June 23, 2016


Is Donald Trump struggling to find the green with his golf investments? (Tom Bergin,  June 23, 2016, Reuters)

A Reuters examination of them shows that Trump has likely lost millions of dollars on his golf projects. The analysis shows high costs and modest current valuations. Using conservative estimates of the amount Trump has spent, he may be breaking even or making modest gains; on higher estimates - based on what Trump has said he is spending - he's losing money. [...]

Only three Trump golf properties publish accounts - Turnberry; Trump International Golf Links Scotland, north of Aberdeen; and Trump International Golf Links Doonbeg in Ireland. All are loss-making, according to their latest filings.

Managers at all three said they were hopeful that the investment Trump has made in the sites will allow them to start to show a profit and that Trump expected them to deliver a return on his investment (ROI). In Turnberry, golfer Brad Hughes visiting from Orlando, said: "Trump has done an outstanding job. I played here 20 years ago and it's much better now. We paid £175 to play. That's around $250. It's well worth it for that quality. But will he get the ROI?"

Judging by past performance, Trump faces a challenge. Turnberry has only occasionally made a profit over the past 30 years. Revenue peaked at just under 16 million pounds in 2007, accounts for Turnberry's operating companies show.

So in total the analysis indicates Trump has spent about $1.1 billion. In return, he has received up to $200 million from property sales and other income, according to property records and golf analysts' estimates, and he owns a string of new or refurbished golf courses. What are they worth?

Reuters valued Trump's properties using several metrics. Golf consultants say clubs are typically sold within a range of 0.8 to 1.8 times turnover. Reuters used a multiple of 1.5 times turnover figures for the 12 courses, drawn from company accounts or Trump's election disclosures. Using estimates by real estate agents and other investors, the analysis added further amounts to reflect the fact that some of Trump's land is already designated for development. Further amounts were added to reflect that some Trump properties have trophy status, for which buyers might pay a premium.

On these calculations his golf courses are estimated to be worth $500 million to $600 million. This analysis suggests Trump could have lost hundreds of millions of dollars investing in golf.

"The figures indicate that those were bad investments," said John Griffin, professor of finance at the University of Texas at Austin, who has previously studied Donald Trump's wealth. He said that a typical listed property fund would have returned much more over the same period. By comparison Trump "seems to have lost half his investment," he said.

Posted by at June 23, 2016 4:19 PM