The Real Trump Deal. Martin E. Latz
in a decrepit part of town effective? Yes.
First, it reflected strategic planning. Trump smartly understood the public impact of the image of a shuttered hotel with “dirty scrap wood” and directed it like a TV producer.
Second, was his threat to walk credible or empty? Credible. Without a significant tax exemption, no developer could make that project work. But Trump highlighted the city’s risk by focusing on his control of the hotel site. And the city wanted the area improved (the city’s Plan B now appeared worse).
Third, was this strategically selective? Perhaps. Trump’s flair for the dramatic and the visually compelling image of the run-down hotel could have impacted a board member who might otherwise have voted against it. In that sense, his threat could have broken an impasse.
Did it undermine the legitimacy of the vote or engender ill will or resistance to implementation? Unlikely.
Fourth, was the threat appropriately framed?
– Specific and detailed? Yes.
– Address the Board’s interests in redeveloping a rundown area? Yes.
– Delivered respectfully in a measured, serious tone? Unclear.
– Include meaningful consequences? Yes.
– Link to a timeline? Yes, the Board voted the next day.
– Include an escape route if circumstances change? No, but that would have been counterproductive as the Board would either approve or disapprove the redevelopment.
Overall, Trump’s threat satisfied many of these elements, and he got his tax exemption two years later, after working with the city to address many other items on the negotiation table.
Thus, this particular threat didn’t appear to cause long-term damage to his relationship with the city.
• Trump’s Tiffany Threat
Trump had a grand vision for Trump Tower. To make it work, however, he needed the air rights from his soon-to-be neighbor on Fifth Ave, Tiffany. Tiffany occupied a small classic building adjacent to Trump’s proposed tower. Trump was willing to pay $5 million for the air rights but didn’t want to. He also was afraid Walter Hoving, who ran Tiffany, would balk, as Trump’s proposed design was radically different from the architectural style in that area.
What did Trump do? Before meeting with Hoving, Trump had his architect construct two different models of his tower. One was a graceful, fifty-story building. The other was an ugly building Trump could argue would be what New York would end up with due to zoning requirements if he didn’t have Tiffany’s air rights. Trump showed Hoving both models, implying Hoving’s Plan B would be a very ugly neighbor. Trump limited the attractiveness of Hoving’s perceived Plan B.223
Hoving sold Trump his air rights.
Was this implicit threat to build an ugly tower next door effective? Yes.
First, Trump strategically planned it.
Second, was it credible or empty? Probably empty. Would Trump have built an ugly building if he didn’t get it? Unlikely. He probably would have just paid more for the rights.
Third, strategically selective? Not according to our criteria. On the other hand, it would be far less likely to engender ill will and invite retaliatory measures than if it were explicit.
Fourth, did Trump appropriately frame it?
– Specific and detailed? Yes.
– Address Tiffany’s interests in a beautiful structure next door? Yes.
– Delivered respectfully in a measured, serious tone? Unclear.
– Include meaningful consequences? Yes.
– Link to a timeline? Unknown.
– Include an escape route if circumstances change? Unclear but unlikely.
Overall, pretty effective.
Trump’s threats, though, proved ineffective in other business negotiations.
• Trump’s NBC/Television City Threat
Donald Trump controlled 75 acres on New York City’s west side in 1986. NBC had recently informed city hall it planned on leaving Rockefeller Center and Manhattan unless it received a huge tax break. To Trump, a marriage made in heaven.
His vision? Lure NBC to the site, build the world’s tallest building along with 7,600 luxury condos in six 76-story apartment buildings, two office buildings, a retail mall, a massive parking garage, and a vast amount of open space and parkland. Trump hoped to vault to the top of New York City developers in one single bound.
The problem? He needed a huge tax break to make these nuptials happen. NBC wasn’t yet committed. Neither was New York City. So Trump applied for a $700 million tax abatement from New York City to underwrite the development’s construction, hoping to use it to entice NBC. Trump called this development-in-waiting “Television City.”224
Here’s a description of Trump’s negotiations with New York City and Mayor Ed Koch and the threats associated with them. Keep in mind that Trump’s relationship with Koch and New York City had already been strained due to problems related to the Commodore Hotel.
The following meeting took place on September 11, 1986 and included Koch’s top economic development officials, including Deputy Mayor Alair Townsend. It was described in Trump Show.
A cocksure Trump told the assembled bureaucrats that unless the city acted, a cramped NBC might move to New Jersey or to Burbank, where the network had a great deal of extra acreage….
Trump argued that he had the only site in the city suitable for major new television studios and that he had worked out a deal with the network giving it a third of his site. “NBC is in love with it,” he said, claiming that the network had been designing its own facility for the property over the past three months. Asked by Townsend how strong a commitment Trump had from NBC, Donald replied: “We’re negotiating the terms of a lease.”
Donald’s strategy was to act as if he were NBC’s exclusive agent, knowing that the city desperately wanted to retain the network’s thousands of jobs, and then to convince the administration to grant him zoning bonuses and tax abatements for the whole site so he could afford to offer the network a sweetheart deal on its portion of it. “I don’t want the mayor to confuse the issue by bringing up other sites [NBC’s and New York City’s Plan Bs],” said Trump. “Nothing else in Manhattan does it.”
To underline the seriousness of NBC’s threatened departure, Trump then sent [Deputy Mayor] Townsend a confidential copy of the network’s request for proposals for a competitive site in New Jersey’s Meadowlands.225
Trump sought to step in the shoes of NBC—which had the leverage with New York City—and use its leverage, in the form of threats to leave New York City, to get his full tax abatement.
There are two problems here. Trump bluffed on his authority to represent NBC, which was simultaneously negotiating with New York City over a possible tax package incentivizing it to stay at Rockefeller Center. And Mayor Ed Koch, a huge personality, was not prone to give in to threats.
Trump’s strategy backfired. Here are sections of two letters Trump and Koch exchanged after New York City rejected Trump’s requested tax benefit.
Trump letter to New York City Mayor Ed Koch, May 26, 1987:
Dear Ed,
Your attitude on keeping NBC in New York City is unbelievable. For you to be playing “Russian Roulette” with perhaps the most important corporation in New York over the relatively small amounts of money involved because you and your staff are afraid that Donald Trump may