Is the Trump brand beyond repair?
Some companies likely to keep their distance
Now that he’s out of office, former President Donald Trump faces a daunting challenge: rehabilitating his brand after it has been tarnished by a tumultuous presidency that ended with riots at the U.S. Capitol and a second impeachment.
The good news for Trump: More than 74 million Americans voted for him and might be willing to stay at his hotels, golf at his resorts and buy his products, such as shirts, golf accessories and jewelry.
The bad news: Business experts say many companies are expected to keep him at a distance, treating him as bad for business – especially financiers that view the former president as a risky bet, given his history of defaulting on debts and not paying his bills on time.
“There’s a swath of businesses (for which) his brand is just radioactive,” said Erik Gordon, a business and law professor at the University of Michigan.
It’ll be especially hard for Trump to break through if he faces criminal charges over his conduct in office, such as those tied to his alleged role in provoking the Capitol insurrection.
“He is seen as a criminal and, in fact, is one,” said Lisa Gilbert, executive vice
president at Public Citizen, a watchdog group that has criticized Trump for profiting off of the presidency.
About a week after the insurrection, New York City moved to terminate its business contracts with Trump, including deals to operate two ice skating rinks and a carousel in Central Park. Major companies in the business world in which Trump made his name are cutting off campaign funds from lawmakers who supported his challenge to accepting the certified Electoral College votes electing Joe Biden.
And the National Association of Manufacturers called for his potential ouster, while The New York Times reported that Deutsche Bank, Trump’s primary lender for two decades, was no longer interested in doing business with him. Even the New York chapter of the Girl Scouts is reportedly aiming to exit a long-term lease at the Trump Building in Manhattan’s Financial District.
For Trump to succeed financially, he may have to carve a new path for himself because a significant portion of his previous business strategy – real estate development, casinos and golf resorts – but might a dead end, experts said.
There are already signs that some of his partners are done doing business with him. The PGA of American recently announced it was pulling the 2022 PGA Championship from his golf course in New Jersey.
What’s more, the type of elite, wealthy consumers who have historically been able to afford to indulge in Trump’s luxurious properties – such as the Trump International Hotel in Washington, D.C., or the Trump National Doral golf resort in Miami – have increasingly come to view his brand as distasteful.
“I think amongst the traditional Trump target audience or demographic the brand is tarnished for them,” said Peter Jaworski, a Georgetown University professor who teaches business ethics and ethical leadership. “In order to be successful, I think he needs to shift gears toward red states – the people who continue to admire Donald Trump almost to a fault.”
That could prove easier said than done. Recent efforts by his company, the Trump Organization, to launch a brand of affordable hotels geared toward budget travelers in middle America fell apart. The company blamed political opposition for the plan’s collapse.
The Trump Organization and the White House, while Trump still occupied the Oval Office, did not respond to requests seeking comment.
Trump, however, has signaled he plans to remain firmly in the public eye.
“We’ll be back in some form,” he said Wednesday morning in his going-away speech.
Will anyone lend to Trump?
Part of the trouble for Trump is that financiers may not be willing to extend the type of loans that he would need to invest in a major new enterprise.
And that’s particularly problematic because he could face a cash crunch if he doesn’t quickly reinvent himself, experts said. He owes $300 million in loans over the next several years, according to a New York Times investigation.
But his debts might not be as much of a hurdle as they first appear, said Charles Elson, a professor of finance at the University of Delaware.
“There’s the old joke: If I owe you $40 and I can’t pay you back, it’s my problem. If I owe you $40 million and can’t pay you back, it’s your problem,” Elson said.
In other words, Trump’s creditors may have an incentive to help him work out a payment plan rather than tip him into bankruptcy, a legal process he has used several times to help escape debts and kick-start a comeback. If Trump or his companies file for bankruptcy, their creditors would almost certainly not receive what they’re owed in full.
“He’s gone through this before – this isn’t the first time he’s gone through a severe downturn,” Elson said.
Still, for lenders to extend financing to him, they may want to see proof of strong cash flow at his current operations. And the reality is that the types of businesses he operates – namely destinations that rely heavily on travel spending – have suffered during the COVID-19 pandemic. To be sure, if the economy comes roaring back as vaccines take effect, travel spending could quickly rebound – but will Trump’s properties reap the benefits?