The Truth About the Rise and Fall of Donald Trump’s Atlantic City Empire
It’s an April Sunday in Atlantic City in 1989. Though it’s early spring, the boardwalk is packed outside Trump Plaza and the convention hall next door. The setting: WrestleMania V, the fifth in a series of professional wrestling super-shows. After a year of buildup, Hulk Hogan will attempt to win back the World Wrestling Federation championship from his former friend and tag-team partner, “Macho Man” Randy Savage.
But that’ll be in a few hours. Right now Ted DiBiase, aka “The Million Dollar Man,” is about to wrestle Brutus Beefcake in an early undercard matchup. DiBiase is an ostentatious character who flouts his wealth. He shoves $100 bills down the throats of defeated opponents and just over a year ago he actually bought the WWF championship after cheating Hogan out of the belt; when that was nullified, he created his own “Million Dollar Belt” with diamond-encrusted dollar signs on the front.
This being WrestleMania, there’s a very wealthy celebrity in the front row. Before the match, the Million Dollar Man greets America’s billion dollar man: Donald Trump. It’s a fitting pair, actually, as Trump shares many of the DiBiase character’s traits. He hasn’t shoved $100 bills down anyone’s throat (that we know of), but Trump’s presidential speeches often sound a lot like classic bad guy wrestling promos.
This was actually the second time Donald Trump attended a WrestleMania. Trump Plaza was the title host for WrestleMania IV as well as V, each installment of the sport’s annual pay-per-view extravaganza was held next door at what’s now called Boardwalk Hall. Trump cavorted with the heel DiBiasi in 1989, but the year before he was a full-fledged good guy. “Thank God Donald Trump’s a Hulkamaniac,” then-hero Hulk Hogan said in a truly bizarre promo.
Professional wrestling is a great American art form, but it isn’t exactly high-brow. But this is what Donald Trump’s Atlantic City was: gilded and schlocky. Donald Trump helped make Atlantic City the capital of boxing in the 1980s — Mike Tyson made 4 of his 7 undisputed title defenses here — and Trump hung out with Don King (and Jesse Jackson!) at the fights. He opened casinos that looked like gaudy Epcot pavilions and called them the finest buildings ever made. He had three successive plans for a theme park on Steel Pier: First a Six Flags, then a Disney theme park, then a collaboration with Sega. He wanted to build the world’s largest yacht and park it next to his marina casino. None of these planned projects ever happened.
Donald Trump likes to brag that he made a lot of money in Atlantic City and got out before things went sour. Like professional wrestling, though, that’s mostly an act.
Donald Trump probably shouldn’t even have gotten a license to operate a casino in Atlantic City in the first place. According to Wayne Barrett’s 1990 book Trump: The Deals and the Downfall, Trump had been interviewed in a federal bribery investigation in 1979. According to New Jersey law, a casino license must be denied if the applicant fails to disclose all relevant past brushes with the law, even investigations. (No charges were ever filed; a later investigation, after the release of Barrett’s book, found Trump was not a target.) He was recommended by the attorney general’s Division of Gaming Enforcement and licensed by the Casino Control Commission. Trump Plaza was the first casino to open with the backing of the AG; the hearing lasted seven minutes (he’d been preliminarily investigated for two hours earlier).
So Trump went to get his start in Atlantic City. He had a novel way of doing it, too, basically getting Holiday Inn to fund his casino construction project. The company, then the owners of Harrah’s, already owned a casino at the marina and wanted to expand. The two planned the new Harrah’s at Trump Plaza, cutting a deal ridiculously fortuitous to Trump: He was paid to build the casino, he received an equal profit share and was amortized from operational losses in the casino’s first five years. Trump bragged in The Art of the Deal he actually hired a construction company to excavate, then re-fill in a hole with dirt in order to fool his partners into thinking more work was being done at the site. A Holiday Inn board member was curious. “This was difficult for me to answer, but fortunately this board member was more curious than he was skeptical,” Trump wrote.
The casino, Atlantic City’s 10th, opened on May 15th, 1984. It cost $210 million and was the city’s largest. At 2 p.m., the doors opened. At 2:40 p.m., an alarm went off. The building had to be evacuated.
It was not a good start for the casino, but the evacuation and re-opening of the building went smoothly. The partnership between Trump and Holiday Inn was less so. Trump convinced the casino to remove Harrah’s from the name and thwarted attempts to build a parking garage for the casino hotel. (It only had a surface lot, as Trump refused to build a garage on land he owned in front of the casino. Trump’s plan for the Plaza was to attract high rollers, not day-gamblers.) “Each week Harrah’s Marina earned a bigger net profit than Harrah’s at Trump Plaza earned in all of 1985,” former Inquirer reporter David Cay Johnston wrote in Temples of Chance, his stellar book on the expansion of gambling, primarily in Atlantic City, in the 1970s and ’80s.
At the same time, Hilton was almost finished building a $320 million casino in the marina, near Harrah’s. But the commission denied Hilton’s casino license application, and Hilton looked to sell: He took Trump’s offer. Suddenly, Trump had two casinos in Atlantic City — including one that was a direct competitor of his partner in the other. Two things happened on June 17th, 1985: Trump’s Castle, his new marina casino, opened. And Holiday Inn — which then still owned Harrah’s — sued Trump. He then countersued, saying Harrah’s had “badly bloodied” Trump’s name with its mismanagement. “I gave them a Lamborghini, and they didn’t know how to turn on the key,” Trump told the New York Times.
Eventually, Holiday Inn got out of the deal, selling its share of the Plaza for $223 million to Trump. Like he did with his purchase of the marina casino, he borrowed the money it cost to buy it. He put his wife, Ivana, in charge. Per Johnston, she took the casino’s only suite for herself.
Still, things moved along. Trump Plaza was a hit in many ways, including the hosting of concerts and major boxing and wrestling events, and it even attracted high rollers. In a scene later adapted for the film Casino (though moved to Las Vegas), Akio Kashiwagi lost $10 million playing high-stakes baccarat at Trump’s boardwalk hotel. Trump’s Castle got its own TV game show, Trump Card.
Trump wanted more, of course. Johnston notes how he was able to make a ton of money and weaken his Atlantic City rivals:
Trump, again using borrowed money, bought nearly 10 percent of Bally Manufacturing in the last two months of 1986. […] Within days Bally sued Trump, accusing him of antitrust and securities law violations, and Trump countersued.
In February, 1987, Bally settled the litigation with Trump by buying back his stock at an inflated price and paying him a $6.2 million fee to go away for 10 years. Trump’s gross profit, including the fee, was $21 million. […] Because Trump owned two casinos, Bally could block a takeover by buying a second gambling hall. That’s because New Jersey law limited him to three. Bally bought the Atlantic City Golden Nugget [from Steve Wynn], paying a wildly inflated price of $440 million.
Bally’s spendthrift reaction to Trump’s raid left Bally drowning in red ink, unable to compete effectively in Atlantic City (or Nevada) and the raid prompted Wynn, one of the two high-roller specialists, to leave town. For Trump it was a straight win-win.
Now that he wasn’t going to buy Bally’s, Trump looked for another way to get a third casino. He turned to Resorts, the first casino in Atlantic City, which was in reality just a restored Chalfonte-Haddon Hall. Resorts was also building the luxurious Taj Mahal next door — a behemoth of a casino that would be the world’s largest and most grand casino. The company was also running out of money, having spent more than $500 million on the Taj without even coming close to finishing construction.
Trump bought 88 percent of the B shares, per Johnston’s book, thus giving him a large majority of the votes in the company. He now controlled it. But this began a war with an unlikely foe: Merv Griffin. The TV host and game show mogul began an attempt at a hostile takeover of Resorts from Trump, which led to the two trading barbs through the media. When it appeared Griffin would win the war and take over the company, he said he wouldn’t put his name on Resorts: “No, not unless I can get ‘Merv’ to be as big as ‘Trump’ — or get the ‘T’ off Trump.”
Griffin’s purchase, though, left the company saddled with debt. Griffin bought Resorts International — the casino’s holding company — and owned the Taj Mahal for just one day before selling it to Trump.
Trump finished what was now called the Trump Taj Mahal in 1990. It opened with a hint of glamour and an appearance by Michael Jackson. “That fan hysteria reminded me of 1963,” Robin Leach said on Lifestyles of the Rich and Famous, “when I covered The Beatles’ arrival in America.”
The Taj has lasted longer than The Beatles did, but it hasn’t had quite as much success as the Fab Four. The casino dubbed “The Eighth Wonder of the World” — a term pro wrestling had used previously to describe Andre the Giant — was finished primarily by financing the purchase with junk bonds. And the casino had issues. “The shortage of funds was obvious inside the building,” Johnston writes in Temples of Chance. “The long second-floor hallways leading to the New Delhi Deli and the ballrooms were supposed to have marble columns. Instead they had been hastily covered with pink wallpaper. Many rooms were a mess, with hanging rods laying on closet floors, curtains that would not close and keys that did not match the doors weeks after the grand opening.” More than 200 contractors, the Inquirer reported, were owed $72 million.
The casino opened in April of 1990. Just over a year later, Trump was not going to be able to make his June payments. The Times said Trump was on the hook for $900 million that year, and the Taj Mahal eventually filed for Chapter 11 bankruptcy. Trump lost about half of his interest in the casino, and had to sell his private yacht and plane to help pay his losses. His creditors even put him on a budget (of $5.4 million, so … not that bad of one).
Trump Plaza was the next to fall out of his control. It was hemorrhaging cash in the early 1990s — Johnston estimates that, in the end, Trump lost about a million courting high-roller Kashiwagi (who was found dead, stabbed 150 times, in Japan in 1992) — and filed for bankruptcy protection in November. The banks took a 49 percent stake in the Plaza in exchange for more favorable terms on the $550 million in debt the building had on it. Trump remained as CEO, but no longer had a role in day-to-day operations.
Eventually, Trump consolidated his three Atlantic City casinos under a publicly traded company, Trump Hotels and Casino Resorts. By then he owned less than half of both his boardwalk casinos. The company bought the Taj in early 1996. He sold the Trump Castle to that same company later that year. The Times reported Trump did not make any cash on the first deal; he made a little under a million on the Castle deal, along with $130 million in stock.
(In the meantime, Trump had purchased the old Playboy Hotel and Casino in 1990. He first operated it as a hotel, then turned it into the Trump World’s Fair and Casino in 1996. It closed in 1999 and was demolished the next year.)
But then came the end for him in Atlantic City. As casinos began to open in markets besides Atlantic City and Las Vegas, Trump’s casinos failed to diversify as many casinos in Las Vegas did. Boxing had fled to Vegas. WrestleMania was no longer being held in Atlantic City. And in 2004 Trump Hotels and Casino Resorts Inc. filed for bankruptcy with $1.8 billion in debt. After the restructuring, Trump’s share was reduced to 28 percent.
“We have one of the most powerful gaming companies the day it comes out [of bankruptcy],” Trump said. “There’s no way we could have done that without the ’B’ word.”
But just five years later, the company filed for bankruptcy with $50 million in assets and $500 million in debt, per its filing. Trump eventually resigned from the board, and ended up with just 10 percent of the company when it came out of bankruptcy.
In 2015, only one of his casinos still stands with the Trump name. Trump Plaza closed in September of last year. The Trump Marina (formerly Trump Castle) was sold to Landry’s, which owns Chart House and Bubba Gump Shrimp Company among other restaurants, and is undergoing a resurgence as the new Golden Nugget under the new ownership. The Trump Taj Mahal is now owned by Carl Icahn, who is in a messy battle with the union that represents the Taj’s workers. Icahn recently struck a deal to keep Trump’s name on the building.
In the same deal, the company agreed to remove all the Trump Plaza signs from his old boardwalk casino. The only remnants of the Trump name in Atlantic City is a casino where the workers may currently strike, a casino that is the second-worst performing in Atlantic City this year.
Trump’s Atlantic City casino empire was built and funded by others. He deserves credit — perhaps grudging credit, but credit nonetheless – for this impressive feat. He was, indeed, one of the largest employers in South Jersey for decades. But he was no visionary, getting out ahead. Trump once had an Atlantic City empire. And he didn’t sell it — he lost it.
Follow @dhm on Twitter.