Donald Trump's Scottish Golf Resorts Suffer Heavy Losses
US president had to plough £1.3m into debt-ridden Aberdeenshire resort...
The two resorts lost a total of £17.6m ($23m) last year. Revenue also fell sharply
The Guardian/Independent UK, 15 October 2017.
Trump boasts of making great deals, but financial records filed in the UK show he has lost millions of dollars for three years running on a couple of his more recent big investments, >his Scottish golf resorts.
A Companies House report shows losses last year at the two resorts more than doubled to £17.6m ($23m). Revenue also fell sharply.
In the report, Mr Trump's company attributed the results partly to having shut down its Turnberry resort for half the year while building a new course there and fixing up an old one.
His company has faced several setbacks since it ventured into Scotland a dozen years ago and its troubles recently have mounted.
The company has angered some local residents near its second resort on the North Sea with what they say are its bullying tactics to make way for more development.
The company also has lost a court fight to stop an offshore wind farm near that resort, drew objections from environmental regulators over building plans there in August and appears at risk of losing a bid to host the coveted Scottish Open at its courses.
Amanda Miller, a spokeswoman for the Trump Organisation, declined to comment about the results.
Mr Trump handed over management of his company to his two adult sons before becoming US president, but still retains his financial interest in it.
It is not clear how big a role Mr Trump's setbacks in Scotland have played in the losses. In addition to the Turnberry shutdown, the company also noted in its report that it took an £8 million (10 million dollar) loss due to fluctuations in the value of the pound last year.
The company reported that revenue at the two courses fell 21 per cent to £9 million ($11.7m) in 2016 from £11.4m ($15m) a year earlier.
Trump's golf business is being closely watched because he has made big investments buying and developing courses in recent years, a risky wager in a struggling industry.
It is also a bit of departure for the company. Mr Trump has mostly played it safe in other parts of his business, putting his name on buildings owned by others and taking a marketing and management fee instead of investing himself.
Much of the anger toward Mr Trump in Scotland is centered around his resort outside Aberdeen overlooking the North Sea coast and its famed sand dunes stretching into the distance.
Called the Trump International Golf Links, it is here that a local fisherman became a national hero of sorts for refusing a $690,000 (£520,000) offer from Mr Trump for his land and where footage was shot for a documentary on Trump's fights with the residents, called "Tripping Up Trump".
Many locals praise the course for bringing in more tourists to the area and helping the local economy, but Mr Trump's critics there are outspoken and now, with their target the US president, playing to a worldwide audience.
The same day that the financial report on the resorts was released, an online petition by a global corporate watchdog group fighting Mr Trump's plans for a second 18-hole course to the North Sea resort got signature number 94,860.
When Mr Trump visited his North Sea resort in June last year, two local residents ran Mexican flags up a pole in protest against the then-candidate's immigration policies.
It was a snub that came just after the UK Supreme Court ruled unanimously against Mr Trump's efforts to stop the wind farm, a Scottish government decision to strip him of his title as business ambassador for Scotland and the revocation of an honorary degree from Aberdeen's Robert Gordon University.
Both the Scottish government and the university cited Trump's comments about Muslims during the campaign.
In July, the CEO of a major sponsor of the Scottish Open was quoted in a local newspaper casting doubt on Trump's chances of hosting the event.
"There's no decision made but, look, there are clear issues," Aberdeen Asset Management CEO Martin Gilbert was quoted saying.
He added,
"Politics aside, Trump would be an ideal venue - but you can't put politics aside."
Asked for clarification about what Mr Martin meant by "issues" and "politics", Aberdeen Asset spokesman James Thorneley said:
"It's pretty kind of obvious, right?"
Pressed, he said he would not comment further.
This summer, Scotland's Environmental Protection Agency and Scottish Natural Heritage, a conservation group, sent letters to Aberdeenshire Council urging it to reject Trump's plans for the second course if he did not make certain changes. A vote by the council, expected in August, was postponed.
The global watchdog group behind the online petition, SumofUs, used the environmental objections in its plea for signatures.
It also seized on Mr Trump's reaction to the violence in Charlottesville, Virginia, to muster support, arguing that Trump's rhetoric has "bolstered white supremacists" across the globe.
It states on its website:
"Now we have a chance to reject Trump's hatred and protect our environment in one fell swoop."
Whether any of this will hurt profits further at Trump's Scottish business in the long run is another matter.
In the financial report, Eric Trump, the president's son and a director of the British subsidiary that owns the two resorts, included a letter expressing confidence that the resorts will attract plenty of golfers.
He said Turnberry had received "excellent reviews" from its guests, and that the reopening of the resort is ushering in an "exciting new era" for the company.
END
MORE:
Did Donald Trump Bankrupt a Golf Course, Leaving Puerto Rico with $33 Million in Debt?
A viral string of tweets gets some facts right about a failed business venture involving a Trump company, but it also leaves out some important context.
Snopes...posted 15 October 2017
Donald Trump "bankrupted" a golf course in Puerto Rico, leaving taxpayers there on the hook for $33 million worth of debt.
A Trump company was unable to save a floundering Puerto Rico golf club and resort from bankruptcy after entering into a management and brand licensing agreement with its owners in 2008. As a result of the episode, $32.6 million in government investment was not recouped.
In the aftermath of a series of hurricanes in September 2017 — particularly Maria, which devastated the United States territory of Puerto Rico — President Donald Trump reflected on the infrastructural damage caused by those storms in a 25 September 2017 tweet:
Quote:
Donald J. Trump
@realDonaldTrump
Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble..
1:45 AM - Sep 26, 2017
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In response, public relations and marketing executive Lainie Green issued a series of tweets that went viral, accusing President Trump of having added to Puerto Rico’s debt by bankrupting a golf course there and defaulting on $33 million worth of government-issued bonds:
Quote:
Lainie Green @AureliaGroup
Replying to @realDonaldTrump
Massive debt you and your sons helped when you bankrupted your golf course & never paid back the $33 mil bond you left Puerto Ricans with.
You remember because you filed for the bankruptcy a month after you started running for president in 2015
And you claimed because you didn't own it wasn't your fault that you were just managing for 5 years leading up to the bankruptcy.
So how much are you going to give back of that $600,000 paycheck you got for sticking Puerto Rico with a $33 million debt?
2:03 AM - Sep 26, 2017
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Green’s account of the episode got some facts right, but it also left out some important context necessary for any assessment of Trump’s responsibility for the bankruptcy of the golf course.
According to documents first detailed in a 2016 BuzzFeed investigation, in 2008 Trump International entered into an arrangement with the owners of Coco Beach Golf & Country Club, a foundering resort and golf course that had opened in 2004 on the northeast coast of Puerto Rico about 30 miles from San Juan. Under the agreement, the future president’s company licensed the Trump name to the owners and took on a share of the resort’s day-to-day management in exchange for a fee.
The owners of the resort, which was renamed Trump International Golf Club Puerto Rico after 2008, had already received significant financial assistance from the Puerto Rican government before Trump’s intervention. In 2000 and 2004, Puerto Rico’s Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority (AFICA) issued the owners of the club a total of $25,497,854 in bonds to help build and launch the resort. In 2009, the Puerto Rican government also invested $50 million in the Hotel Gran Melia, which was part of the resort and provided a crucial stream of customers for the golf club, according to BuzzFeed.
By October 2011, Coco Beach had defaulted on $26 million in bonds and had to seek another round of financing. In 2015, the company filed for bankruptcy under its original name, Coco Beach Golf and Country Club, citing debts of more than $78 million but only $9 million in assets. Bankruptcy court records show that Puerto Rico’s Tourism Development Fund made a claim of $32,606,821, essentially leaving Puerto Rican taxpayers on the hook for the better part of $33 million.
Does all this mean that Trump “bankrupted” the golf course, though? Not exactly.
The evidence shows that Coca Beach had consistently been operating at a loss and accumulating debts in the years before Trump International became involved with its management. And a significant portion of the financial assistance provided by the Puerto Rican government was given in 2000 and 2004, well before the future U.S. president’s company arrived on the scene.
Puerto Rico had already been hard hit by a recession well before the Trump International contracted to assist with the club’s management, and in the two years before Trump International’s intervention (2006-07)
Coco Beach operated at an average annual net loss of $5.3 million, according to BuzzFeed. Moreover, neither Donald Trump nor Trump International held an ownership stake in the property, took part in its development, or was involved with its financing; they only operated and managed the resort. Holding Trump to be solely or primarily responsible for the bankruptcy of a business they didn’t own, that was already heavily in debt, and was losing several million dollars a year before Trump arrived on the scene would be something of an unfair standard.
However, one could argue that Trump International received a good deal of money from the Coco Beach deal yet failed to turn the club around, or even stanch its financial bleeding.
According to the March 2011 bond offering (which was itself required to cover losses on the Puerto Rican government’s 2000 and 2004 bond investments), Trump International had given certain assurances about the future viability of the resort:
The continued operations of the Partnership are dependant [sic] upon the ability of the Club to attract customers and control operating expenses.
Trump International Co. (Club Manager) has developed a plan to achieve and maintain positive operating cash flows sufficient to allow the Partnership to continue as a going concern.
In particular, the Club Manager [Trump International] has developed programs to attract members and use the Club, while containing operating costs.
Whatever that plan was, it did not succeed.
The 2012 financials show that the club’s average annual losses rose to $6.3 million during the period that Trump’s company provided management services to the resort (2008-2012), $1 million more per year than the business had been losing before.
Further, for this lack of success, Trump International garnered a total of $609,607 in management fees between 2008 and 2012. (This figure is likely the source of Lainie Green’s reference to a “$600,000 paycheck” received by Donald Trump.)
Donald Trump did not set Coco Beach Golf and Country Club on course for ruin, but he wasn’t able to save it from that fate. His role in the bankruptcy of the company, which ended up costing Puerto Rican taxpayers $32.6 million, was significant.
That $32.6 million loss constituted 0.03 percent of the territory’s total $123 billion debt, which prompted the Puerto Rican government to file for bankruptcy relief in May 2017.