Trump: The art of disaster; Good November for Las Vegas

If Donald Trump proposes to run America the way he ran his casinos, God help us all. He built a Boardwalk empire in Atlantic City with a lot of hocus-pocus, debt financing and sky-high interest rates (14% for Trump Taj Mahal). With typical Trump insecurity, he got analyst Marvin Roffman — a friend of mine — fired from Janney Montgomery Scott after Marvin predicted (accurately) that Trump Taj Mahal would go bankrupt, so heavily was it leveraged. In another sham transaction, Trump had his father buy $3.5 million in Trump’s Castle chips as a subterfuge to pump money into the casino.

Trump’s massive indebtedness was, in a perverse way, his salvation. True, he had to submit to a personal allowance and sell some of his toys, like his Trump Princess yacht. But he convinced regulators that letting him keep his three casinos was better than letting them go into foreclosure. And, given the scale of Trump’s indebtedness, how much choice did the banks have but to play along? (Shades of how Gary Loveman would take Wall Street hostage in the Caesars Entertainment buyout.)

The Los Angeles Times visits the scene of the crime and finds a number of embittered tradesmen who took a bath from Trump’s multiple bankruptcies — and let it not be forgotten that, as 10% owner of Trump Entertainment Resorts — Trump is now in Chapter 11 four times over. “What kind of ethics are we talking about here,” asks stockholder representative Sebastian Pignatello, adding, “He trampled everyone: the shareholders, the bondholders, the employees, the contractors.” In answer to his question, the same kind of ethics Trump usually displays: none.

“From a financial point of view, [Trump] left Atlantic City with his tail between his legs … hardly a model of financial probity or business acumen,” says former Casino Control Commission chairman Steven Perskie. The LAT finds a few Trump defenders in Atlantic City, one of whom says, “If a guy used a loophole in the law to benefit himself, more power to him. Wouldn’t you do the same thing?”

Well, would we?

* Fattened by some end-of-October slot revenues, Nevada gaming grosses were up 8% last month, with the Strip showing 5% improvement. This was in spite of a 28% decline in baccarat wagers and boy did the house play lucky, winning only 14% less at baccarat. Other types of table games saw only 3% and house winnings rose 7% (inclusive of poker rake). Strip slots held tighter than a drum, keeping 15% more of players’ money than last year. “Overall, we continue to think the LV Strip can generate mid-single [room revenues] and low-single-digit visitation growth, though we expect the market to continue experiencing volatility in baccarat play given a likely slowdown in Chinese players,” wrote JP Morgan analyst Joseph Greff.

Laughlin and Reno both saw modest gains (3% each), while other jurisdictions were absolutely boffo. Downtown Las Vegas shot up 25%, North Las Vegas zoomed to a 23% gain and the Boulder Strip was up 21.5%. Outlying Clark County markets like Mesquite and Primm rose 9%, so — all in all — the locals player was feeling very confident in November.