“A Great Lawsuit”

The following is an excellent excerpt from the book “THE MAKING OF DONALD TRUMP” by David Cay Johnston from Chapter 7: “A Great Lawsuit” on page 51 and I quote: “Erecting gaudy buildings did not bring Donald Trump the national attention he craved.  It was football that made him famous.  Hiring a new general manager for his real estate firm drew little media attention, but “I hire a coach for a football team and there are sixty or seventy reporters calling to interview me.”

Trump’s foray into professional football provides an early example of a business career built on breaking, ignoring, or making up rules.

In August 1983, Trump bought the New Jersey Generals, one of a dozen teams in the nascent United States Football League.  The league played its first game in March 1983, five weeks after Super Bowl XVI.  The USFL drew decent crowds, but nothing like the National Football League, which took in about $1 billion at the gate that year and another $2.1 billion from network television broadcasts.

Back then, NFL teams were valued in the tens of millions of dollars.  Serial sports entrepreneur David Dixon and other USFL founders had started the league as a way for people not rich enough to buy an NFL team (like Trump) to invest in commercial sports.  Trump initially said he paid $9 million for the Generals; he later claimed $5 million (which annoyed the other owners by implicitly reducing the value of their investments).

Dixon’s strategy was low-risk and low-cost.  It called for patience and careful execution to grow the business until it could go head-to-head with the NFL.  A crucial part of that strategy was to play in the spring rather than compete with the NFL’s wealth, seven decades of fans, and monopoly in the fall season.

USFL attendance averaged about twenty-five thousand per game, a respectable number for a new league.  Both the ABC network and a television start-up called ESPN signed contracts to broadcast USFL games.  That brought in additional cash to supplement the ticket sales and other direct fan revenue that would eventually turn losses into profits if the business strategy was executed smartly.

The new league embraced innovations that fans liked some of which the stodgy NFL later adopted.  For example, when USFL players scored touchdowns they could dance, holler, and otherwise celebrate, in clear contrast to NFL rules that prohibited such conduct at the time.  The new league also saw the benefits of videotape.  Years earlier, the NFL had considered instant replays so fans could make their own assessments of controversial decisions by the referees, but rejected the idea.  The USFL adopted instant replay, which fans embraced.  It is now, of course, a staple in broadcasting all professional sports.

Trump had little interest in Dixon’s strategy.  Instead, he endowed the USFL with the showmanship and high-stakes gambling that would ultimately destroy it.  Applying his P.T. Barnum-like skills at attracting attention, Trump held cheerleader tryouts in the basement of Trump Tower just before Christmas 1983.  A flock of television cameras showed up to record the more than four hundred high-kicking candidates jostling to become “Brig-A-Dears,” as the Generals’ cheerleaders were called.  Trump’s electric choice of judges also ensured news coverage.  Among them were New York Post gossip columnist Cindy Adams, pop artists LeRoy Neiman and Andy Warhol, as well as Ivana Trump, who designed the cleavage-maximizing Brig-A-Dear outfits.

To promote the team, Trump sent the Brig-A-Dears to bars.  He did not spend money on security to deal with the inevitable boors and drunks who mistook the scantily clad young women for hookers.  Though she was underage and could not participate herself, sixteen-year-old Brig-A-Dear Lisa Edelstein organized a walkout by the adult cheerleaders to protest the lack of protection at “sleazy bars.”  In a 2015 interview, Edelstein (who has starred on the television shows House and Girlfriends’ Guide to Divorce) said that although she had later dealings with him, “Trump doesn’t remember this” walkout.

Signing top college players and luring several pros away from the NFL also helped the Generals build an audience.  Despite the league salary cap of less than $2 million, Trump hired a star athlete, notably Heisman trophy-winning quarterback Doug Flutie from Boston College, for well over the maximum USFL salary.  None of this was consistent with Dixon’s low-risk, low-cost plan to slowly and steadily build the business.

After his first season as team owner ended, Trump decided to go for the NFL’s jugular–a commercial infant taking on a successful and powerful adult in its prime.  In 1984, Trump persuaded the other USFL owners to sue the NFL under the Sherman Antitrust Act, which makes it a felony to “monopolize, or attempt to monopolize” any business.  The suit was filed in October.  It said the NFL should not have had contracts with more than two of the three television networks.  Trump’s theory was that, since the NFL had television contracts with all three networks, the USFL could not get its games on the air if it switched to a fall season, so the NFL must have had an unlawful monopoly on fall football.  “If God wanted football in the spring,” he told an ABC television reporter, “he wouldn’t have created baseball.”

Antitrust litigation is a legal specialty as arcane as tax law.  Mastering antitrust law requires years of experience and a grounding in the subtle economics of anti-competitive behavior, as well as a thorough understanding of past court decisions.  Such a suit would require a top antitrust litigator with a record of success with juries.  This was not to be.

The lawsuit was signed by Trump’s mentor and attack dog, Roy Cohn.  As the two men announced the lawsuit on October 18, 1984, Cohn said he had a list of NFL owners on a secret committee “created exclusively for the purpose of combating the USFL.”  Reporters asked for proof.  “We have reliable reason to believe we know who they are and what they are doing,” Cohn replied.  When reporters persisted, Cohn channeled his patron, Senator Joseph McCarthy, who would wave a paper on which he claimed to have the names of communist agents in high-level positions in the federal government, but whom he never identified.  Like McCarthy, Cohn declined to name names.

For the trial, Trump convinced the other USFL team owners to hire Harvey D. Myerson, a colorful litigator with no expertise in antitrust litigation.  The federal court trial lasted forty-eight days, filled with mind-numbing testimony about law and economics, as well as testimony from Trump himself, claiming NFL commissioner Pete Rozelle had tried to buy him off–an accusation that could well be an indictable offense.  A judge handling the case seemed unimpressed with this, writing without further comment that Trump “testified that he was offered an NFL franchise by Commissioner Rozelle in exchange for his blocking the USFL’s proposed move to the fall and his preventing the league from filing the instant action.  Rozelle denied that he made such an offer to Trump.”

After five days of deliberation, the jury found that the NFL had indeed engaged in criminal behavior when, as an appeals court later put it, the league “willfully acquired or maintained monopoly power in a market consisting of major-league professional football in the United States.”  They awarded the USFL damages in the amount of one dollar.

Under the Sherman Antitrust Act, the award was automatically tripled to three dollars.

The tiny damages sent a powerful message, which many at the time interpreted as both acknowledgment of the illegal monopoly and recognition that the USFL should not have taken up two months’ of the jurors’ lives by seeking quick-and-easy riches from a lawsuit.

Years later, after the Supreme Court declined to hear the matter, the NFL sent a check to the USFL, adding to the three dollars the legally required interest: seventy-six cents.  The uncashed check remains stored in USFL executive director Steve Ehrhart’s Memphis safe-deposit box, no doubt worth more as sports memorabilia than its face value.

Trump’s legal strategy had failed.  The networks wouldn’t have to worry about broadcasting a fall USFL season.  On top of that, they were annoyed by the lawsuit.  They were not defendants themselves, but they were so integral to the scheme the jury examined that they were forced to spend money protecting their own interests.  Within minutes of the jury’s verdict, USFL team owners were telling reporters it was over.  The USFL promptly folded, and what could have been a successful long-term enterprise turned to dust; the smart business strategy of David Dixon had been fumbled by a disastrous Trumpian legal gamble.

In 1988, the Second Circuit Court of Appeals explicitly rejected the theory Trump had sold to the other owners–that a lawsuit was an appropriate way to force the NFL to merge with the USFL.  The court, in the formal language of legal opinions, chastised both Trump and the owners who were along with him.  Judge Ralph K. Winter Jr. wrote that “what the USFL seeks is essentially a judicial restructuring of major-league professional football to allow it to enter” into a merge with the NFL.

Calling the NFL “a highly successful entertainment product,” Judge Winter observed that “new sports leagues must be prepared to make the investment of time, effort and money that develops interest and fan loyalty and results in an attractive product for the media.  The jury in the present case obviously found that patient development of a loyal following among fans and an adherence to a original plan that offered long-run gains were lacking. . . The jury found that the failure of the USFL was not the result of the NFL’s television contracts but of its own decision to seek entry into the NFL on the cheap.”

The appeals court decision, which the United States Supreme Court let stand, was a stinging rebuke of Trump’s effort to use litigation to obtain what he was unwilling to achieve by patiently devoting time, money, and effort in the market.

Years later, Trump would appear in an ESPN documentary by Mike Tollin called Small Potatoes: Who Killed the USFL?  The title came from Trump’s own response when Tollin suggested that the USFL could have survived had it stuck to a spring season format.

The documentary includes a shot from the USFL days showing a smiling Trump looking into the camera and expressing his support for Tollin, along with his expectation that Tollin would not be well-rounded in his filmmaking, but biased in favor of Trump.  “Mike will only use the good,” says Trump.  “Mike’s a star maker.”

At the time, Tollin ran the company that filmed USFL games and stitched together highlights, which he considered a dream job.  When Tollin interviewed Trump a quarter century later for his ESPN documentary, Trump grew annoyed by questions about whether the lawsuit was the smart strategy and whether a spring football league was the smart strategy and whether a spring football league could have prospered.  “It would have been small potatoes,” Trump says as he pulls off his microphone and walks out.  The documentary also includes Trump summarizing his thoughts years after the USFL fold: “It was a nice experience,” he says.  “It was fun.  We had a great lawsuit.”

Tollin extended Trump a courtesy in 2009 by sending him a rough cut of the film before it aired on ESPN.  Trump was not happy with what he saw.  In what had long before become a pattern when he was displeased, Trump took a thick, felt-tip pen to Tollin’s letter before mailing it back; “A third rate documentary and extremely dishonest–as you know.  Best wishes,” Trump wrote, adding his distinctive, jaws-like signature.  “P.S.–You are a loser.”  Trump underlined the last word.

To disagree with Trump is to be wrong.  To portray Trump in a way that does not fit with his image of himself is to be a loser.  It is an approach to life that may work in business (where Trump can walk out and not deal with people who displease him), but government leaders do not enjoy that luxury, especially the president of the United States.

If the Senate and House leadership do not do as the president wishes, he cannot dismiss them.  The Constitution makes Congress coequal.  The same is true of the Supreme Court.  Leaders of sovereign nations–whether democratically elected politicians as in Canada, Europe, and Mexico, heirs to the throne as in much of the Middle East, or self-appointed autocrats as in China, Cuba, and North Korea–also cannot be dismissed in the way Trump walked out on Tollin and others who have not embraced his self-image over the years.  Everyone cannot be expected to “use only the good.”

The ruinous legal strategy Trump sold to the other USFL team owners was not the only time that he would flout conventional rules of conduct.  After the USFL failed, Trump drafted a letter on Trump Organization stationery.  This letter sought leniency for a major cocaine and marijuana trafficker with multiple connections to Trump, a man whose case would soon come before a federal judge in New Jersey–a judge who just happened to be Trump’s older sister, who recused herself from the case three weeks later.”

(THE FOLLOWING IS FROM THE INSIDE FRONT COVER AND I QUOTE:

The culmination of nearly thirty years of reporting on Donald Trump, Pulitzer Prize-winning investigative reporter David Cay Johnston takes a revealingly close look at the mogul’s rise to power and prominence.”

“Covering the long arc of Donald Trump’s career–which today includes stakes in more than 500 business ventures–David Cay Johnston tells the full story of how a boy from a quiet section of Queens, New York, would become an entirely new, and complex, breed of public figure.  Trump is a man of great media savvy, entrepreneurial spirit, and political clout.  Yet his career has been plagued by legal troubles and mounting controversy.

From the origins of his family’s real estate fortune to his own too-big-to-fail business empire, from his education and early career to his whirl-wind presidential bid, The Making of Donald Trump provides the fullest picture yet of Trump’s extraordinary ascendency.  Love him or hate him, Trump’s massive influence is undeniable, and figures as diverse as Woody Guthrie (who wrote a scathing song about Trump’s father) and Red Scare prosecutor Roy Cohn, mob bosses and high rollers, as well as the average American voter, have all been pulled into his orbit.

Drawing on decades of interviews, financial records, court documents, and public statements, Johnston–who has covered Trump more closely than any other journalist working today–gives us the most in-depth look yet at the man who would be president.”

LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veteran

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About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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