No. of Recommendations: 4
I mean....this doesn't mean that Trump's a moron. It doesn't even mean that he's a bad businessman.
I know, I know. It sure doesn't seem that way.
But if you can get a bank to loan one of your SPE companies a million dollars against your ten thousand so that you can bet that $1.01 million on "red" on the roulette wheel, and you keep the winnings (minus repayment) if it hits and you just have that entity declare bankruptcy if you lose....is that not a smart bet?
That's a very exaggerated example, but there's lots of real estate developers that try to run their businesses that way. Make risky bets with other people's money - the riskier the better. It's an art to get banks and equity partners to come into your deal with a waterfall that gives you massive upside and modest downside - but if you can get away with it, it's awesome for you.
Trump made a huge bet on AC with other people's money with a small percentage of huge upside and a massive downside potential. He never went bankrupt - he barely had any money at all in those deals. But he stood to make a gazillion dollars if it hit, and lose very little if it failed - so who cares if there's a very slim chance of it succeeding, or if it failed?
