive. Just before the Board of Estimate vote, three city
councilmen held a news conference in front of the Commodore to denounce the deal. I didn’t
take it personally. They were politicians. They sensed an issue that might play with the voters
and the press, so they jumped on the bandwagon.
I worried about the growing opposition, but publicly my posture was to take the offensive
and concede nothing to my critics. When a reporter later asked me why I got a forty-year tax
abatement, I answered, “Because I didn’t ask for fifty.”
The basic case against us was that the city was giving me too rich a deal. The length of the
tax abatement was only part of it. In addition, critics said, there shouldn’t be a cap on the
profits I shared with the city. Also, if my maximum rent was going to be equivalent to the full
property-tax assessment as of 1974, then that number should at least be adjustable, so that it
could take into account the possibility that real estate values—and assessments—might rise
over the years.
If I’d been the city official in charge of negotiating with me, I might have made those same
arguments. But while other hotel owners were great at carping, not one of them made an
alternative offer for the Commodore. Admittedly, most everyone assumed I had an exclusive
option on the property—and it helped that the city didn’t dispute that. Several months
earlier, a city official had requested that I send along a copy of my option agreement with the
Penn Central. I did—but it was signed only by me, and not the railroad, because I had yet to
put down my $250,000. No one even noticed that until almost two years later, when a
reporter doing a story on the deal called the city and asked to see the original agreement.
Two weeks before the Board of Estimate was scheduled for the third time to vote on my
plan, an alternative offer finally was made for the Commodore. It came from a company that
owned a bunch of low-rent hotels in bad neighborhoods. If the city could get title to the
Commodore, these people said, they’d be willing to buy it, put up a couple of