Merv Griffin’s Outrageous Fortune : When Millionaire Griffin Took on Billionaire Trump, They Said It Was a Mismatch. They Were Wrong.
MERV GRIFFIN is headed for a 2:30 appointment with the crown prince of Manhattan real estate in New York City’s Trump Tower. That’s the glassy skyscraper at 5th Avenue and 56th Street, not to be confused with Trump Plaza over on 3rd, near Bloomingdales, or Trump Parc, the art nouveau condominium complex on Central Park South where $4 million buys a three-bedroom apartment. Trump Tower is the one with a six-story pink marble atrium and an 80-foot waterfall; there’s a Cartier store and a Bonwit Teller’s in the lobby. You can’t miss the tower--it’s always packed.
Against the best wishes of his advisers, Griffin has agreed to meet Donald Trump at Trump’s office. This is a delicate business negotiation, the advisers warned, and delicate business negotiations should not take place on your opponent’s home turf. Griffin just smiled.
As he boards the security elevator to Trump’s 26th-floor office, Griffin passes Trump’s face on a poster advertising his best-selling book, “Trump: The Art of the Deal.” (“This reads like Trump unvarnished--vainglorious, combative, ambitious and unafraid to let us know about it,” says a quote on the cover from CBS news correspondent Mike Wallace.)
When he reaches Trump’s office, Griffin doesn’t have a lot of time to look around. If he did, he would notice a wall full of Trump’s face on magazine covers--Time, Newsweek, Business Week, Fortune, Manhattan Inc., GQ, People, New York (twice), the New York Times Magazine. He also would see a model of Trump’s 282-foot yacht, the Trump Princess (formerly a favorite toy of international arms merchant Adnan Khashoggi), the Trump plane (Boeing 727) and the Trump helicopter (a black Super Puma).
But there’s no time for wandering eyes. Trump shakes Griffin’s hand and guides him to the window to show off his latest acquisition--the Plaza Hotel. Griffin is impressed: The Plaza is the crown jewel of New York. A marble-laden national landmark built in the style of a French chateau, the Plaza has 800 rooms overlooking Central Park. “Gee, Donald,” Griffin says, interrupting Trump’s description, “that’s how many rooms you’re going to need to house all the lawyers it will take to fight me.” Trump laughs. It’s time to get down to business.
Merv Griffin is here this April afternoon because he has thrown a gigantic wrench into Trump’s plans to buy out the public shares of Resorts International, a hotel-casino company with flashy properties in Atlantic City and the Bahamas. Trump is anxious to take the company private to get the control and financing he needs to complete construction on the company’s Taj Mahal in Atlantic City, New Jersey’s seaside gambling resort.
There’s nothing quite like the Taj Mahal, a massive entertainment complex that will resemble its 17th-Century Indian namesake, but with a modern twist: New Jersey’s Taj Mahal will be topped by glowing minarets to light up the city night. After its opening, scheduled for next year, it will be the biggest hotel and casino in the world. With construction costs nearing $1 billion, it will also be the world’s most expensive building, Trump says.
But days before Trump expected to close his Resorts purchase, Griffin appeared out of nowhere with a competing offer for the company. Now the two men are locked in a nasty, name-calling, lawsuit-swapping takeover fight.
Still, there’s hope for this meeting. Like any good talk-show host, Griffin has studied up on Trump, and he suspects that all the New Yorker really wants is the Taj. After all, it’s big and glitzy and risky--tailor-made for Trump. And it will give the ambitious young developer yet another high-profile chance to save a troubled project. Costs for the Taj had escalated under the previous Resorts management when its construction hit several snags, including the 1986 death of Resorts Chairman James Crosby. But Trump has boosted costs further with glamorous touches such as Italian marble and crystal chandeliers.
As Trump sizes up Griffin, he has a hunch that the Californian doesn’t want the Taj: The former crooner and talk-show host is a hotelier, not a developer; Griffin even likes to think of himself as a maitre d’ of sorts. Why would he want to become involved in a massive construction project plagued by cost overruns?
But Trump isn’t ready to agree to anything--yet. The New York developer has a net worth he estimates at $3 billion; he has a battery of lawyers, and he relishes a good fight. After what Griffin describes as some “saber rattling” by Trump, Griffin finally asks, “Are you finished?” Griffin’s own net worth is $300 million, he’s got plenty of cash on hand and his own battery of lawyers. And unlike Trump, he has the luxury of time on his side. All of which Griffin points out to Trump.
The dealing starts. Trump says he wants the Taj. OK, Griffin says. And the Steel Pier jutting out from the Taj boardwalk. OK. “Is that all?” Griffin asks. “Yes,” Trump says.
Just like that, it’s over. When Griffin reaches out to shake on the deal, Trump is surprised. It was too fast, too easy. Maybe Griffin was right when he said, much later, that Trump would have relished negotiating every detail, right down to the paper towels in the casino restrooms. After all, this is the man who persuaded the city of New York to turn over prime real estate at bargain-basement prices.
But the deal is set, and the details are left to their top executives, who spend the next four hours at a bar in the Helmsley Palace Hotel hammering out the agreement. Finally, a little after 7 that evening, Michael Nigris, president of Griffin Co., returns to Griffin’s suite at the Helmsley to tell him everything is settled; he can purchase Resorts International for $295 million. “Shhh!” Griffin says as he sits in front of the TV, his eyes glued to “Wheel of Fortune.” “That woman just won $36,000--now that’s real cash!”
DONALD TRUMP IS ANXIOUS TO set the record straight: He did not lose to Merv Griffin. “Merv offered me a lot of money,” he says during a recent interview. “That’s why I made the deal. Do you understand that? I would not have accepted except that he offered me so much. You understand that, don’t you?” And later in the same interview: “You understand that I had 88% of the vote in Resorts. I didn’t have to approve the deal. Do you know that?”
Anyone even remotely interested in the deal knows that Trump owned 12% of Resorts’ equity, but had purchased a special class of stock giving him nearly 90% of the shareholder vote. And they know that Trump will walk away from the deal with a tidy profit. He bought the Taj Mahal for $230 million, even though, according to Trump, Resorts had sunk about $550 million into the complex. Griffin paid him $60 million to cancel his management contract with Resorts, and he came out about even on his stock. Not bad for a one-year investment.
But Griffin busted up a deal that others with deep pockets wouldn’t go near. And he managed to back the legendary Trump far enough into a corner that he had to come to the negotiating table--or risk losing control of Resorts and his pet project, the Taj Mahal.
The real point of the Resorts saga is that Merv Griffin, Southern California TV personality, went up against one of the biggest boys around and got what he wanted. He paid a price, a hefty one--but he got it. In only six months, starting with his purchase of the Beverly Hilton Hotel last December, Griffin has built a chain of six major hotels and two casinos. His net worth, he estimates, will top $1 billion when the Resorts deal closes later this summer. If the financial world needed any more assurance that Griffin had arrived, his handshake with Trump that afternoon was it.
THERE COULD NOT have been two more different men sitting across the negotiating table, although Griffin and Trump appear to genuinely like and admire each other. (In interviews, both joked, with just a tinge of seriousness, about going into business together.) Griffin will regale a guest for hours with stories and gag lines--as long as he can first slip out of his business suit and into his sweats. Trump is fast-talking and intense, sparring and competitive. Griffin is still in awe of his money; Trump is at ease with his.
Having wealth is nothing new to Griffin--he’s lived in posh homes ever since his talk show became a hit in the ‘60s--but he has never quite settled into it. “I can’t say I’m 100% happy here,” he says of the walled-in Beverly Hills estate he bought for $5 million in 1986. “It’s OK, but it’s not quite my life style. I fell into the trap that everyone in this town falls into: You work hard all your life, and here you are ready to enjoy it and you buy an estate with the highest wall you’ve ever seen around it. People can’t see in and you can’t see out.”
When his aides called in 1986 to tell him that they had completed his $250-million sale of Merv Griffin Enterprises--creator of the hit game shows “Wheel of Fortune” and “Jeopardy"--to Coca-Cola Bottling Co., he was at a loss. “This was one of the net sales of all time, and it came in cash,” Griffin recalls. “But they never came and piled it on my desk, so I never saw it. They said it had been wired to my bank. So I thought, ‘Do I have a glass of champagne? Go out and buy a new pair of shoes? What do I do?’ ”
By then, Griffin had come a long way from the time he traveled from town to town with his band, sleeping in the same hotels he’s now buying. In those days, he was an overweight young man from San Mateo trying to make his mark as a singer. In the late 1940s, he had a gig on a daily radio show in San Francisco. He was billed as “America’s Romantic Singing Star.”
“I was on the radio, so no one ever saw that I weighed 240 pounds,” he says. “Then they started asking for pictures. So I dropped 80 pounds. I’ve spent a lifetime gaining 80 pounds, losing 80 pounds, gaining 40, losing 40.” That didn’t prevent Griffin from going on to become a major TV personality as the host of “The Merv Griffin Show.”
But in 1986, after 23 years on TV, Griffin’s life took a new turn. In addition to selling his company, he filmed his last talk show. Now, at 63, Griffin spends his days doing whatever strikes his fancy: discussing business moves with his advisers from his director’s chair; mulling ideas for new game shows (he has two in the works), or personally designing the puzzles that Vanna White flips during “Wheel of Fortune.” He still has a management contract with Coca-Cola, enabling him to keep a hand in the production of “Fortune” and “Jeopardy.”
These days Griffin has more time to spend with close friends. When he tours his new Bahamian hotels, he’s got Eva Gabor at his side. And as he settles into his wicker chair during an interview one sunny June afternoon, he’s got Nancy Reagan on the line. (When he hangs up after a call from the First Lady, he laughs about reports that he was the one who introduced Mrs. Reagan to her San Francisco astrologist: “Oh, that’s ridiculous, soooo overblown!”)
With his purchase of Resorts, Griffin is like a kid with a $1,000 gift certificate to F.A.O. Schwarz. After the final Resorts agreement was signed, he and Gabor immediately jumped on a plane to Paradise Island in the Bahamas, where--when the deal closes--he will own four hotels, a casino, a golf course, an airline, a pair of houses and a yacht.
“They asked me at the first stop, ‘What’s the first thing you’re going to do?’ and I said, ‘I’m going to find me a little tiny man to stand next to me on the dock and say, ‘Hey voss, zee plane is coming!’ ”
Griffin is in stitches over his letter-perfect imitation of “Fantasy Island’s” Herve Villechaize. But apparently Griffin’s new Bahamian neighbors were not amused. “They don’t laugh too easily down there,” he adds. “The prime minister didn’t think it was too funny. But I just luuuved Paradise Island. All the employees lined up like they used to do in Europe when the boss arrived.”
Throughout his entertainment career, Griffin accumulated real estate. A “Depression baby,” Griffin viewed such investments as tangible--not like that wire transfer of $250 million from the Coke deal. Between hosting a talk show and producing game shows, Griffin also picked up four radio stations and the country’s largest closed-circuit TV system, which broadcasts horse and dog races.
His first move into the hotel business came late last year, when he purchased the 592-room Beverly Hilton for $100.2 million, with a commitment to give it a $20-million face lift. He has hired Waldo Fernandez, who decorated his estate, to design the hotel’s new, more upscale look.
The Resorts purchase represents a quantum leap in Griffin’s holdings--virtually tripling his net worth--and his visibility in financial circles. Not only does it give Griffin five more hotels--one in Atlantic City and four on Paradise Island--and two casinos, but he will also have 150 acres of prime real estate in the heart of Atlantic City, where legalized gambling has made the town the Las Vegas of the East Coast.
As a talk-show host, Griffin was often chided for being too easy on his guests; he was, some critics say, a master of the softball question. But so far he appears able to turn that amicability into an asset in business. Trump, who has gone up against some of the savviest deal-makers in the country, counts Griffin’s personality as a big plus. “I think Merv is a very good businessman largely because of his personality,” Trump says. “It opens doors. You have a lot of people that will be tougher or seemingly shrewder. But Merv’s personality is infectious, and that’s a great asset in business.”
INFECTIOUS IS NOT a word Trump would use to describe his own personality. He is tough, street-smart, at times brash--and he knows it. When New York Mayor Edward I. Koch accused Trump of being greedy, Trump fired back, publicly labeling Koch a “moron.” Trump also criticized business associates by name in his book, prompting some of them to offer friendly words of encouragement to Griffin in his raid on Resorts. “There’s no middle ground with Donald,” Griffin says. “They either love him or they hate him.”
But what he lacks in grace, Trump more than makes up for in chutzpah. At only 42, his daring business moves and glittery life style have made Trump an icon for young entrepreneurs on the rise. His book has sold about 800,000 copies, securing a No. 1 spot on national best-seller lists for about 10 weeks. General Motors hopes to capitalize on his image with a new line of limousines called the “Trump Series.” “Donald Trump . . . a name that has captured the admiration and imagination of New York City,” the Cadillac brochure boasts. “Now his fame extends worldwide.”
The son of a Brooklyn builder, Trump had his eye on Manhattan real estate at an early age. He didn’t want to follow in his father’s footsteps by building rent-controlled housing in Brooklyn and Queens. Young Donald wanted to “try something grander, more glamorous and more exciting.” He graduated from the University of Pennsylvania’s Wharton School of Finance, worked in his father’s business, then crossed the river to Manhattan.
In 1975, when he was only 28, he persuaded Penn Central to sell him the aging Commodore Hotel--and the city to agree to an unprecedented tax-relief package. In partnership with the Hyatt hotel chain, Trump gutted and rebuilt it into New York’s glamorous Grand Hyatt. He also offered to build the city’s convention center--if New York officials would put his father’s name on it. The city declined, and when its Jacob Javits Convention Center was completed years late and over budget, Trump publicly gloated.
New York City’s dire financial condition during the 1970s enabled developers such as Trump to pick up prime real estate at bargain prices, aided by generous tax abatements. Trump helped revitalize the city with new buildings, but some New Yorkers worried that city officials had given away the store to developers such as Trump.
Over the past decade, the business community has watched, skeptically, as Trump boasted about his grandiose plans. But he nearly always seemed to pull them off. “To me, it’s very simple: If you’re going to be thinking anyway, you might as well think big,” he counsels in his book. Not only is he building the Taj Mahal, but he plans to build the world’s tallest skyscraper in New York City.
Bravado is a big part of Trump’s dealing style. “I play to people’s fantasies,” he writes. “People may not always think big themselves, but they can still get very excited by those who do.”
But those who have sat across the table from Trump are impressed by his willingness to check his ego at the door when he smells a good business opportunity. “Trump and his people do a wonderful job of presenting him as this egomaniacal guy who is driven by his ego to go to extremes,” says Morris Orens, a Griffin attorney on the Resorts deal. “But in fact he’s a very sensible businessman; he uses that as a lever. He doesn’t let his ego get in the way of a deal that should be made.”
And there’s another reason, beyond ego, for the hype Trump attracts. Media attention, good or bad, adds value to property--and Trump knows it. Citizens can picket his projects, architecture critics can scream about his designs, but everyone notices them. “You can have the most wonderful project in the world, but if people don’t know about it, it’s not going to be worth much,” Trump writes in his book.
ENTREPRENEURS FILTER into two types: Those who build their big dreams on the personal mastery of minute details, and those who supply only the vision, letting well-paid underlings fill in the blanks. Trump falls into the first category; Griffin the second. As Griffin, with Gabor at his elbow, toured his chic new Ocean Club on Paradise Island early this summer, a guide suddenly pointed to a beautiful home next door. Apparently that, too, came with the Resorts purchase. “He was flabbergasted,” recalls Warren Cowan, Griffin’s publicist, who accompanied him on the trip. Griffin also was surprised to learn that he had purchased the yacht in the marina. (Cowan immediately signed Griffin up for a subscription to Yachting magazine.)
So when Griffin decided to try to break up Trump’s plans to take Resorts International private, he left the details to Nigris, who runs the Griffin Co. from a New York office, and his two New York attorneys--Orens of Olshan Grundman & Frome and Thomas Gallagher of Gibson, Dunn & Crutcher. What impressed Orens was Griffin’s ability to make multimillion-dollar decisions in a snap once he had the financial and legal information he needed. No hesitation, no soul-searching, no fear.
It took a 10-minute phone conversation for Griffin to decide that he was interested; within two weeks after that early March call, Griffin was offering $225 million to buy Resorts. Later, he would raise the bid to $295 million--again without any hesitation. “It took Merv five minutes to agree to it--$70 million--bang!” Orens recalls.
What’s even more amazing is that no one thought Griffin had even a remote chance of pulling it off. Even Orens had serious doubts, which he shared with Griffin and Nigris.
Orens was the man who brought Griffin into the deal in the first place. Shortly after a disgruntled Resorts shareholder named F. V. Scutti came to Orens for legal help last February, the attorney decided to look for someone with enough cash on hand to make a competing bid for Resorts. Griffin’s wasn’t the first name to spring to mind.
“I talked to a lot of experienced takeover people,” says Orens, a specialist in hostile takeovers who has worked for such raiders as Carl Icahn. “They just wouldn’t take on Trump. He was too tough, and the deal looked like it was too locked up. They didn’t want a lot of dirt thrown on them unless there was a better-than-even chance to succeed.”
Then, in early March, while Orens was listening to his car radio, a light went on in his head. The broadcaster was talking about the three richest people in Hollywood, one of whom was Griffin. Orens had approached Griffin the year before about another takeover deal, involving a food manufacturer. Griffin hadn’t been interested; maybe, because of Resorts’ hotel chain, he’d be interested this time.
It turned out that Griffin was anxious to expand his hotel business, which at that point consisted only of the Beverly Hilton. And, as Orens had suspected, Griffin didn’t know enough about Trump to be intimidated by him.
To Griffin, Trump was a successful real estate developer with holdings in New York and Atlantic City--and that was it. The tales--some true, some not--about Trump’s razor-edged business dealings hadn’t filtered into his Beverly Hills estate. “I had no impression of him,” Griffin recalls. “He’s far better known on the East Coast than the West Coast. This was just about the time his book came out. I read it and thought, ‘Now I know how to go after him. Thanks for the book!’ ”
Although the odds were against him, Griffin and his advisers saw two avenues of attack on Trump’s deal. The first was Resort’s six-member board of directors. Three of those directors--including Trump and his brother Robert--would fight Griffin’s bid. But because of a requirement in New Jersey’s gambling law, the other three Resorts directors were independent of Trump and the company’s management. Although the independent directors were grateful to Trump for coming to the rescue of the problem-plagued Taj, there was a slim chance that they could be persuaded to support an alternative bid, or at least pressure Trump to negotiate with Griffin.
The second avenue of attack was the Delaware Chancery Court. Trump’s $22-a-share bid hinged on the settlement of more than a dozen shareholder suits that challenged his lucrative management contract and his earlier $15-a-share bid. As a result, his offer had to be approved by the court in Delaware, where Resorts was incorporated. On March 18, the judge would consider arguments over the deal and ultimately decide whether Trump’s offer was in the best interests of the shareholders.
During the weeks leading to that hearing, the shareholders were, in effect, voting on Trump’s deal every time one of them decided to sell--or not to sell--their stock to Trump for $22. About two weeks before the hearing, Trump had decided to extend the deadline for this tender offer, giving the shareholders more time to sell their stock. Because of the timing of this extension, Orens suspected that a lot of shareholders didn’t like Trump’s bid and had not offered their stock--something Trump would not want to advertise to the Delaware judge.
One major shareholder was clearly, and publicly, unhappy with Trump’s deal--and that was Scutti, who owned 5% of Resorts’ stock. Scutti, a wealthy former used-car dealer, believed that Trump had purposely driven down the price of Resorts stock so that he could buy the company at a huge discount. During the seven months after Trump bought into Resorts, the company’s shareholders had watched their stock drop from $62 to a low of $12.
Scutti and Griffin argued in a lawsuit filed in U.S. District Court in New York that Trump had driven down the stock’s price by making alarming public projections about cost overruns and delays on the construction of the Taj Mahal. Trump denies that charge. He blames the drop in the stock’s price on the October stock market crash, as well as news he says he was obligated to release to shareholders. “I don’t believe the stockholders knew the extent of the problem created by the previous management,” he says. “I think people should know the real problems of a company.”
It didn’t matter who was right. What mattered was what the Delaware judge believed. If Griffin could cast enough doubt on Trump’s intentions and follow that with a bid that was much richer for the shareholders, Trump’s deal would be in trouble. “Legally what would happen was very iffy,” Orens recalls. “But it seemed that if you applied enough pressure and had a really credible bidder who would hang in there, then something ought to shake loose.”
Just 24 hours before the court hearing, Griffin made public his offer to buy Resorts for $225 million, or $35 a share. “I knew that if I was going to make any impact on the shareholders, or the media that are going to monitor all this, I couldn’t come in at $24 or $25 a share,” Griffin says. “So I made a huge jump to $35 a share.”
Griffin thought March 17--St. Patrick’s Day and his son’s birthday--was a lucky date. But there was a shrewd business reason to go forward on that date: Griffin’s offer was timed to catch Trump off guard, just as his deal looked like it was going to sail through court. Some published reports say that Trump, hearing about the bid during a meeting, muttered an expletive and rushed out of the room. But Trump insists that he wasn’t surprised. “See, these deals are all very fragile, and I always assume that somebody will come and try to get in or buy the company,” he says.
There are two classes of shareholders at Resorts. Most own Class A stock, with each share carrying one vote. But last year, Trump had bought about 712,000 shares of the company’s Class B stock, which has 100 times the voting power of the Class A stock. The Class B stock had traded at a higher price because of that increased voting power. So when the Class A stock was trading in the $60 range, Trump bought nearly all the B shares for $135 each. It was an astute move, giving him nearly 90% of the shareholder vote, but only 12% of the equity.
A Class A shareholder, faced with the choice of Trump’s $22-a-share offer or Griffin’s $35-a-share offer, probably would lean toward the higher price. In fact, shortly after Griffin made his offer in March, the stock’s price on the American Stock Exchange rose from $22 to about $33. So, despite Trump’s argument that Griffin was not a serious bidder, the judge refused to give an immediate stamp of approval to Trump’s deal. At the end of a grueling, five-hour hearing March 18, the judge said simply that he would consider the matter. “Right then I knew we could win,” Orens maintains; the judge had at least left the door open.
Now it was time for Griffin to apply pressure on Resorts’ independent shareholders. Board members argued, correctly, that there was no point in approving Griffin’s bid because Trump would use his shareholder vote to veto it. So Griffin looked for a way to sweeten the pot for Trump. A week later, on March 22, he raised his bid to $295 million--$35 a share for the Class A shareholders; $135 a share for Trump. Trump still wouldn’t budge, and the Resorts board, which had rejected the first offer, rejected this one, too.
That’s when Orens, staying up all night in search of a next move, hit on a maneuver that just might pressure Trump to negotiate with Griffin. Orens knew that, sitting in its treasury, Resorts had 1.2 million shares of stock that had been authorized by the board but not yet issued to investors. And, as luck would have it, this stock was Class B, the same super-vote stock that Trump owned.
Orens figured that if they could persuade Resorts’ board to sell those shares to Griffin, Trump--with only 712,000 Class B shares--would be relegated to a minority partner. In a second setback for Trump, Resorts’ board voted to investigate Griffin’s offer.
By the first week of April, it looked as if Griffin’s two-pronged attack might work: Both the Delaware court and the board of directors were at least considering his offer. So much for the theory that Trump had a lock on the deal.
Now Griffin had to demonstrate that he was serious about his offer, that he had the cash and that he wasn’t going to go away. So on April 12, he bypassed the board and went straight to the owners of the Class A stock, offering $36 a share to anyone who wanted to tender their stock. “The tender offer drove Donald out of his mind,” Griffin says.
But Trump had other worries. He still needed to obtain financing to complete the Taj Mahal, and he couldn’t do that until it was clear to his lenders that he had control of Resorts. During the first part of 1988, as the takeover battle with Griffin escalated, construction on the Taj had ground to a halt. But the project was still chalking up millions of dollars in carrying costs such as taxes, interest payments and maintenance. Griffin’s dogged pursuit of Resorts was costing Trump a lot of money.
Trump disputes any assertions that he was checkmated by Griffin. But when Griffin called Trump and asked to meet with him in New York on April 14, Trump agreed.
No one, with the possible exception of Griffin, expected an agreement to come out of that meeting. Griffin’s advisers had warned him not to count on a resolution. And Trump admits that he was taken aback when Griffin readily agreed to his demands for the Taj Mahal and the Steel Pier. “I was surprised,” Trump recalls. “But at the same time he did the right thing, because otherwise there would not have been a deal.”
THE DEAL FELL APART on May 11, a development that insiders now attribute to posturing on both sides. But on May 27, the pair reached a final agreement and issued a news release outlining their plans to divvy up Resorts International.
Both men got what they wanted. Trump had wanted the Taj Mahal, and he got it--for $230 million (about $320 million less than the company’s costs on the project). And Griffin got just about everything but the Taj. Trump asked him later why he didn’t want the Taj Mahal, Griffin recalls. “You’re a much younger man,” Griffin told Trump. “The Taj Mahal looks like sleepless nights to me, and I don’t want any more of those.”
Indeed, while no one doubts that Trump will complete one of the most spectacular sights ever built, costs and delays on the project are mounting. In late June, Trump began soliciting $675 million to help finance his purchase of the Taj Mahal and its completion. His June 29 prospectus projects that the resort will be delayed six more months, from June to December, 1989.
Griffin has his own obstacle course to worry about. At the end of the first quarter of this year, Resorts carried more than $1 billion of debt on its books. Selling the cash-thirsty Taj Mahal to Trump will help Resorts ‘ immediate financial outlook. But Griffin still must boost Resorts’ profits to service its debt. Already, Griffin is planning some face lifts for his hotels, and he expects to reap the benefits of improved airline service carrying tourists to Atlantic City and Paradise Island.
Trump says it is too early to evaluate Griffin’s purchase. “I think you’ll have to see in two years,” he says. “He paid a very substantial price, which may or may not turn out to be a good deal.”
Ironically, the economic futures in Atlantic City of both men will be intertwined. Together, they will control 40% of the town’s hotel-casino business, Trump estimates. Trump’s Taj Mahal will be connected by a bridge to Griffin’s Resorts International Hotel.
The Atlantic City market is intensely competitive, with too many hotels vying for too few tourists. If Trump’s Taj Mahal can increase the tourist traffic to Atlantic City by drawing wealthy high-rollers, it should help Griffin’s hotel and add to the value of 150 acres that Resorts owns there. “I’m relying on Donald’s Taj Mahal,” Griffin says.
Likewise, Trump owns two other hotels in Atlantic City--Trump Castle and Trump Plaza. A marketing campaign linking Griffin to Atlantic City or a Griffin decision to broadcast from his hotel one of the game shows he still manages could, Trump says, increase the visibility of the seaside resort. “I think Merv will be a tremendous asset to Atlantic City,” he says.
Trump says a key reason behind his decision to sell Resorts was Griffin himself. “If someone other than Merv came in and offered me a very big price, I may or may not have accepted the deal,” Trump says. He calls Griffin an “excellent showman” with a “wholesome image.”
IN WANGLING A DEAL out of Trump in just one meeting, Griffin proved himself a fine showman in the world of high finance, too. “Wasn’t that really the secret of my show?” he asks. “My show was improvised. There were no written-out questions, and lots of times there was a lot of give and take. In 23 years of doing a talk show, you certainly judge body language and speech very quickly so you know how far you can go with a guest. That came in very handy.”
As Griffin sits in his backyard tennis pavilion, relaxed in sweat pants and tennis shoes, a warm sea breeze picks up the late afternoon air. The former talk show host--who probably knows more about actress Morgan Fairchild than investment firm Morgan Stanley--suggests that Trump underestimated him, much as East Coast financiers invariably underestimate the growing financial clout and sophistication of Los Angeles.
“There is an East Coast arrogance,” Griffin says. “They think this is la-la land out here. But there is a very important financial community that you cannot underestimate in Southern California.
“They probably think we’re doing this interview in a Jacuzzi,” he adds, glancing through the open doors of his tennis pavilion, past the brilliant green lawn, to his oh-so-Southern California swimming pool.