The Real Trump Deal. Martin E. Latz
6. Threats and Leverage: Real or Fake?
AN INSTINCTIVE WIN–LOSE MINDSET
“Some people have an ability to negotiate. It’s an art you’re basically born with. You either have it or you don’t.” 6
—Donald J. Trump
Donald Trump made millions from his starring role in The Apprentice and its progeny. And the publicity and persona he derived from it formed a fundamental basis for the millions more he made from subsequent U.S. and international licensing deals.
His celebrity and brand also proved indispensable to his successful presidential run. He almost certainly would not be president today had he not first been portrayed as such a widely admired and successful business titan in the popular NBC series.
So, how much preparation did he do for his first meeting and negotiation with Mark Burnett, the creator of the hit Survivor reality TV series who pitched The Apprentice concept to Trump?
None. Trump did it all on the fly based solely on his instincts.
According to Michael Kranish and Marc Fisher in their extensively researched and well-written biography Trump Revealed, The Definitive Biography of the 45th President:
Burnett walked out of that first meeting with a handshake deal to make The Apprentice. Trump secured not only a starring role on a show made by TV’s hottest producer but also 50 percent ownership of it. Trump had consulted no one, done no research. He liked the idea; he bought it. It was a classic Trump moment, an example of the gut-instinct decision making that he had proudly touted throughout his career. 7
How does this fit into Trump’s business negotiation approach? Two consistent themes run through Trump’s business negotiations:
1) his gut-level planning and decision-making, and
2) his win–lose mindset and approach to business and life.
Trump’s Gut Drove His Business Negotiations—Not Strategic Homework
“I just think that you have an instinct and you go with it. Especially when it comes to deal-making and buying things.” 8
—Donald J. Trump
Lack of planning in The Apprentice deal was typical Trump. In 1986, Trump sought to take over Bally’s, a public company that owned three casinos, one in Atlantic City, where Trump already owned two casinos. Trump eventually became Bally’s biggest shareholder after investing $63 million and buying up 9.9 percent of its stock.
His interest in Bally’s originated from Daniel Lee, an analyst at Drexel Burnham Lambert, the infamous Wall Street investment bank led by Michael Milken that went bankrupt in 1990 due to its involvement in illegal activities in the junk bond market.
According to Lee, who informally advised him on this effort, “[Trump had] begun buying the stock without even reading the annual report.” [Emphasis added.]9
As with The Apprentice deal, though, Trump’s gut proved profitable. While Bally’s fended him off, he made over $20 million when Bally’s bought him out.
Trump acknowledges this tendency and considers it a strength. In a 1984 interview with Lois Romano of The Washington Post in which he discussed negotiating nuclear disarmament with the then Soviet Union, he said that—while he was no expert on missiles—“it would take an hour and a half to learn everything there is to learn about missiles….I think I know most of it anyway.”10
President Ronald Reagan, whom no one ever accused of digging deep into the policy details of nuclear disarmament, certainly spent a lot more than an hour and a half strategic prep time before negotiating this with Soviet Leader Mikhail Gorbachev in 1986.
How important is strategic preparation before complex, significant negotiations?
RESEARCH: Harvard Law Professor Robert Mnookin, Chair of the Harvard Program on Negotiation, noted in his excellent book Bargaining with the Devil, When to Negotiate, When to Fight, it’s appropriate to spend around 90 percent of your time in these negotiations “on preparation behind the table.”11
In my training and consulting, I usually recommend at least twice as much time on strategic planning as “at the table” negotiating. Here’s how I describe this crucial element in my book, Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press, 2004) (Gain the Edge!):
The Power of Preparation Always Makes a Difference
What is the most universally ignored but most effective negotiation tool? Preparation. I conclude every one of my seminars with this statement: “Prepare. Prepare. Prepare. It’s guaranteed to succeed. The more you prepare, the better you will do.”… Renowned UCLA basketball coach John Wooden said: “Failing to prepare is preparing to fail.” He’s right…. Negotiation research unmistakably illustrates the concrete value of preparation.12
Of course, Donald Trump would dispute the characterization that he doesn’t do his homework.
First, he would likely suggest he does his homework where it’s needed. A perfect example would be his first big real-estate negotiation when he was 27—a complex deal involving multiple parties in which he redeveloped the Commodore Hotel in New York City next to Grand Central Station (now the Grand Hyatt).
He may be right. In fact, his long-time lawyer and co-star of The Apprentice, George H. Ross, in Trump-Style Negotiation: Powerful Strategies and Tactics for Mastering Every Deal (Trump-Style Negotiation), wrote:
Donald Trump spends a great deal of time preparing himself and members of his team for every negotiation—not just for the big deals, but every negotiation he enters. He knows that by being as well prepared as he can be, there will be fewer surprises.13
Ross is probably right, at least for the 1970’s Trump. This is confirmed in possibly the most comprehensive Trump biography by Village Voice investigative reporter Wayne Barrett, who met Trump in 1978 and compiled 14 file drawers of documents on Trump and his deals. In Barrett’s 450-page book, Trump: The Greatest Show on Earth published in 1992 (Trump Show), he wrote about Trump’s 1974 purchase of some bankrupt Penn Central railways properties:
[Ned] Eichler and Donald cut the deal over the next six months, winding their way through a 65-page contract and working out a timetable for the first phase of the anticipated zoning changes and housing subsidies that reached 13 years into the future.14
While Trump probably did his homework early on, he did less as he became more prominent in the mid-1980s and beyond.
Barrett described Trump in the mid-1980s here in two Atlantic City casino negotiations.
The Hilton Castle Casino Acquisition
While the Plaza deal took four years, from Donald’s initial lease negotiations in the spring of 1980 to the grand opening,