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Trump Owes $650 Million…So What? Google Owes More!

His debt is not that high for a multi-billion dollar business...


Posted By Globalo On

Yet again, Trump is attacked on ridiculous grounds, this time for the debt carried by his organization. It was reported earlier this week that the Trump organization had at least $650 million in debt.

Interestingly enough, there was little reporting from the business world, and this topic did not appear in any of the major financial newspapers like The Wall Street Journal, The Economist or The Financial Times.

The reason is simple: It is not real news.

This Just In: Trump Runs a Business!

All businesses need debt to function. It is a normal tool for buying big things, like a building or a new machine, in order to remain competitive. When Amazon needs a new warehouse, they don’t wait until they have the cash on hand and then buy one in full. Instead, they go to a bank, get a loan for the building, and pay it back over a number of years.

Given that debt is a normal part of a business, why is there a problem with the Trump Organization?

The problem came when Trump disclosed a financial form earlier in the campaign, stating that his business had $315 million in debt (rather than $650 million).

Trump’s response on Fox & Friends on Monday was, “Well, the value — if the value is $11 billion, it’s a very small amount of debt…I have very little debt relative to the assets. I have massive assets.”

 




To put this into perspective, let’s take a look at a few other companies that carry more debt than the Trump Organization:

  1. Google: $5.2 Billion ($1.99B in long term debt): Google, a tech company, has billions in assets, and is much larger than the Trump Organization.
  2. Amazon: $8.2 Billion:  Again, another company much larger than Trump’s, but Amazon holds a lot of real estate in warehouses, as well as assets like airplanes.
  3. Bank of America: $236.8 Billion: One of the larger companies in America, BofA has a lot of debt because of real estate, as they had to open and purchase a lot of buildings to house their branches all over the United States.
  4. InterContinental Hotels Group: $1.98 Billion ($1.85B in long term debt): A great competitor to Trump, focusing only on hotels and tourism, the InterContinental Hotels Group owns Holiday Inn, and has a huge amount of debt to cover for the cost of hotel construction.
  5. Hilton: $10.5 Billion ($10.3B in long term debt): Another property group with a big brand name, Hilton is perhaps one of the best known hotel chains in the world.

Considering the size difference between the companies, the amount of debt for the Trump Organization is not that ridiculous. 

Given that the Trump Organization, the holding company of Trump’s businesses, does real estate, investment, development, and property management across the globe, the debt amount makes sense. Comparing to other hotel businesses, InterContinental and Hilton, they all carry significant debt. This makes Trump’s $650 million not seem like a big deal, and it isn’t.

Trump’s business debt is not real news. If the media wants to attack Trump for something, we have plenty of better suggestions: