Businesses look to cut ties with the Trump Organization

Dan Alexander, "White House Inc." Author and Forbes Sr. Editor, joins Yahoo Finance's Sibile Marcellus to discuss how the Trump Organization will fare after Trump leaves office.

Video Transcript

SIBILE MARCELLUS: After the riots at the capital last week, many businesses cut ties with the Trump organization. Now, while he's been president, Trump has given the day-to-day management reins to his two sons, Eric and Donald Trump Jr., to manage the Trump organization. But what does that mean for President Trump once he leaves office in just a couple of days?

I want to bring in Dan Alexander. He's the author of "White House Inc" and senior editor at "Forbes." Dan, give us a lay of the land. What are President Trump's finances going to look like after January 20?

DAN ALEXANDER: Well, he's in a really tricky spot. And honestly, he was in a tricky spot even before the Capitol riot. I mean, think about what he owns. He owns a bunch of office real estate-- not what you want to be in right now during the pandemic. He owns a bunch of hotels-- not what you want to be in. He owns a bunch of brick and mortar real estate near Fifth Avenue-- not what you want to be in.

And then you get to the US Capitol riot and all of the people who now just don't want to be connected with him. So you have tenants saying that they don't want to be in his buildings, you have New York City saying that it wants to get rid of his contracts, you have banks saying that they don't want to have any ties to him. So you've got all this cloudiness on top of what was already a really, really difficult situation. If the Trump organization were a publicly traded stock, this is not one that you would want to invest in right now.

SIBILE MARCELLUS: Wow, those are definitely powerful words there. Let's start with New York City-- obviously, President Trump's hometown, but obviously he's going to Florida after inauguration day. But he has plenty of interest still in the city. Now, as you mentioned, Mayor Bill de Blasio wants to sever contracts New York City has with the Trump organization. So what impact is that going to have for President Trump? I'm trying to follow the money here.

DAN ALEXANDER: Yeah. You know, it's mostly a slap in the face. Those contracts bring in about $17 or $18 million a year in revenue. So the Trump organization overall takes in about $600 million a year in revenue. So it's not going to put a huge dent in the business, but it does send a signal that this is not somebody that people want to be tied to.

And the big question is whether, at the heart of Trump's empire, which is basically his commercial real estate portfolio, if you start to see big tenants backing away-- Bank of America, Gucci, those sorts of people saying we don't want anything to do with this guy-- that's when it's going to be a five-alarm fire and the Trump organization is going to have real problems. Until then, it doesn't look good, it's not pretty, it's embarrassing for Trump, but his financial picture is going to be relatively stable, just not growing.

SIBILE MARCELLUS: Yeah, you mentioned the power of the Trump name. So he has the distinction right now of being the only US President who's been impeached twice. What impact do you think that's going to have on his brand, and specifically his ability to license the Trump name?

DAN ALEXANDER: Well, you know, his brand has never been as big as he's said it was. You know, he claims that it's worth billions of dollars. It's just not true. You know, basically, he's licensed his name on some real estate assets, and he had product licensing partners that did shirts, and ties, and that sort of thing.

A lot of those partners fled on the day that Trump announced that he was going to run for president and made his famous comment about Mexican immigrants. So this has been something that's been going on where people have been backing away from that brand. What was a small sliver of his business is now a smaller sliver of his business. But if the core assets start to get toxic, that's when it's going to be really troublesome.

SIBILE MARCELLUS: We mentioned companies that have cut ties with the Trump organization, but at the same time, there are many companies that actually pay Trump rent, because that's where their offices are. Obviously with the pandemic, all that's been in flux-- plenty of people have been working from home. But what does that say in terms of these companies publicly denouncing President Trump, but then-- when it comes to campaign donations, but at the same time still paying him rent to this day.

DAN ALEXANDER: Well, it says that we're not going to know the pain of the capital riot on Donald Trump's finances for a few years from now. And I'll tell you why-- you know, saying that you don't like the president is one thing, but saying that you're going to break a lease, particularly if you're a publicly traded company and it's going to cost you a lot of money to break that lease, is quite another.

And so as these leases come up for expiration, that's when we're really going to see if companies want nothing to do with Trump. And if that's the case, then the profits of those buildings are going to decrease, and the values of those buildings are going to decrease, and you're going to see a massive hit on Donald Trump's fortune. But we just can't know that over time. It's really, really easy to pull your political money and say, hey, we're not going to donate anymore. It's much harder and it takes longer to get out of leases.

SIBILE MARCELLUS: Looking back at the Trump presidency in its final days, you wrote a book, "White House Inc," where you warned about a laundry list of potential conflicts of interest. Have those come to fruition?

DAN ALEXANDER: Absolutely. I mean, anywhere you look in Trump's business-- you know, we were just talking about his commercial real estate portfolio. You know, some of his biggest tenants-- Bank of America, that's one that's under huge financial scrutiny from federal authorities, Goldman Sachs, same thing. You know, you've got-- there were over 30 companies that were paying Trump rent while lobbying the federal government, many of those lobbying the White House itself, including four entities that are tied to foreign governments.

You've got 17 companies that were under federal investigation while paying the president rent. And that's not even getting into the members at Mar a Lago or at his golf clubs. The conflicts are simply everywhere. There are too many to track, too many to know about, let alone to understand all the motivations behind why these people were paying the president money. We're never going to fully understand this story. It's bottomless.

SIBILE MARCELLUS: Well, it will definitely be interesting to see what President Trump chooses to do after January 20. Dan Alexander, thanks so much.

DAN ALEXANDER: Thank you.