Where Did Donald Trump Get Two Hundred Million Dollars to Buy His Money-
Losing Scottish Golf Club?

By Adam Davidson
July 13, 2018
Image may contain Plant Grass Clothing Apparel Human Person Tie
Accessories Accessory Vegetation Suit and Coat
This weekend, Trump will visit a property that offers a tantalizing and
maddeningly incomplete glimpse into the ways that our President makes and
spends money.Photograph by John Gunion / Redux

Between meeting the Queen of England and Vladimir Putin, President Trump
will spend this weekend at Turnberry, the golf course he bought in 2014
and rechristened Trump Turnberry. This property has not received the
attention it deserves. It is, by far, the biggest investment the Trump
Organization has made in years. It is so much bigger than his other recent
projects that it would not be unreasonable to describe the Trump
Organization as, at its core, a manager of a money-losing Scottish golf
course that is kept afloat with funds from licensing fees and decades-old
real-estate projects.

No doubt, the President will be excited to visit. After buying the
property for more than sixty million dollars, he then spent a reported
hundred and fifty million pounds�about two hundred million dollars
total�remaking the site, adding a new course, rehabbing an old one, and
fixing up the lodgings. It is possible, though, that he will have some
harsh words for his staff. The Turnberry has been losing an astonishing
amount of money, including twenty-three million dollars in 2016. The Trump
Organization argued that these losses were the result of being closed for
several months for repair. However, revenue for the months it was open
were so low�about $1.5 million per month�that it is hard to understand how
the property will ever become profitable, let alone so successful that it
will pay back nearly three hundred million dollars in investment and
losses.

This is the first edition of a weekly column in which I hope to expose,
explore, and analyze the financial activity of our President and his
associates�including his family, his political appointees, and business
partners�and make the case for greater transparency. We know, of course,
that the Trump Organization has worked with some truly questionable
business associates, that it has run afoul of anti-money-laundering laws,
and that its most high-profile business expansion�a line of three- and
four-star hotels�has all but collapsed. But, for all the coverage of
Trump�s finances, there is so much we just don�t know. And Trump Turnberry
offers a tantalizing and maddeningly incomplete glimpse into the ways in
which our President makes and spends money.

President Trump has proclaimed himself the �king of debt,� a proud master
of �doing things with other people�s money.� So it was quite surprising
when Jonathan O�Connell, David A. Fahrenthold, and Jack Gillum revealed in
a Washington Post story in May that Trump had abruptly shifted strategies
and begun spending hundreds of millions of dollars in cash to fund
projects. In the nine years before he ran for President, the Post
reported, the Trump Organization spent more than four hundred million
dollars in cash on new properties�including fourteen transactions paid in
full. In fifteen years, he bought twelve golf courses (ten in the U.S.,
one in Ireland, and a smaller one in Scotland), several homes, and a
winery and estate in Virginia, and he paid for his forty-million-dollar
share of the cost of building the Trump Hotel in Washington, D.C.�a
property leased to Trump by the U.S. government. But his largest cash
purchase was the Turnberry, followed by tens of millions of dollars in
additional cash outlays for rehabbing the property.

Using what appears to be more than half of the company�s available cash to
purchase Trump Turnberry makes no obvious sense for any business person,
but especially for Donald Trump. It is a bizarre, confounding move that
raises questions about the central nature of his business during the years
in which he prepared for and then executed his Presidential campaign.

While Trump has portrayed himself as uniquely aggressive in his use of
debt, borrowing money is central to any real-estate business. By borrowing
money, developers increase their profits when successful, reduce their
losses when they fail, and are able to diversify their holdings to
increase the likelihood of success. By 2014, Trump was seen by lenders as
a high-risk bet because he had so many bankruptcies and so few successful
projects. But, if he had used the three hundred million dollars he spent
on Turnberry as a pledge, he could have surely received several hundred
million in loans at a competitive rate. With, say, a billion dollars
total, he could have invested in projects around the world. Instead, he
chose to put nearly all of his available cash in an old, underperforming
course in a remote corner of Scotland.

We know so little about the internal finances of the Trump Organization�s
activities elsewhere that it is hard to understand where all of the money
spent on Turnberry came from. Through the public disclosures required of
someone running for and becoming President, many media outlets have tried
to re-create a model for Trump�s business, recognizing that, by his own
frequent admission, he often exaggerates his worth. Forbes came up with a
figure of a net worth of just over three billion dollars, with less than
two hundred million in available cash. This is an astonishing sum, of
course.

However, the portfolio of assets that Trump owns does not suggest that he
would have so much money that he can casually spend a few hundred million
on a whim. Much of his wealth is tied up in properties that lose money or
are not especially profitable. A comprehensive analysis by the Wall Street
Journal, in 2016, concluded that Trump brought in about a hundred and
sixty million dollars in income a year. (�The income number is wrong by a
lot,� Trump said, though he provided no details.) With that money, Trump
had to pay for his business, his taxes (if he paid any), his personal life
style, and that of his family. His Boeing 757 alone cost more than ten
thousand dollars per hour of use, not to mention the dozens of staffers at
his various properties, the clothes and food and jewelry of a status-
conscious family, and countless other expenses that could easily eat up
all of that income. There simply isn�t enough money coming into Trump�s
known business to cover the massive outlay he spent on Turnberry.

Featured Video

Trump Nominates Kavanaugh to the Supreme Court

In congressional testimony, Glenn Simpson, the founder of Fusion GPS, the
firm that hired Christopher Steele to report out the document that became
known as the Steele dossier, wondered aloud if the money really was
Trump�s. If so, why would he have spent it in this location and not
elsewhere? (A recent report by R&A, the world�s leading golf organization,
shows that there is far more opportunity in Asia, Africa, and Latin
America�where golf is growing quickly�than in Scotland, the country most
oversupplied with courses, clubs, and resorts.)

We don�t know. We can�t, until we learn far more about Trump�s internal
finances. It can�t be dismissed, out of hand, that there is an innocent
explanation for the Trump Turnberry purchase. Eric Trump told the Post
that Trump had �incredible cash flow,� and that none of the cash used to
purchase the fourteen properties in full came from outside investors or
from selling off other assets. Perhaps Trump actually did make far more
than we know. Perhaps he sees something in the business of golf that
others have missed, and he has a vision for how to turn the money-losing
property into a thriving concern. Or, as some have suggested, he may have
become sentimental and wanted a deeper connection to his mother�s Scottish
roots.

There is another way to view the investment in Trump Turnberry. Even
before the financial crisis of 2008, Trump found it increasingly difficult
to borrow money from big Wall Street banks and was shut out of the rapidly
growing pool of institutional investment. Faced with a cash-flow problem,
he could have followed other storied New York real-estate families and
invested in the ever more rigorous financial-due-diligence capabilities
required by pension funds and other sources of real-estate capital. This
would have given him access to a pool of trillions of dollars from
investors.

Instead, Trump turned to a new source of other people�s money. He did a
series of deals in Toronto, Panama, the Dominican Republic, Azerbaijan,
and Georgia with businesspeople from the former Soviet Union who were
unlikely to pass any sort of rigorous due-diligence review by pension
funds and other institutional investors. (Just this week, the Financial
Times published a remarkably deep dive into the questionable financing of
Trump�s Toronto property.) He also made deals in India, Indonesia, and
Vancouver, Canada, with figures who have been convicted or investigated
for criminal wrongdoing and abuse of political power.

We know very little about how money flowed into and out of these projects.
All of these projects involved specially designated limited-liability
companies that are opaque to outside review. We do know that, in the past
decade, wealthy oligarchs in the former Soviet Union and elsewhere have
seen real-estate investment as a primary vehicle through which to launder
money. The problem is especially egregious in the United Kingdom, where
some have called the U.K. luxury real-estate industry �a money laundering
machine.� Golf has been a particular focus of money laundering. Although
the U.K. has strict transparency rules for financial activity within the
country, its regulators have been remarkably incurious about the sources
of funds coming from firms based abroad. All we know is that the money
that went into Turnberry, for example, came from the Trump Organization in
the U.S. We�and the British authorities�have no way of knowing where the
Trump Organization got that money.