How to value your empire (one more lesson learned from The Donald)
Yesterday, The Wall Street Journal reported on the technique that Donald Trump uses to establish his worth. He's had to come forth with this info as part of a defamation suit he's bringing against Timothy O'Brien for the 2005 book (TrumpNation) in which O'Brien cited anonymous sources that pegged The Donald's wealth at between $150M and $250M. (Note: access to this article may require a subscription to The WSJ. I have one, and I actually put a value on it well in excess of the $90/year I pay.)
Trump claims that O'Brien way low-balled his wealth, which Trump places in the billions, and claims that the book so damaged his rep that he lost out on a couple of deals.
We could all learn a lot from The Donald on worth setting, which is revealed in the deposition he made as part of his suit. For starters, he doesn't waste any time on flim-flams like mark to market. Instead, he sometimes uses what he calls "mental projections", and acknowledges that feelings matter:
"My net worth fluctuates, and it goes up and down with markets and with attitudes and with feelings, even my own feeling," he told lawyers in the December 2007 deposition.
Here are some of the areas in which Trump has used feelings, and other more or less subjective techniques for wealth "creation":
- When declaring his worth, he throws in $1B or so for "brand value."
- In equating a 30% limited partnership interest in one Manhattan project with more than 50% ownership, Trump said that not having to put cash into the deal, and getting paid management fees for the project's buildings, lets him comfortably round the number up. ("'In my own mind I've always felt that," he said. "That 30% is equated to 50%."', later upping the ante to 50%+.)
- If the Trump name is on the door through a licensing agreement, Trump tends to think himself into owning. ('"I would say that it could be interpreted to be a form of ownership in the building."')
- He values his position in a golf-course in NJ as $120M (over time), even though the course lost $4.6M in 2005. Forget back of a napkin, forget spreadsheets. Trump figured out that $120M value via mental projections.
Anything that places his wealth at less than multiple billions is "'ridiculous.'" (Deutsche Bank, those trimmers, estimated his worth at a bit under $800M.)
Trump acknowledges that he may exaggerate a bit ("'Who wouldn't?'"), but does not do so "'beyond reason.'"
At one point during the deposition, Mr. Trump explained the importance of putting his projects in the best light possible. "Would you like me to say, oh, gee, the building is not doing well, blah, blah, blah, come by, the building -- nobody talks that way. Who would ever talk that way?"
Trump is forecasting that he will prevail in his suit, adding hundreds of millions of dollars to his fortune (whatever that fortune might or might not be). And, of course, there's the cover boy status in The WSJ, that's got to be worth plenty. (I didn't see the print edition, but I bet he had one of those nifty little pointillist drawings of himself. I'm jealous!)
I will acknowledge that, whether Donald Trump is worth in the billions or in the hundreds of millions, he is worth a lot more than I am now or ever will be (unless, of course, he goes completely belly-up). But, I do believe there's some important psychological and ego-boosting value to be had from following Trump's method, so I'm going to test it out a bit here.
First off, there's our 1980's kitchen. You know the kind: almond laminate cabinets with oak trim. Some might assert that it takes $50-100K off of the value of our condo. I'll venture to say that, properly positioned - retro look, Smithsonian-quality - it could actually add value. Ka-ching!
And speaking of condos, we may only have a 15.4% interest in our building, but we are actually the only owners who actually live there. Because of the proprietary interest my husband and I take in the place - making sure the cleaning people clean, letting in the elevator repair man, planting tulips, and taking care of the paper recycling for the lazy-beyond-belief tenants - I'll put forth here that our 15.4% equates to 30% easy, maybe even 50%.
Then there's my blog. It may appear to be worth zilch now, but if I do a mental projection, it could be worth a lot, which I'll add into the Maureen Rogers brand value and call $1M.
I don't know about you, but I'm feeling a lot better about my wealth now that I did just a New York minute ago. And I haven't even gotten into the value of my possessions.
The steer horns that hung in my grandfather's saloon. My grandmother's cookie jar. My father's Pendleton shirt. The fabulous sweater I bought for myself on my 40th birthday, that's still going strong. The poster we got from the street artist in Berlin when The Wall fell in 1989.
Not to mention my health. And friends and family. And access to ZipCar. Tickets for an upcoming Red Sox game. The ability to solve difficult Sudokus. More umbrellas than I can shake an umbrella at....
Damn! I am rich.
Maybe not TrumpNation rich, but rich nonetheless.
(Try it - it's easy. Wheeeee.......)
Does this mean The Recession's over?