Trump lost $ 40m on his Scottish golf courses for failing to implement a very basic financial practice, experts say
Tycoon Trump accumulates millionaire losses in two golf courses in Scotland that have not obtained profits
Donald Trump's failure to cover his Scottish golf course loans cost him tens of millions of dollars, experts say.
Accounts registered in the United Kingdom indicate that Trump issued loans from the United States in sterling.
The British pound has significantly diminished the value of him, adding tens of millions to his already huge losses.
However, the scale of Trump's losses may be even greater than it appears, and experts note that Trump appears to have lost tens of millions of dollars more by failing to implement a very basic financial practice.
What is the context?
Trump has two golf courses in Scotland.
One is the iconic Turnberry near Glasgow, which he bought in 2014, and the other is Trump Golf Links International in Aberdeenshire.
These resorts lose millions of dollars every year and none have made a profit since Trump bought them.
Both complexes also rely on loans from Trump and US-owned entities to stay afloat.
Turnberry's parent company, Golf Recreation Scotland, owes Trump, through various U.S. registered entities, a total of £ 113,425,000 (about $ 160,000,000), according to the accounts of the UK Chamber of Companies introduced in December.
Trump International Golf Club Scotland Limited, which owns its Aberdeenshire course, owes Trump £ 44,400,049, also issued in the form of interest-free loans, according to Companies House accounts.
The problem is that Trump appears to have created those sterling loans, as evidenced by the fact that they are all listed as sterling loans on Companies House. The Trump Organization did not want to confirm or deny this.
The debts
His Aberdeenshire field started racking up debt from the start of its operation in 2006, when £ 1 was worth almost $ 2. Now, £ 1 is worth just $ 1.42 (as of June 9).
Turnberry's parent company has also been taking large loans from Trump-owned U.S. registered entities since he bought the resort in 2014.
Stephen Clapham, an investment analyst and founder of the financial website Behind the Balance Sheet, who has previously written about Trump's business practices in Scotland, estimated in October last year that the value of those losses may be more than $ 40 million. Dollars.
The pound was worth $ 1.27 when doing those calculations, and has since risen to $ 1.42 (as of June 9), meaning some of those losses will have been mitigated, but the current figure would still represent a loss amounting to tens of millions of dollars.
Those losses, Clapham said, appear to have been the result of Trump's inability to "cover" the loans he created. In simple terms, hedging is a common business practice that compensates for the risk of price movements such as a drop in the value of a currency by fixing the rate of repayment of a loan when it is created.
“The most likely explanation is that Trump has made this loan and incurred a significant loss. It's the simplest and probably the most likely explanation, ”Clapham said.
