A story has just been posted online by The New Yorker promising to be the first of a series of articles one might call Trump by the Number$ - a detailed analysis of the structure of some of his more notable business investments and how those characteristics have changed over time.
https://www.newyorker.com/news-desk/swamp-chronicles/where-did-donald-trump-get-200-million-dollars-to-buy-his-money-losing-scottish-golf-clubHere is the set-up paragraph in the first article's analysis of his purchase of Turnberry.
By 2014, Trump was seen by lenders as a high-risk bet because he had so many bankruptcies and so few successful projects. But, if he had used the three hundred million dollars he spent on Turnberry as a pledge, he could have surely received several hundred million in loans at a competitive rate. With, say, a billion dollars total, he could have invested in projects around the world. Instead, he chose to put nearly all of his available cash in an old, underperforming course in a remote corner of Scotland.
The point of this article, and the larger series as it will eventually play out, is not to look at these investments as examples of how dumb Trump must be to violate well established heuristics on investing large sums of money across multiple projects to maximize leverage and reduce risk. The first article on Turnberry looks at the deal in terms of where the cash funds came from, what they expose about his true wealth and liquidity and -- under the assumption that Trump is NOT stupid -- what else could explain the investment decision.
In the case of Turnberry, the oddities pointed out about the deal are that his huge cash investment was put into a vastly over-bought, under-performing business (golf), in possibly THE most over-bought, over-supplied location (Scotland - the home of golf) after a wave of FOURTEEN other golf course purchases between 1999 and 2014. These deals involved over $400 million in cash payments.
Hmmmmmm. Multiple GOLF courses plus other real estate properties. Lots of CASH payments. Over FIFTEEN years. Including the post 2008 CRASH and contraction of credit. By an investor with a history of defaults and strategic bankruptcy filings. Depending primarily on RUSSIAN investors.
Pat, I'd like to solve the puzzle...
I-N-T-E-R-N-A-T-I-O-N-A-L
M-O-N-E-Y L-A-U-N-D-E-R-N-G.
WTH
