PDF Summary:The Art of the Deal, by Donald J. Trump
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Before the White House and The Apprentice, Donald Trump was a real estate mogul whose large-scale projects made him one of the most well-known developers in New York City.
In this autobiography, Trump recounts his early life and career—from building low- and middle-income housing with his father in NYC’s outer boroughs to erecting luxury apartments in Manhattan. Trump outlines the eleven principles that guide his business decisions, and how they played out in the deals that defined his early career, including projects such as Trump Tower in New York, his first casino ventures in Atlantic City, and his gamble on the United States Football League.
Trump got an exclusive purchase option for the property, contingent upon him paying $250,000 and securing financing, a hotel operator, and an unprecedented tax abatement from the city.
Hyatt agreed to be the hotel operator, contingent on financing and the tax abatement.
Trump Used the Bad Economy as a Bargaining Chip
When he approached the bank for financing and the city for approval on his tax abatement, Trump leveraged the city’s poor economic condition.
First, Trump told the banks that it was their moral obligation to help the city by financing the project because the development would create jobs and improve the surrounding neighborhood.
Then, Trump told the city that the renovation was essential to revitalizing the Grand Central neighborhood. Additionally, Trump encouraged the Commodore’s seller to publicly announce that the hotel was losing so much money that soon it would permanently close.
The pressure convinced the city to approve the tax abatement. The Commodore opened as the Grand Hyatt in September 1980 and immediately turned millions of dollars in annual profits.
A Juggling Act: Trump Tower
At the same time that the convention center proposal and the Commodore renovation were in the works, Trump eyed a building at 57th Street and Fifth Avenue.
Since Trump hadn’t completed any projects yet, the building’s owners refused to sell. Trump kept in contact, and when the company later faced financial issues, Trump got the deal.
Assembling All the Pieces
But in order to construct the building he envisioned—which would become Trump Tower—Trump still needed:
- The underlying land below the building
- The air rights above the building
- The land behind the building
- Zoning approval to build a skyscraper
Trump found a negotiating angle for each piece:
- He gave the bankers options: When they were apprehensive about his proposal for an office building with retail—which entailed moderate costs but also moderate profits—he offered an alternative that gave the bankers more confidence to approve financing.
- Trump convinced the owners of the underlying land that partnering and contributing the land would earn them much higher profits than merely collecting rent on its lease.
- Trump convinced Tiffany, which owned the air rights, that selling those rights to Trump would allow him to construct a building worthy of standing next to the high-end jewelry store.
- Trump leveraged a clause in his air rights contract, which gave him the option to buy a parcel of land behind his building, to convince that parcel’s owner to extend the lease on the land to a term that was long enough to allow Trump to build.
- Trump got the city to approve zoning for his building because he’d offered the site’s previous occupant, the luxury store Bonwit Teller, retail space in his building, so zoning approvals would mean keeping the highly desirable store in New York.
Trump Invested in Luxury
With all the pieces in place, Trump set out to build Trump Tower, a skyscraper with luxury apartments, high-end retail, and a jaw-dropping atrium.
He invested in features like an 80-foot, $2 million indoor waterfall. Trump designed and marketed the apartments to wealthy tenants who valued luxury and exclusivity.
Trump faced criticism for building the towering skyscraper. However, the backlash brought more attention to the project and he saw an uptick in apartment sales as a result.
In addition to staggering profits, Trump Tower gave Trump credibility as a developer, which would be invaluable in his future deals
Trump’s First Casino: Trump Plaza
Trump realized that casino profits could far exceed hotels, so he looked to Atlantic City.
New Jersey was preparing to vote on legalized gambling, and real estate values shot up in anticipation. However, Trump was hesitant to buy in such a hot market before legalization was certain; in fact, even after gambling was legalized, Trump held out for a few years before he found a good deal on a boardwalk property.
When Trump was finally ready to buy, the casino construction rush had calmed. The property he was considering had several issues, including multiple owners and existing agreements; these factors would make development complicated, but they also helped him leverage a better deal.
Getting the Casino Up and Running
After Trump bought and straightened out issues with the land, he needed to address logistics for operating the casino, which would be named Trump Plaza Hotel and Casino.
First, Trump needed a gaming license. To save time, many casinos started construction and applied for their gaming license at the same time, but lost money when their applications were delayed or denied. By contrast, Trump decided to spend the time securing the gaming license first to avoid risking millions in construction costs.
Second, Trump needed a casino operator. He brokered a 50/50 partnership with Holiday Inns, pending the board’s approval. Trump orchestrated a spectacle on the construction site for the board’s visit—with every piece of machinery he could get on the site doing mostly aimless tasks—and the optics impressed the board enough to approve the deal.
The facility brought in about $35 million gross operating profit in 1985 during its first year. Trump bought out Holiday Inns and installed new management during the second year, and finished 1986 with a gross operating profit of $58 million.
Trump’s Second Casino: Trump Castle
After his first Atlantic City project, Trump considered buying Hilton’s Atlantic City casino-hotel, which was denied a gaming license just 12 weeks before its grand opening.
Hilton planned to file for another hearing, but Trump told the company that he’d be interested in buying if anything changed. Eventually, Hilton accepted his offer and sold for $320 million.
Trump renamed the facility Trump Castle, which grossed $226 million in its first year.
Fierce Opposition Forces an Alternative Plan: Central Park South
In 1981, Trump bought a mid-priced hotel and an adjoining rent-controlled and rent-stabilized apartment building in a premium location on the edge of Central Park.
Both buildings brought in meager profits, especially considering their location and potential. Trump planned to demolish both buildings and replace them with luxury condos. However, Trump faced fierce opposition from tenants wanting to protect their rent-controlled and rent-stabilized apartments, which were worth several times what the renters paid.
Trump took various measures to encourage the tenants to leave, but they formed a tenants’ association, hired lawyers, and sued for harassment. Trump fought and won the suit. Despite the ill will, Trump renewed the tenants’ leases.
Meanwhile, Trump needed to switch to plan B: He did construction only on the hotel site and left the apartment building intact.Architectural trends were moving toward classic styles, so instead of rebuilding the hotel from scratch, he added luxury features while maintaining the original architectural details. The project ended up costing less than half the price of rebuilding.
Circumstances had caused the projects to stray far from Trump’s original plans. But because Trump had backup plans and rolled with the punches, he pivoted to a project that cost less and brought in more profits than his initial plan.
Trump’s Gamble: United States Football League
In a departure from real estate, Trump took a chance on the United States Football league (USFL) and bought a team called the New Jersey Generals. The league was struggling, but Trump was confident he could help resolve the league’s two major challenges.
First, the USFL needed top-quality players, competition, and marketing to draw fans, press, and money.Trump and other USFL team owners poached several star NFL players and focused on recruiting promising college players; Trump signed Boston College quarterback Doug Flutie, whose first game more than doubled the prior season’s average broadcast ratings.
Second, the USFL was a spring league, but Trump didn’t think spring football would draw fans or broadcasting contracts. Eventually the team owners agreed to move the season to the fall.
However, when the USFL announced its move, talks with CBS and NBC about broadcast contracts suddenly stalled. Trump assumed the NFL pressured the networks not to create competition by airing the USFL in the fall, so he and the other owners filed an antitrust case against the NFL.
The USFL won the case, but was awarded only one dollar in damages—instead of the $1.32 billion it sought. (Shortform note: Jurors found the NFL guilty of just one of the nine charges, and they awarded such a small amount because they determined that the NFL’s actions did virtually no damage to the USFL.)
The USFL team owners appealed the ruling and suspended the league’s season in the meantime.
Trump Finished What NYC Couldn’t: Wollman Ice Skating Rink
In 1980, New York City officials began renovating Wollman Ice Skating Rink, which they projected would take two-and-a-half years and cost $2 million. Six years and nearly $13 million later, the officials announced they were starting over and projected two more years until completion.
Frustrated by the project’s mishandling, Trump offered twice to take over the project. The city initially refused, but criticism from the media pressured NYC officials to make a deal with Trump, who committed to finish Wollman Rink’s renovation in merely six months.
He planned thoroughly, acted decisively, and consulted experts to avoid delays and cost overruns. Trump finished the project in four months—two months ahead of schedule—and more than $750,000 under budget.
A Second Chance: West Side Rail Yards
Six years after Trump’s purchase option for the West Side rail yards expired, he bought the site for about $95 million.
As Trump created his plans, he tailored it to the site’s strengths—the views of the Hudson River and the cityscape—and the area’s needs—basic shopping. But in order to get the zoning approvals, Trump had to convince city officials that NYC would also benefit from his plans.
Trump learned that NBC was considering a move from its headquarters at Rockefeller Center to New Jersey. Trump courted NBC to move to his site, and he used his plan to convince the city that approving his zoning and tax abatement could keep the network in New York.
However, in the end, Trump couldn’t get the zoning approvals he wanted and decided to wait to move forward on the project.
Trump details opportunities, curveballs, and strategic maneuvering in his accounts of these deals. Through them all, several primary principles guide him in his ascension from rookie real estate developer to well-known mogul.
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PDF Summary Chapter 1: Each Day Is Full and Flexible
For Trump's full schedule and the outcomes of the week's deals and conversations, refer to Chapters 1 and 14 in the book. For the sake of brevity and coherence, we've omitted Chapter 14, which follows up on the events listed in Chapter 1.
Some of the stories and details about Trump’s involvement, practices, and profits in The Art of the Dealhave been questioned or contradicted since its publication. In fact, the book’s ghostwriter Tony Schwartz has said that writing the book was his greatest regret and suggested that the book be “recategorized … as fiction.”
We’ve included Shortform notes to point out several factual discrepancies, though these may not be exhaustive.
PDF Summary Chapter 2: Guiding Business Principles
Principle #3: Have a Backup Plan
Always have a plan B, plan C, and even plan D—and don’t get too attached to any one of them.
The majority of deals fall through, so your long-term success depends on your ability to be flexible and change course if need be. When you need to pivot to your backup plan, you won’t waste valuable time coming up with an alternative and figuring out how to approach it—you’ll have had it in mind the whole time.
Trump’s original plan when he bought a large undeveloped site in Manhattan was to build middle-income housing. But when the city’s public housing subsidies dissipated, he agilely shifted to his backup plan of building a convention center on the site. (More on the 34th Street convention center in Chapter 5.)
Principle #4: Know Your Target Audience
Successful people know their audiences. This is true for movie directors, authors, salespeople, and real estate developers. Anytime you’re creating or marketing some kind of product to other people, you need to know who you’re targeting, what they want, and how they think.
Trump believes that understanding your target audience is an instinct—and that he has it....
PDF Summary Chapter 3: Trump’s Formative Years
Fred Trump was born the second of three children in New Jersey in the early 1900s. His father—a Swedish immigrant and restaurant owner—died when Fred was just 11. As the oldest son, Fred took on the role of man of the house: He worked odd jobs, including some on construction sites. That’s where his interest in construction began.
As a teenager, Fred took night classes, such as plan-reading and carpentry, to learn more about the construction business. Before he’d even graduated high school, Fred had his first business building and selling prefabricated garages.
After high school, Fred worked as a home-builder’s assistant. Fred’s natural intelligence, ambition, and hard work—along with the skills he’d learned in his night classes—helped him excel.Within a year, he’d built and sold a single-family home for a 33 percent profit margin.
That was the beginning of his company, Elizabeth Trump & Son. Fred tapped into an eager market for his single-family homes: working-class families in Queens who’d long lived in small apartments and were excited to have a home with more space. Over time, Fred built bigger homes to sell for larger profits.
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PDF Summary Chapter 4: Trump’s First Deal—Cincinnati Apartments
After the renovations, the Trumps ran newspaper ads for the apartments and had zero vacancies by the following year.
(Shortform note: The Trumps were sued for housing discrimination after a black prospective tenant was turned away. They gave the man an apartment and settled the case.)
Appearances Matter: Trump Made Small Improvements For a Big Impact
In order to attract higher-paying tenants to Swifton Village, Trump’s renovations included some unexpected changes, including:
- Adding window shutters
- Replacing aluminum apartment front doors with white colonial doors
- Sanding and staining floors
- Painting hallways
- Landscaping outside the buildings
The improvements were meant to make the building feel nicer and more inviting than the drab, dreary look associated with lower-income housing.
Some of these changes may seem extraneous, but these kinds of details can make a building look like it’s worth more; investing a relatively small amount in improving appearance and cleanliness can add much more in value.
Know When to Fold: Trump Sold When...
PDF Summary Chapter 5: Trump’s First NYC Deal—34th Street Convention Center
When Penn Central was selling the land, the area was full of welfare hotels and drug dealers. Still, Trump couldn’t resist the lure of undeveloped riverfront property—plus, much of it was still near Central Park and desirable residential areas.
Trump was confident that developing the area would revive the neighborhood. Attracting a different kind of traffic through the area would inevitably lower crime and other issues and allow the land to live up to its full potential.
Have a Bargaining Chip: Trump Convinced Penn Central to Sell to Him
Trump was just 27 years old and didn’t have any construction projects on his resume—besides those he watched his father lead. However, he had the gumption to make a move on the ambitious project, and that drive is what he emphasized to Victor Palmieri, the man Penn Central had hired to sell off the railroad’s assets.
In addition, Trump framed the deal as if he was doing Penn Central Railroad a favor:
- He underscored that the West Side neighborhood was undesirable and that the city was in poor financial shape.
- He talked about how difficult it’d be to get zoning approvals for such a large undeveloped property....
PDF Summary Chapter 6: Remaking a Classic—The Commodore Hotel
Trump needed a proposal that would inspire confidence among the banks and the city, so the first thing he did was work with an architect to create a design.
Trump felt that the Commodore’s dark, outdated appearance was hurting its potential. He wanted to make the building look contemporary by covering the brick exterior with either bronze or glass.
When he and the architect had settled on the design, Trump told the architect to make the drawings look more expensive than they were.With his proposals as with his buildings, Trump is convinced that an impressive presentation makes an invaluable impression.
Know Your Target Audience: Trump Chose a Hotel Operator
While looking for a hotel partner to run the Commodore, Trump considered what would give him the best chance of success given the kind of business and clientele he envisioned:
- An established hotel operator could handle the large 1,400-room hotel.
- A national hotel chain had the benefits of being well known, having a proven track record of successful management, and having a large reservation system.
- The company had to have a prestigious enough reputation (Ramada Inn and Holiday Inns...
PDF Summary Chapter 7: A Juggling Act—Trump Tower
But first, Trump needed financing.
Have a Backup Plan: Trump Gave the Bank Options
When Trump approached the bank to finance the $25 million deal, he anticipated some pushback.
Since the lease for the underlying land expired in 29 years, the bank was hesitant to make such a large investment when the land’s owner could take over when the lease was up. Trump offered two backup plans.
First, he could turn the site into an office building with retail on the ground level. The project wouldn’t cost much, and he could easily make enough to pay the rent on the lease plus make a profit over the course of the 29 years.
His second and preferred plan was to buy the underlying land from its owner, Equitable Life Assurance Society. The banker was much more enthused with this option, so Trump set out to put many moving pieces in place.
Have a Bargaining Chip: Trump Put All the Pieces in Place
As with his Commodore deal, Trump needed to secure several interdependent commitments in order to see this project through. He carefully reframed the deal to get all parties to essentially give him what he wanted.
Buying the Underlying Land
Trump offered Equitable the...
PDF Summary Chapter 8: Trump’s First Casino—Trump Plaza
- Disputes over purchase options
- Lawsuits about past agreements for multiple landowners to jointly lease or sell the land
Real estate professionals advised him to avoid such a convoluted project, but again, he felt the property’s issues would help him secure a better deal.
Have a Bargaining Chip: Trump Convinced Landowners to Sell to Him
Trump needed to get all the landowners on the boardwalk site to sell so that he could build the casino-hotel he envisioned.
With Trump Tower on his resume, he played off his credibility: Trump assured the owners that he could give them a fair offer and that he’d finish the project. Given the property’s issues, Trump also leveraged the fact that the owners might not get any other offers because no developer wanted to take on this project.
After a long negotiation, Trump secured all the pieces of the Boardwalk site.
Prepare for the Worst: Trump Spent a Little Time to Avoid Losing a Lot of Money
Trump decided to get his gaming license before starting construction because he knew the licensing process was lengthy and unpredictable.
**Many casinos had started construction while they applied for their gaming license,...
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PDF Summary Chapter 9: Trump’s Second Casino—Trump Castle
Not long after, the head of the Golden Nugget started positioning himself to take control of the Hilton company, which was possible because Barron had inherited only enough shares to make him a minor owner of the company. The takeover attempt helped Trump in a few ways:
- Defending the company from a takeover distracted Barron from the licensing rehearings
- The aggressive move repelled Barron from Golden Nugget and made Trump’s offer more appealing by comparison.
Barron sold the casino to Trump for $320 million, allowing Hilton to break even with his investment in the facility.
Learning from his experience at Trump Plaza, Trump appointed his wife to run Trump Castle instead of hiring a general manager.
Under her direction, the casino-hotel grossed $226 million in its first year.
PDF Summary Chapter 10: Fierce Opposition Forces an Alternative Plan—Central Park South
- It’s extremely difficult to get tenants out of rent-controlled and rent-stabilized apartments, especially in such a desirable location. This proved to be the biggest obstacle in this project.
Given the challenges to his plan, it was critical that he had alternatives in mind.
Trump’s Actions Fueled the Tenants’ Case
Trump hired an outside company to offer tenants help relocating, but he underestimated how hard the tenants would fight to protect their low rents and desirable apartments. They formed a tenants’ association and hired lawyers.
Trump continued to provide essential services such as heat and hot water, but he cut down on other expenses: He got rid of the doormen’s uniforms to save on dry cleaning, put low-wattage bulbs in the hallways to save on electricity, and stopped allowing tenants to use a telephone in the lobby for free.
(Shortform note: Legal documents claim that Trump, in fact, cut heat and hot water, among other things.)
However, the tenants claimed these changes—along with the relocation offers—constituted harassment and sued Trump.
Some of Trump’s actions inadvertently...
PDF Summary Chapter 11: Trump’s Gamble—United States Football League
Flutie’s first game with the Generals was broadcast on ABC and had more than twice the previous season’s average ratings. (Flutie later played for the NFL as well as the Canadian Football League.)
Have a Backup Plan: Trump Pushed to Move to the Fall or Sue
Trump was convinced that if the USFL moved its season to the fall, one of the three major television networks—ABC, NBC, or CBS—would agree to a contract to broadcast the league’s games. Televised games on a major network would make the USFL more competitive with the NFL, and bring in more viewers and money.
If no network agreed, Trump had a backup plan: He felt it would be evidence for an antitrust case against the NFL because the NFL’s season was in the fall and it would have a monopoly on broadcasting. If the USFL won in court, the USFL could use the money from the settlement or damages payment to make necessary improvements.
However, not all USFL team owners were willing or financially able to fight. Many owners were hesitant when Trump suggested a vote on moving the league’s season, but they eventually voted and agreed to move the season to fall.
Fight If You Think You’re Right: The USFL Filed an...
PDF Summary Chapter 12: Trump Finished What NYC Couldn’t—Wollman Ice Skating Rink
Trump continued holding press conferences when he hit new milestones, such as pouring concrete. Although these weren’t momentous achievements, he capitalized on the media’s interest, and the reporter turnout was steady.
Koch’s letter had piqued public interest in the feud and the outcome of the project, and Trump capitalized on the free press as promotion for Wollman Rink.
Keep Costs Low: Trump Was a Strong Leader
When Trump took over the Wollman Rink project, one of the biggest problems he identified—at the root of the project’s mishandling—was a lack of leadership.
He recalled a day during the city’s reign when he had walked past the construction site twice, and both times the workers appeared to be doing nothing. Stalled progress leads to delays and cost overruns, so Trump visited the site nearly every day to make sure things were moving along.
Trump insists on two principles that hearken back to his father’s influence:
- Continually push contractors to get the job done on time.
- Know what things cost and what jobs entail. For example, if the contractor says that pouring concrete will take two weeks and a million dollars, you need to have...
PDF Summary Chapter 13: A Second Chance—West Side Rail Yards
Know Your Target Audience: Trump Maximized Assets and Filled Needs
When Trump took over the project he decided to start from scratch; he wanted no association with Macri or his plans. As Trump created his plans, he tailored them to the site’s strengths and area’s needs.
In Trump’s view, the property’s biggest asset was its views. His buildings would be tall to maximize the view, and they’d be designed so that every apartment had unobstructed views of the Hudson River or the Manhattan skyline.
Trump also planned to include retail shopping because he knew the area had a dearth of basic shopping options, such as grocery stores and pharmacies.
To ensure a profit, Trump needed much more generous zoning approvals than Macri had gotten—and he was willing to push as hard and wait as long as he had to in order to get them.
Have a Bargaining Chip: Trump Courted NBC to Leverage Zoning Approvals
To get the zoning approvals he wanted, Trump had to convince city officials that NYC would also benefit from his plans.
Trump found his angle when he learned that NBC was interested in relocating from Rockefeller Center—and that the network was considering a move to New...