Explore Ways to Satisfy Common Interests (The Carrots)
Trump has offered reporters many carrots over the years. And he does it in an extremely timely fashion, understanding their interest in responsiveness. As noted in Trump Revealed, “While other developers might refuse interviews or issue carefully worded statements through publicists, Trump was almost never unavailable to talk for a few minutes or a few hours…. Trump [also] usually returned calls personally, within hours if not minutes.”144
What carrots did Trump give reporters (other than offering to get Barrett an apartment in a nicer part of New York)? “Sensational” and “bold” and “controversial” quotes and stories and access about his business and personal life. Everything “Trump” was newsworthy, and he knew and promoted this.
Even his divorces became tabloid fodder, which Trump managed. He himself said, “[a] divorce is never a pleasant thing, but from a business standpoint, it’s had a very positive effect.” 145 And business occupied the central part of his life.
Trump employed these same strategies in his business negotiations. First, he understood his personal and business needs and interests. Second, he ascertained his counterparts’ personal and business needs and interests. And finally, he found ways to satisfy their common interests and offered carrots.
Two business negotiations illustrate this: the Commodore Hotel Redevelopment and Trump Tower.
The Commodore Hotel Redevelopment
Trump needed a first project in Manhattan to demonstrate his development abilities, prove his financial acumen independent of his dad, and establish himself in a highly competitive real-estate environment (collectively, his interests). To do this, he picked the redevelopment of the run-down Commodore Hotel next to Grand Central Station.
What did he need to get this done?
– Control the Commodore site.
– Obtain a tax abatement from New York City so the redeveloped hotel could cover its mortgage and be profitable.
– Receive a loan of about $70 million from financial institutions for the redevelopment.
– Find a hotel operator to run it after redevelopment.
His counterparts? The Penn Central railways bankruptcy trustee (the landowner). New York City. Financial institutions. And Hyatt Hotels, which then had no New York City hotel.
Trump did four things in this negotiation that would tap into his counterparts’ personal and business interests. These became hallmarks of his negotiation approach.
1. Trump’s Carrots to Get the Site—Political Connections and Partner Relationships
Trump knew Penn Central needed a hard-driven, hungry, financially solid developer with access to capital and political clout at city hall to take on this risky redevelopment project.
So, he initially spent time with the Penn Central representative showing him various large Fred Trump-developed properties. This was meant to satisfy Penn Central’s fundamental interest in a proven developer with the experience and expertise to reliably get the job done.146
Trump even sent the Penn Central representative a television set as a Christmas present, appealing to the representative’s personal self-interest. The Penn Central rep returned it.147
To satisfy Penn Central’s interest in a politically connected developer (a likely requirement to get a big tax break and other zoning benefits), Trump arranged a meeting with New York City’s newly elected Mayor Abe Beame. Beame was a longtime friend of Fred Trump’s and a candidate to whom the Trumps had made significant financial contributions.
At that meeting, organized within a day—illustrating Fred Trump’s political clout—Beame put his arms around both Trumps and said to the Penn Central representative, “Whatever Donald and Fred want, they have my complete backing.”148
Donald Trump appreciated the political interests involved and how to satisfy them. In fact, many would view politicians’ primary interest as getting re-elected. How could Trump satisfy their interests? Financial contributions. Trump told his Penn Central counterpart, according to Trump Show:
As they walked down Lexington Avenue together, Trump saw a newspaper headline announcing the arrest of a New Jersey mayor for allegedly taking an $800,000 bribe from a developer. “There’s no goddamn mayor in America worth $800,000,” Trump bellowed. “I can buy a U.S. Senator for $200,000.”149
But Trump ran into problems getting Penn Central to sell him the option rights to the site, as the bankruptcy judge needed to approve the deal. The court could only accept an offer that satisfied what it perceived to be in Penn Central’s best financial interest.
And a competing offer came in from a developer named Starrett that was “a lot higher than mine,” according to Trump.150
At the same time, though, Starrett was partnering with Fred Trump in developing Starrett City, a large government-subsidized 5,000-unit residential construction project.
Upon hearing of Starrett’s bid for the Commodore site, Trump met with Starrett’s chairman Robert Olnick. As Trump later testified about this meeting: “Starrett and Trump are partners in Starrett City, of which we own 25 percent and they own 5 percent. Frankly, if we hadn’t put in the $7 million equity, the project wouldn’t have been built. We have a big relationship with Starrett.”
Starrett abruptly withdrew its offer after meeting with Trump, before the court could even evaluate its competing bid.151
Trump appreciated Starrett’s more important interests here—continuing its “big relationship” with the Trumps.
2. Trump’s Carrot for a Competing Bidder—Join His Lawsuit
The second counterpart interest Trump understood involved a second competing bid supported by Penn Central’s shareholders. Here’s how Trump’s strategy addressing this challenge unfolded, according to Trump Revealed.
Trump was a construction neophyte, but he was already adept at turning around the opposition. David Berger, a lawyer who represented the railroad’s shareholders, initially opposed selling Trump the Commodore, but at a crucial moment in the negotiations, Berger flipped to support a deal with Trump.
A few years later, federal prosecutors investigated whether Berger’s sudden change of heart was connected to Trump’s decision to help Berger out and join his unrelated, $100 million suit by New York landlords against nine major oil companies for fixing the price of heating oil. The federal probe ended without any indictments. Both Trump and Berger denied there was any quid pro quo.152
But Trump joining Berger’s lawsuit brought a significant financial benefit to Berger. While Berger’s switch adversely impacted the interests of Berger’s Penn Central shareholder clients, it more fully satisfied Berger’s personal self-interest financially. Trump almost certainly knew this, as described in Trump Show.
Berger had a powerful financial stake in Trump’s signing on for the lawsuit: His firm would get a third of any settlement, and the size of the award would be determined by the number of apartment
