Financial Daily from THE HINDU group of publications
Monday, Apr 19, 2004
Columns - American Periscope
Hubris and Trump's empire
Mr Donald Trump, Chairman, President and Chief Executive of Trump Hotels and Casino Resorts with a copy of his new book How To Get Rich.
There is a glare of bright lights all around and all the time to create a constant ambience. Waiters and waitresses come around to get you drinks to help you avoid skipping a beat in your losing streak. It is even rumoured that a burst of oxygen comes through the air conditioning shafts on a regular basis to give you that burst of energy for another round of betting.
Trump Hotels and Casino Resorts Inc. are waiting for such a burst of oxygen to come from the bank, Credit Suisse First Boston, in the form of $400 million (Rs 1,840 crore) to bailout the company. The company was recently issued a qualification in its annual report by its auditor, Ernst and Young, which believes that there are serious doubts about the company's ability to continue as a going concern.
Auditors rarely issue such a qualification unless the company has agreed amicably to such a noting because it has probably already filed for bankruptcy protection. Alternatively, auditors in the special case where they are deeply committed to their principles (and we have seen too few of those cases in the corporate world of late), would issue such a notification even knowing that their contract is not likely to be renewed.
We do not know which one of these two motives drove the auditors, but the company chairman, Mr Donald Trump, breezily reacted to questioning by news reporters that the auditors have issued the same qualification three years in a row. All in a day's work in the casino business apparently.
Mr Trump is reported to have leveraged his casinos heavily to invest in real estate around New York and other major cities around the US and those investments are reported to be doing well. If the CSFB deal comes through, the bank will control about 65 per cent of the casino and Mr Trump's holding would fall to only about 20 per cent. He does not seem to mind it because he says he is now focussed on real estate. You see, he is also a real estate developer.
Apart from casinos and real estate, Mr Trump is actually in a third line of business, that of maintaining celebrity status. He is the master of Hubris (he named his casino in Atlantic City as `Taj Mahal'), and is famous for regularly exaggerating his importance and his fortune. He made a pretence of wanting to run for President in 2000 and that got him attention on the front pages for a few days. Not a bad burst of oxygen.
More notable in his efforts at hubris is his entry into the world of what is ironically called reality television. In these shows, participants are not supposed to be adhering to written scripts, but are behaving as they really would while being recorded with a camera.
Thus, there are shows that put people on an island to see how they exhibit survival skills and reward a few with cash prizes; in others, women compete to be chosen by one man and will eventually marry him (really!). The show will take you through several episodes of the story while the narrator will frequently quiz the participants on how they `feel', what are they `thinking' at this moment, what are they `scheming,' and so on.
Mr Trump jumped into this genre with his `Apprentice.' In this, two teams of young men and women started the series by competing to complete a task (different in each episode) assigned by, yes, Mr Trump.
In one episode, the task involved each team being given one of Mr Trump's apartments to repair and rent out. The team that secures the higher rent is the winner and progresses to the next level. The losing team is summoned at the end of the episode to an across-the-table session with Mr Trump who quizzes them on what they did and did not do and then makes them turn on each other to find a scapegoat for their failure.
He then chooses one to whom he says, `You're fired!' and the rest of the crew proceeds to compete in the next round. The ultimate prize of this series is that one will be chosen to work for Trump as a highly paid lackey.
The camera follows each team in its efforts at executing the task. You see team members forming alliances within the team, ratting on each other, and setting themselves up with an excuse for poor performance if they fail at the task. The base premise of the task is faulty, for the winning group is rewarded as a `team' while the failing group is dissected for an individual to be punished.
The tensions and backstabbing take place in the winning team too, for the individuals there also are motivated by the same desire to show themselves as better than the others in the team. Their activities are not examined or analysed by Mr Trump because they ultimately won. There are several wrong lessons in these episodes. One is: The end result matters, not how you got there. Another is: Individualism matters even if you are nominally in a team. My colleague at the university tapes these episodes to show in her class as examples of how not to behave in an organisation!
Mr Trump has found his `you're fired' exclamation so catchy that he also appears in an advertisement for Verizon, the communications company, and uses it there. With CSFB soon to take majority control of the casino, Trump obviously has plenty of time.
Just in case you do not watch TV, Mr Trump inflicts himself upon you through the print media. He has written three books already. In each one of them, he explains to you how great a person he is, how wealthy he is, and how successful he is.
His current work is titled Trump: How to get rich. He genuinely wants to share with you the reasons for his success because he wants you also to become rich and successful. He has declared in his books that he does not need the money because he already has enough and more than he will ever need. I hope the bankers from CSFB are not reading these books; they may withhold that loan he has applied for.
(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is email@example.com)
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