How a Beauty Pageant Solved

Posted by Eva Harvey
2
Apr 29, 2016
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The Miss Universe Pageant helped paved Donald’s way to the White House

Donald Trump has built a legend by clinching highly-creative deals, but did you know that he dodged perhaps the most potentially damaging lawsuit of his career by mollifying angry plaintiffs with, get ready for this, a big stake in a beauty contest? As far as this writer can tell, Trump’s gambit of trading a stake in the Miss Universe pageant for a pivotal legal settlement has never been reported in the press, though well establish in public documents. Yet the episode illustrates just how skillfully Trump deploys both imaginative stratagems, and relentless resistance, in giving those who sue him the absolute minimum, no matter what the merits of the case.

By the way, the Miss Universe franchise was a lot more famous than profitable, and it didn’t take Donald long to take back every share he’d briefly sacrificed.

In fact, repelling lawsuits is a core business practice for Trump, and he’s darn proud of it. “I don’t get sued because I don’t settle cases, I win in court,” Trump asserted during an MSNBC interview in early March, when questioned about whether he’d consider resolving a pending lawsuits over now-defunct, self-named real estate academy, Trump University.

Read more Fortune coverage of Trump as business:

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In reality, while Trump, at least in legal circles, is well known for his intimidation-through-litigation tactics, Trump is also often on the receiving end. The Donald has gotten sued a lot. And he frequently settles. But he’s a master at extracting the best possible terms by dragging opponents through years of expensive legal maneuvers that drain their resources and sap their resistance.

The Miss Universe saga is a case study in Trump’s success in defanging suits that, when filed, look dangerous. Here’s the background: In June 1996, Trump Hotels & Casino Resorts Holdings, the mogul’s publicly-traded gaming enterprise in Atlantic City, announced the purchase of the Trump’s Castle, a property, later renamed The Trump Marina, that was 100% owned by Trump, who also served as chairman of Trump Hotels, (later renamed Trump Entertainment Resorts). The price appeared extremely high. The public company was paying $525 million according to its public filings at the time, for a property with a negative net worth. In addition to assuming $348 million in debt, Trump Hotels agreed to pay Trump himself $177 million in newly-issued shares of stock.

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