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Trump: The Art of the Deal
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Chapters 7-9Chapter Summaries & Analyses
Chapter 7 Summary: “Trump Tower: The Tiffany Location”
Donald Trump’s interest in the Bonwit Teller building at 57th Street and Fifth Avenue began in 1971 when he saw its prime location and large lot as “perhaps the single greatest piece of real estate in New York City” (145). However, when he approached Franklin Jarman, the head of Genesco, which owned Bonwit Teller, Jarman dismissed the idea of selling. Trump persisted, writing multiple letters over three years despite receiving no encouragement. In 1978, Trump read that John Hanigan had taken over Genesco to sell assets and pay off debt. Trump called Hanigan, who agreed to meet after recognizing him from the letters. This, Trump says, shows the importance of “timing” (148) in any deal. Hanigan was eager to sell the property, and Trump negotiated a $25-million deal to buy the building and lease. However, Trump needed to keep the deal secret to avoid competition. He convinced Hanigan to sign a letter of intent without a board approval clause, securing the deal before others could bid.
Trump approached Chase Manhattan Bank for financing, but they hesitated because Genesco did not own the land. Since the Equitable Life Assurance Society owned the underlying land, Trump met with George Peacock, head of Equitable Real Estate, and proposed a 50-50 partnership: Trump would contribute his building lease, and Equitable would contribute the land to develop a skyscraper with Trump. Peacock agreed, subject to zoning approvals. Next, Trump sought air rights from Tiffany & Co, which was next to Bonwit Teller, to allow a larger building. Tiffany’s “legendary” (153) owner, Walter Hoving, was known for his integrity and high standards. Trump met with Hoving, presented two scale models—one with Tiffany’s air rights and one without—and convinced him that selling the rights would “preserve” (154) Tiffany’s prestige. Hoving agreed on a handshake deal for $5 million. While away on vacation, air-rights prices soared, but when his executives tried to renegotiate, Hoving honored the deal.
At the same time, Trump needed a small but crucial adjacent lot, leased by Bonwit Teller but owned by Leonard Kandell. Kandell rarely sold properties but granted Tiffany an option to purchase the site. Trump secured this option as part of his deal with Tiffany, giving him leverage. After a brief negotiation, Kandell extended Trump’s lease from 20 to 100 years, making the project financeable. Trump’s relationships with key figures like Hoving and Kandell played a crucial role in this project and his success. Years later, Kandell gifted Trump a 15% stake in the land beneath the Ritz-Carlton Hotel on Central Park South, believing Trump could maximize its future value to “benefit his heirs” (160). Through persistence, strategic partnerships, and negotiation, Trump assembled the Bonwit Teller site, Equitable land, Tiffany air rights, and the Kandell parcel, laying the foundation for Trump Tower. His ability to juggle commitments, build alliances, and seize opportunities at the right moment, he claims, ensured the success of what he hoped would become one of New York City’s most iconic developments.
By December 1978, Donald Trump had successfully assembled the necessary properties for Trump Tower, but he still lacked a signed contract with Genesco for the Bonwit Teller building. When rumors leaked in early 1979, other buyers, including wealthy Arab investors, tried to outbid him. Genesco attempted to back out, but Trump’s letter of intent helped pressure them into finalizing the deal. To force Genesco’s hand, Trump confirmed the sale to a New York Times reporter, which led to Bonwit’s top employees quitting, making it impossible to run the store. This accelerated the sale, but Genesco’s financial crisis forced Trump to pay 50% upfront ($12.5 million) instead of the usual 10% deposit, which was risky in case of Genesco’s bankruptcy. However, Trump reasoned that a quick closing would be a worthwhile “calculated risk” (161), as he had already invested heavily in planning and zoning efforts.
Trump worked with architect Der Scutt to maximize building height. Using zoning bonuses, he increased the allowable floor area ratio (FAR), helping secure approval for a 70-story glass skyscraper despite opposition. He convinced Bonwit Teller’s new owner, Allied Stores, to lease back a smaller store space, which offset his land costs. The deal also strengthened his case with city planners, as it ensured Bonwit Teller remained on Fifth Avenue. Facing strong community and political opposition, Trump strategically leveraged public support. He secured a key endorsement from New York Times architecture critic Ada Louise Huxtable, who, despite her reservations about skyscrapers, called Trump Tower “dramatically handsome” (172). This helped win zoning approval in October 1979, allowing him to build near the maximum FAR.
Securing construction financing from Chase Manhattan Bank, Trump hired Barbara Res as the first woman to oversee a Manhattan skyscraper. Demolition of Bonwit Teller began in March 1980, but “outrage” (175) erupted over destroying its Art Deco sculptures, despite no early interest in preservation. Though the negative press hurt his reputation, it boosted publicity and apartment sales. Trump spared no expense in creating a luxury atrium, selecting rare Breccia Perniche marble and polished brass finishes. His controversial 80-foot waterfall became a focal point. The high-rise apartments featured floor-to-ceiling windows and multi-directional views, commanding “unprecedented prices” (179).
Trump Tower became the most prestigious luxury residence in New York, surpassing its main competitor, Museum Tower at the Museum of Modern Art. While Museum Tower had a strong location and architect Cesar Pelli, it lacked a striking design and effective marketing. Trump positioned Trump Tower as the ultimate address for the world’s elite, attracting celebrities, foreign investors, and Wall Street executives. Trump Tower was a condominium, unlike most New York co-ops, which required board approval and extensive background checks. Wealthy foreigners, who often faced discrimination from co-op boards, flocked to Trump Tower instead. Trump capitalized on exclusivity, maintaining a waiting list for the most desirable units and raising prices 12 times as demand soared. He never offered discounts to celebrities, believing that stars paying full price added prestige.
One rumor that boosted Trump Tower’s fame was that Prince Charles was considering purchasing an apartment. Although false, Trump refused to confirm or deny it, and the story spread globally. As demand increased, he kept raising prices, with some two-bedroom apartments selling for $1.5 million. Trump also noticed patterns in buyer demographics. Middle Eastern buyers dominated during the oil boom, but after oil prices dropped, wealthy French investors arrived, fearing the “socialist” (185) policies of François Mitterrand. Later, South Americans and Mexicans invested during a strong dollar period. By the early 1980s, Wall Street bankers and Japanese investors became major buyers.
Retailers in Trump Tower’s atrium were top luxury brands, including Asprey, Cartier, and Harry Winston. The atrium became a commercial success, attracting tourists and high-end shoppers. Though skeptics claimed it was merely a showcase for brands rather than a profit center, Trump noted that tenants rarely left, and a waiting list of 50 retailers ensured continued demand. Trump also secured a 421-A tax exemption, a common incentive for residential developers, but New York Mayor Ed Koch resisted, viewing it as unnecessary for a high-end project. After years of legal battles, Trump won the exemption in state court, saving millions in taxes. In 1986, Trump bought out his partner, Equitable Life, after disagreements over maintenance costs. Equitable sought budget cuts, but Trump refused to lower standards, maintaining the building’s elite image. The deal concluded amicably, with Equitable acknowledging Trump Tower’s success. Trump Tower, Trump claims, proved to be “much more than just another good deal” (192).
Chapter 8 Summary: “Gaming: The Building on the Boardwalk”
Trump first became interested in the casino business in 1975 when he heard a news report that a hotel workers’ strike in Las Vegas had significantly impacted the stock price of Hilton Hotels. He quickly realized that casino hotels were far more profitable than traditional hotels, with Hilton’s two Las Vegas properties accounting for 40% of its total profits, while the New York Hilton contributed less than 1%. This revelation led Trump to explore casino opportunities in Atlantic City, which was considering legalizing gambling.
Atlantic City was struggling economically, with abandoned buildings and high unemployment that made it seem like a “ghost town” (197). However, speculation over the gambling referendum caused land prices to skyrocket, with homes once worth $5,000 selling for hundreds of thousands of dollars. Trump chose not to buy land until gambling was legalized, reasoning that it was better to pay more for a guaranteed investment than to risk losing money if the referendum failed. When gambling was legalized in 1976, Trump was already heavily involved with his Grand Hyatt project in New York, so he decided to wait for the right moment to enter Atlantic City. By 1980, the casino market had cooled, as several projects ran into financial and licensing issues. Trump saw this downturn as an opportunity and was informed of a prime Boardwalk site next to the convention center that seemed like a tremendous “opportunity” (200).
However, the site was legally complicated, with multiple owners, legal disputes, and overlapping agreements. Experts advised Trump to find an easier location, but he claims to have “an almost perverse attraction” (200) to complex deals. He believes that the best locations are worth the effort. He structured deals with three major landowners (SSG, Magnum, and Network III), using long-term leases with purchase options to minimize upfront costs. He also personally negotiated with immigrant homeowners to acquire small properties at reasonable prices, avoiding the exorbitant amounts others had paid.
By July 1980, Trump assembled the entire site, completing a 28-hour closing process. Before proceeding with construction, however, he needed a casino license. He understood that New Jersey’s licensing process was unpredictable, as seen in Playboy’s failed attempt when Hugh Hefner was denied a license over a 20-year-old bribery allegation. Many applicants were forced to sacrifice executives to get approved, but Trump’s private company could not afford such a loss. His background had to be completely clean. Trump hired Nick Ribis, a young but talented lawyer, to handle the licensing. Trump refused to begin construction until he was licensed, preventing the financial risks others faced when regulators demanded changes. He worked closely with officials, ensuring plans met regulations before building began.
Trump’s “credibility as a major builder” (206) helped in the process. His meeting with the New Jersey attorney general was direct, and he clarified that he would walk away if licensing took too long. Officials assured him a decision within six months. By October 1981, both Trump and his brother Robert received a clean bill from the Division of Gaming Enforcement, securing Trump’s entry into Atlantic City’s casino industry. Trump’s licensing hearings for his Atlantic City casino were scheduled months after the enforcement division’s report was completed. In the meantime, he secured approvals for construction, including a skyway to the convention center, which allowed him to maximize space on a small site. He also ensured that the hotel and restaurants had ocean views. Securing financing was another challenge, as banks were hesitant to lend for casino projects due to the industry’s reputation. However, Manufacturers Hanover, which had financed Trump’s Grand Hyatt, agreed to fund him despite its general policy against casino loans. Though the terms were not ideal, Trump accepted the deal, recognizing he was lucky to get financing at all.
On March 15, 1982, Trump and his brother Robert appeared before the Casino Control Commission for their licensing hearings. While others had endured weeks of scrutiny, Trump testified for only 17 minutes, and by noon, the commission unanimously approved his license. Shortly after, Michael Rose, chairman of Holiday Inn, unexpectedly reached out to Trump. Initially, Trump thought Rose was interested in buying his Barbizon-Plaza Hotel in New York, but the “very pleasant” (211) Rose instead proposed a partnership in Atlantic City. Holiday Inn, which already owned Harrah’s Marina, wanted a Boardwalk presence and was attracted to Trump’s reputation as a builder who delivered on time and on budget. Rose offered Trump a 50-50 partnership, with Holiday Inns financing construction and managing the casino and Trump building it. Holiday agreed to invest $50 million, cover $22 million of Trump’s expenses, and guarantee operating profits for five years. Recognizing the deal as “almost too good to believe” (213), Trump agreed.
To impress Holiday’s board, Trump staged a massive construction site, hiring bulldozers to dig and refill holes continuously to create the illusion of it being “the most active construction site in the history of the world” (214). The board was convinced and, on June 30, 1982, the partnership was finalized. By utilizing value engineering, detailed planning, and leveraging a slow construction market, Trump completed the casino on schedule and under budget. Trump Plaza opened on May 14, 1984, to massive crowds and praise. However, disagreements over management led Trump to buy out Holiday Inns in 1986. To finance this, Trump issued public bonds for $250 million, avoiding personal liability. With full control, he improved profitability by hiring top executives from competitors and streamlining operations. The casino’s profits soared from $35 million to nearly $58 million in its first year under Trump’s management.
Later, Trump bought 5% of Holiday Inn’s stock, considering a hostile takeover. When the company restructured to fend off a buyout, the stock price soared, and Trump sold his shares for a massive profit, effectively recouping much of what he had paid to buy out Holiday Inns. Through this, Trump gained “a first-hand view of corporate management in America” (223).
Chapter 9 Summary: “Wynn-Fall: The Battle for Hilton”
In his “wildest fantasy” (225), Donald Trump never imagined he would own the Hilton casino-hotel in Atlantic City. Initially, he was concerned about Hilton entering the market, as his Boardwalk casino with Harrah’s was underperforming. However, Hilton’s approach to the casino business was inconsistent. Barron Hilton, who inherited the company from his father, Conrad Hilton, had a mixed track record. While he successfully expanded into casino gambling, making it 45% of Hilton’s profits by 1985, his other decisions, such as selling Hilton’s international hotels, had weakened the company’s luxury reputation. Despite early hesitations about Atlantic City, Hilton finally committed to building a major casino-hotel on an eight-acre site in 1984. Their facility, featuring a 60,000-square-foot casino and a 615-room hotel, was planned for expansion. However, Hilton took a major risk by starting construction before securing a gaming license, a strategy that had backfired for other applicants.
By early 1985, Trump heard rumors that Hilton was struggling with its licensing. The New Jersey Casino Control Commission was skeptical about Hilton’s connections to Sidney Korshak, a lawyer who “supposedly had a history of organized crime connections” (229). Rather than severing ties quietly, Hilton kept Korshak on its payroll until regulators explicitly objected, firing him at the last moment. This, combined with Barron Hilton’s lack of personal involvement in the hearings, led to Hilton being denied a license.
Trump first contacted Barron Hilton to express sympathy over the decision and subtly expressed interest in purchasing the property. Hilton, with over $300 million already invested, still planned to appeal the ruling. However, Hilton’s board was “deeply split” (232). Some directors wanted to cut their losses and sell before carrying additional costs of a closed facility. Trump attended a Hilton board meeting where he further positioned himself as a potential buyer. Then, Steve Wynn, owner of the Golden Nugget, launched a hostile takeover bid for Hilton, offering $72 per share for 27% of the company. This created a crisis for Barron Hilton, who was already fighting to gain control of Hilton stock from his late father’s estate. Trump saw an opportunity: Barron, overwhelmed with multiple battles, might prefer selling the Atlantic City property to Trump rather than negotiating with Wynn.
Trump initially offered $250 million, knowing Hilton would reject it due to its $320 million investment. Recognizing he had no leverage, he quickly raised his bid to $320 million. To finance the deal, Trump called John Torell, president of Manufacturers Hanover Trust, and secured a loan based on his credibility. However, for the first time, Trump personally guaranteed the loan, taking on significant financial risk. Remarkably, Trump bought the Hilton casino-hotel without ever touring the property. In “a deal based almost entirely on [his] gut” (238), he relied on information from contractors and his team. Many advisors warned against the purchase, citing high debt, market saturation, and lack of management. Trump believed proper management could lead the casino “to earn a ton of money” (240).
After agreeing on a $320 million purchase price for Hilton’s Atlantic City casino, Donald Trump and Hilton executives faced intense negotiations over final contract details. Hilton wanted to sell the property as is, absolving itself of any future obligations, while Trump demanded guarantees on construction completion and defect responsibility to avoid major financial risks. During negotiations, Hilton’s stance unexpectedly hardened, likely because they received a higher offer, possibly from Steve Wynn. Sensing Hilton’s reluctance, Trump refused to let the deal fall apart. He shamed Hilton executives into honoring their commitment, using a calm but forceful approach, emphasizing fairness and professionalism. Ultimately, both sides compromised: Hilton agreed to fix certain unfinished issues, and Trump held back $5 million of the purchase price until all construction was verified as first-class. On April 27, 1985, the contract was signed, and Trump paid a $20 million deposit, with the closing set for 60 days later.
Trump first visited the property on May 1 and was impressed. He immediately accelerated construction and hired 1,500 additional employees to prepare for opening. Naming the casino was another battle. Trump originally wanted “Trump Palace” (244), but Caesars Palace sued to block it. To avoid delays, Trump chose Trump’s Castle. To refinance the property, Trump pursued a bond issue to replace his personal bank loan from Manufacturers Hanover. While risky, since Trump’s Castle had no financial track record, several investment firms—including Drexel Burnham and Bear Stearns— competed for the offering. Bear Stearns secured $300 million, ensuring Trump’s personal liability was removed.
Instead of hiring an outside general manager, Trump appointed his wife, Ivana, who hired top industry professionals and focused on strong management. Trump’s Castle opened on June 15, 1985, just before the lucrative summer season, generating $728,000 on its first day and $131 million in six months, outperforming expectations. However, issues arose with Hilton over construction defects. Trump withheld the agreed $5 million, citing problems with cooling towers, sewage, computers, and fire alarms. Initially seeking an amicable resolution, Trump personally called Barron Hilton, who agreed to negotiate. Instead, Trump was served with a lawsuit the following Monday. Feeling betrayed, Trump countersued Hilton, listing 94 defects, with repair costs exceeding the withheld funds. Despite this dispute, Trump’s Castle thrived. Under Ivana’s leadership, the casino grossed $226 million in its first year, setting a record for first-year revenues. Trump projected $310 million in 1987, proving his instincts had paid off. Credit, Trump says, “has to go to Ivana” (248).
Chapters 7-9 Analysis
In this section, Trump reveals his surprise at the immense profitability of casinos compared to hotels, offering an unfiltered glimpse into both his business acumen and personal fascinations. His frankness with the audience and the explanation of the sheer profitability of the gambling industry adds sincerity to the discussion. Like his audience, Trump is taken aback by this potentially untapped market. This moment reinforces the theme of Business, Memoir, and the Making of a Persona, as it highlights the contrast between Trump’s self-presentation as an instinctive dealmaker and his occasional moments of surprise or learning, which make his narration appear more candid and accessible.
Several chapters in this section are dedicated to exploring casinos as an avenue of profitability. At the halfway point of The Art of the Deal, however, Trump struggles to balance his fascination with the glamorous underworld of the casino industry with his frank discussion of business deals. Titillating ideas such as organized crime and corruption are alluded to in a way that contrasts sharply with discussions of corruption within New York City real estate and government. While Trump criticized figures like Ed Koch for their apparent corruption, there is no similar condemnation of the corruption and organized-crime connections in Atlantic City or Las Vegas. He dislikes Ed Koch, so he is happy to condemn him, but he is fascinated by the glamorous and profitable world of the casinos, so he doesn’t condemn it. The allusion to shady individuals involved in the gambling trade hints that Trump holds fascination for a world that he is not a part of it. His interest mirrors the interest of his target audience—people who want to learn about dealmaking and are not likely as deep in the world of real estate as Trump.
The figure of Barron Hilton plays an important role in sculpting Trump’s self-image. As he is described in the book, Barron emerges as an analogue for Trump himself. Both are the young, media-savvy sons of self-made men, and both are trying to establish themselves in the cutthroat world of 1980s business culture. But whereas Trump is able to establish himself apart from his father and—in many ways—exceed his father’s accomplishments, Barron is not able to do the same. Barron is burdened by the legacy of his father, Conrad Hilton. Barron lacks the fortitude and the natural business instincts, Trump suggests, to successfully follow in his father’s footsteps. This aligns with the theme of Deals as an Art Form, as Trump frames his own success as a result of unique instincts that cannot be inherited or taught. By contrasting himself with Barron Hilton, he emphasizes that business success requires creativity, resilience, and bold decision-making rather than just family connections. By comparing his success to someone in a similar position who has failed, Trump aims to establish credibility and demonstrate his exceptionalism. Trump uses Barron’s struggles to elevate himself, presenting Barron as a frazzled young businessman who is at the mercy of his advisors. This characterization intends to demonstrate why privileged life origins are not necessarily a guarantee of success, allowing Trump to subtly push back at critics who suggest he is not a self-made success.
The use of Barron Hilton as an analogue for Trump follows a key pattern within The Art of the Deal. Trump establishes his credentials and bolsters his reputation through lengthy discussions of other people’s failures. From casinos to hotels to ice rinks, Trump is happy to discuss the ways in which projects and businesses are being poorly managed. By framing these projects and businesses as poorly managed, Trump can claim more credit for their success. Though he pays a token gesture of gratitude to his wife, Ivana, for the managing of their casino, he named it Trump Castle for a reason: His family name is above the door, and he entitles himself to the credit of turning around yet another failing business.
By describing failure in depth, Trump creates a greater rhetorical difference between himself and his rivals. This also plays into the theme of Business, Memoir, and the Making of a Persona, as Trump shapes the narrative to suggest that his instincts and business acumen are singularly responsible for these successes, downplaying the role of chance, external conditions, or collaborative efforts. Trump suggests that his innate business sense leads to the doubling or tripling of profits, often mentioned in the closing paragraphs of chapters to illustrate the way in which Trump has succeeded where others have failed. The Art of the Deal is not only about Trump’s successes; the book makes a point of building these successes on the foundation of other people’s failures. In doing so, Trump chooses the context in which he is viewed. By choosing not to measure himself against other successful people and their career trajectories, he presents an uneven playing field where he can always emerge on top. The memoir form allows for selective narrative framing, and the incorporation of business language and deals—from Trump’s perspective alone—creates an atmosphere of truth that serves as a powerful narrative device.
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