Forbes took Trump off its rich list in the 90s because they didn’t trust his boasts about money

Forbes took Trump off its rich list in the 90s because they didn’t trust his boasts about money

As we learned from The New York Times this week, Donald Trump lost $1.17bn (£897m) between 1985 and 1994 on failed business ventures, more than any other American taxpayer for the period.

The US president is known for boasting about his success as an entrepreneur, putting his name to the book The Art of the Deal in 1987 and blustering his way through 14 seasons of The Apprentice on NBC between 2004 and 2015.

We knew he lost big at the height of his pomp through such disasters as his acquisition of the Taj Mahal Casino in Atlantic City but, before The Times got their hands on facsimiles of his income tax returns for the period, we didn't have a nice round number to put on his blunders.

Here's his explanation:

Now it transpires that Forbes, the influential US business magazine, was onto him much earlier, dropping him from their Forbes 400 "rich list" in 1990 over doubts about his wealth.

Journalists Richard L Stern and John Connolly explained their reason for the decision at the time, declaring "the decline in Atlantic City gaming revenues, unmasking of misstated asset values, declining real estate values and massive debt may have put The Donald within hailing distance of zero".

Stern and Connolly treated Trump's claims to have a net worth of $1.5bn as of 31 May 1989 with huge scepticism because "virtually all real estate has come down in value the past few years" and dismissed his valuation of many of the buildings making up his luxury property empire as "unrealistically optimistic".

They valued his portfolio at $3.7bn but encumbered by $3.2bn of debt, giving him a net worth of $500m.

That's one-third of Trump's own estimation.

Excluding his three casinos, they suggested his buildings together carried some $1.7bn in debt with interest costs of $180m.

These properties and the net income from the Castle and Plaza casinos yield, we think, about $140m in cash flow.

That leaves Trump bleeding at the rate of at least $40m a year, $3m a month, $770,000 a week.

Blackly comic in hindsight, Stern and Connolly suggest Trump's "great hope" is that the newly opened Taj Mahal "will bring hordes of new gamblers to this decayed New Jersey resort", noting:

He will need a win of maybe $1.3m a day just to cover his overhead and service the casino's debts of $760m.

As Ron Howard's narrator in Arrested Development might have said: "That didn't happen."

A particularly telling passage from the article finds the reporters visiting their subject at Trump Tower in Manhattan, where he says: "I'm going to show you cash flow numbers I've never shown anyone before."

"He waves papers that he says show cash flow last year of $159m - as against the $140m we figured," Stern and Connolly write.

And then?

He shows us more numbers attesting to a wealth of cash and negotiable securities but folds the page so we can't see the next column over.

Classic Donald.

HT Forbes

More: Fox News is desperately trying to pretend it’s OK Donald Trump lost $1bn

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