|
ADAM SMITH'S MONEY GAME Missed the show? Get a phone call half way through? Fail to catch the name of a stock in "Personal Best"? In case you did, we are happy to provide you with a transcript. If you would like a transcript from a previous season, please visit 800-All-News at www.800-all-news.com or call them at (800) All-News. ANNOUNCER: [voice over] This program is made possible by a grant from MetLife, helping people become financially secure for 130 years. Funding has also been provided by the Roy R. and Marie S. Neuberger Foundation. ADAM SMITH: [voice over] In the Money Game this week, real estate. When Donald Trump flies over New York City in his own chopper does he see a continuing real estate boom? Or could there be another bust? Cable television - how this man turned his passion for classic sports reruns into a channel that earned him tens of millions of dollars in just three years. And the new Roth IRAs, will they help you do your personal best in the money game? Or are there hidden pitfalls? Find out next. [on camera] Hello, I'm Adam Smith and welcome to The Money Game. You either love him or your hate him, but you have to admit New York real estate mogul Donald Trump is an American original. Brash, blunt, frequently outrageous, at the moment, "The Donald," as he's called, is riding high. But only a few years ago he seemed to be on the ropes with his property and casino empire on the edge of bankruptcy. Now Trump is back, trumpeting some of his biggest ever deals; one in particular that could change the face of Manhattan. Meet Donald Trump, face to face.
Face to Face [Back to Top] DONALD TRUMP:New York City in 1990 was in desperate shape. It was, as you know, it was a real estate disaster. It was a real estate depression. It was a retailing and airline and other depression, but in particular, New York City was hit hard and for lots of reasons. Now the city is the hottest place there is anywhere in the world. ADAM SMITH: You say New York is a hot place. It's Wall Street that has lifted New York. It's the bull market. Bull markets don't last forever. What happens when it turns down? DONALD TRUMP: New York City gets badly hurt. I would love to tell you that Wall Street could go to hell and New York City would continue on its spiral upward. But if New York City- if New York City was really going to be hurt, the thing that would hurt it would be a downward spiral in Wall Street. And that's certainly something that could happen. ADAM SMITH: [voice over]But as long as the bull market lasts, Manhattan real estate will boom. Right now, demand for real estate is way up. And with little new construction, prices are soaring. Donald Trump took me for a ride in his helicopter as he flew over the city to check out his latest projects.As we looked down on the financial district, he pointed out the new Trump building at 40 Wall Street - 72 stories high and fully rented. DONALD TRUMP: Well, the 40 Wall Street leases are all 15 years and even 20 years. Trump Tower leases are 15 and 20 years. So, you know, regardless of what happens, American Express is going to be paying its rent. CNA is going to be paying. These are great companies. ADAM SMITH: [voice over]His latest acquisition is the classic 50-story General Motors building that towers over Central Park. He bought it recently together with a partner for $800 million, which works out at an astounding $500 a square foot. DONALD TRUMP: The General Motors building is probably the greatest real estate asset anywhere in the world. Single greatest real estate asset in the world. And that just works. Just like Trump Tower, it has worked from the day I built it because of its location and the building itself is so good. ADAM SMITH: [voice over]He intends to develop the retail plaza at the front and may rename the building using his own name. Trump. Trump. Trump. Wherever you go in Manhattan, it seems you can't avoid the name "Trump." It has become a brand. But what, I wondered, is the financial value of his name? DONALD TRUMP: Well, I think a lot. And if you look at the Corcoran Report - you know this is no longer a matter of ego for me - if you look at the recent Corcoran Report, which is done on a yearly basis, I'm getting $200 and $300 and $400 a square foot more than anybody else in the city. When I build a building and if I sell that building; or if I build a building like, for instance, 40 Wall Street, had I not called that the Trump Building at 40 Wall Street, I don't believe it would be 100 percent rented today. And I don't believe I would have gotten nearly the rents. And I'm not even sure I would have gotten American Express to go in or CNA to go in. ADAM SMITH: [voice over]In the early 1990s, there was a severe real estate slump in New York and Trump came close to going under. DONALD TRUMP: There was a time in 1991, when I was called by a major bank that was about seven blocks away from Trump tower at 3 o'clock in the morning. It was winter. It was raining and hailing and snowing and everything. It was the worst evening I've ever seen. And at 3:00 in the morning, they asked me if I could come out to the bank because we had to call some banks in Japan and in Asia, which is the opposite time, some chairmen, because they weren't going along with a transaction- with basically the deal we made. And as I was walking out of Trump Tower - no cars, no cabs, no nothing - and walking about a 10-block distance and it was soaking wet, I said this is really the worst. And that's probably more than any other time that's when it hit. But I said this is really now the worst. And I get there and I'm totally drenched, literally like you just got out of a shower. And I'm calling some banker in Japan who I've never heard of, never met and will never meet again. ADAM SMITH: What did you say to those banks to get them to go along? DONALD TRUMP: I just- You know what I did? I really wanted to let them know me a little bit as a basically decent guy. Because you know, they have this image maybe of Trump that's a little bit different than the fact, also built up by the press. And I think more than anything else, I just wanted to say "I'd appreciate your help; I'd appreciate your going along with this package. It's going to be a great thing. You're going to get your money back." And they went along with it. And I think they were very happy that they went along. And you learn a lot about yourself when you're tested. You know, it's one thing to say, hey, I just bought the General Motors building, things are going great. Life is a bowl of cherries. It's another thing to say that you're billions of dollars in debt. You have some wonderful projects that are half completed. The economy is crashing. The city is doing terribly. And there's almost no hope. And then you come out of that much bigger, much stronger and with far greater assets and asset value than you had before. Then you say to yourself, gee, I guess you know what you're doing. ADAM SMITH: [voice over]His chronicle of how he avoided bankruptcy - >The Art of the Comeback - sold well. In it, he lists his comeback rules. One of them is "Get Even." DONALD TRUMP: I have had cases where I really made somebody's life. And in a few instances during the early '90s when I was in trouble, I went to a couple of these people and they weren't there for me. And I said, I don't believe it. I didn't understand that because I'm a loyalist, I'm a very loyal guy. And I said you're not there? Without me, you would be zippo. I mean, I took people out of city government and made them rich. And when they had an opportunity to help, they weren't there. Now in one instance, I recently had an opportunity to do something negative to one and I took advantage of that opportunity. I just believe in that. ADAM SMITH: [voice over]So what did he do? DONALD TRUMP: Well, I made it very difficult for this person to get something done. And ultimately it failed because I made it difficult. Now some people watching the show are going to say, "Oh, he must be a terrible guy." It's not a question of terrible; you help somebody and you don't want anything. But when you need help, I mean, wouldn't it be nice if that person helped you? Now, right now, they're all calling. They want to have dinners. They want to have lunches. They want to have anything. And I say, you know what? Just forget it. ADAM SMITH: [voice over] "Always Have a Prenuptial Agreement" before you marry. Trump's split from Ivana ended up costing him multimillions even with a prenup. And his second ex-wife, Marla Maples, is battling him in the courts over how much money she should get. [on camera] In your book you say women are more aggressive than men. They may come on sweet and feminine and sensitive, but underneath they are killers. DONALD TRUMP: There is nobody, including us, that's like a woman. I think women are the greatest. But I think women are actually much more aggressive than men. I found in a lot of ways they're more aggressive. ADAM SMITH: They're killers? DONALD TRUMP: Well, I think that some of them are, yeah. They're pretty aggressive. Do I use the word killer? ADAM SMITH: Sure. DONALD TRUMP: Okay, I'll stick by it. ADAM SMITH: [voice over] The deal of his life is here on the West Side of Manhattan by the Hudson River. Trump says it is the largest development ever approved by the New York City planning commission and it took 10 years to get regulatory approval. Now the first buildings are almost complete at Trump Place, a site that stretches over 13 city blocks. DONALD TRUMP: Really, there's nothing like it. I've never done anything so big. It's a $3- to $4 billion project. It's thousands of housing units, parks, retail, office, everything. It's something I'm very proud of because you're really building there a great city within the greatest city of them all. ADAM SMITH: [voice over] Donald Trump is as good an example of the culture of celebrity as you can find. He seems to grow and thrive in the spotlight, yet he claims to despise the media; the very journalists and broadcasters who fuel and maintain his fame. DONALD TRUMP: I think the media, generally, is quite dishonest. ADAM SMITH: Why? DONALD TRUMP: Well, I mean, I just see it. You see, I get so much media that I can tell you whether it was false or not. And oftentimes, I'll tell somebody that, no, you have to understand, that's wrong what you're saying. And they'll actually tell me it may be wrong, but people want to hear it. And it's very interesting. The public doesn't disagree with me. You know, the public has got a very low opinion of the media. And they happen to be right. ADAM SMITH: But you have become a kind of folk hero, an icon. You do owe the media for that, don't you? DONALD TRUMP: It's interesting. I don't particularly think I get good press, but other people think I get great press. So I'm not so sure. I know that what I do is good and the buildings I build are great. And I tell the story. I take, like, the sight of where Trump International Hotel and Tower is now, I built this great building and I do a great job of construction, design, everything. It becomes an amazing success and then everyone says what a great promoter he is. You know, somebody had to build the building. [Graphic: Trump's Estimated Net WorthAccording to The Trump
On the Spot [Back to Top] ADAM SMITH: Wisk, the laundry detergent, made advertising history, few friends among feminists, with the slogan, "Ring around the collar." Now there's a new Wisk campaign that targets the modern woman. In a minute, Bob Garfield of AD AGE magazine will discuss it. But first, Jim Jordan, executive creative director at J. Walter Thompson, which made the new ads, is On the Spot. JIM JORDAN, Executive Creative Director, J. Walter Thompson Co.: My dad, I think, probably over 20-25 years ago, wrote "Ring around the collar," for an agency that used to have the business long ago. It was the first liquid detergent. It launched the idea of pouring stuff right on the stain. And it sort of settled into the annals of advertising fame or infamy, depending on your point of view. I'm the oldest of seven kids and we all went to school on "Ring around the collar." After my dad had left that agency, they eventually put- the client put the business up for review. And the agency I'm currently working for, J. Walter Thompson, was lucky enough to get it. We had been working with them and they've evolved the product. And here we are and they've settled on some new insights and we have this new commercial that's a pretty new change for them. If you could look historically at Wisk, I think that one thing "Ring around the collar" did is it established it as a very effective brand. And I think that what we all collectively realized was that even though people's lives, women's lives are getting busier, and if you asked any woman honestly, "Is laundry the most important thing in your life?" she'd probably tell you no, that doesn't mean that they don't still care about how clean their clothes get. So the idea was to somehow capitalize on Wisk's heritage as a really terrific performance brand and yet put it in a context that people said, yeah, that's me and that's really how I think about laundry. ADAM SMITH: Bob, let's take a look.[Excerpt from Wisk commercial. ACTOR: Wisk presents the 10 million thousand things we have to do every day. Locate stuff. Prevent osteoporosis. Conquer flab. Train dog. Pet husband. Control frizz. Remind kids of family infrastructure. Save the planet. Then we still have to do the laundry, really well. Good thing Wisk has a targeted cleaning system. Now everything you wash gets done right the first time. Wisk - Do it once, do it right.] ADAM SMITH: Detergent. BOB GARFIELD, Columnist, AD AGE: Yeah, it's laundry soap. ADAM SMITH: What do you want to tell me about it? BOB GARFIELD: What I liked most about this commercial is how different it is from its progenitor. Another Wisk commercial; an entire Wisk campaign that ran all through the '70s and into the '80s, called "Ring around the collar." ADAM SMITH: Let's just remind ourselves about "Ring around the collar."[Excerpt from Wisk commercial. 1st ACTOR: Loosen up, Mr. Dillon, you're on a cruise. You've got- ring around the collar. Oh, you've got ring around the collar. 2nd ACTOR: Those dirty rings. Sprays and powders weren't good enough, so I tried Wisk. Wisk does a better job on ring around the collar. And Wisk goes on to get your whole wash clean.] ADAM SMITH: It's sort of painful today to see that, but I guess it sold a lot of detergent. BOB GARFIELD: It did. And it's of its time. But I don't know if you saw that withering look this guy gave her because she has failed as a wife. She's not cleaning up after his filthy neck. It's a commercial that was very successful because it clearly got across the idea that Wisk can get out even the grimiest kind of soil. But the fact is, in doing that it was the quintessential gender-stereotyping commercial. ADAM SMITH: But the new one has Super Mom. She has to train the dog. She has to feed the kids. She has to take care of her husband. She has to do all this and she has to do the laundry. Why does she have to do the laundry? BOB GARFIELD: Well, because it's just a recognition that for all of her advances, Mom's still dealing with the dirty laundry. ADAM SMITH: The early one was their great success though, I mean, for selling. BOB GARFIELD: It was because it communicated the brand image. And I think it affected women, the people who were doing most of the laundry. ADAM SMITH: Do you think this one will? BOB GARFIELD: I hope it works. I think it will. ADAM SMITH: Dr. Garfield, just stop a minute. Let's just say that I'm a female investment banker and I'm watching television at night. I make a packet of money and you're going to tell me that "Ring around the collar," even in a sophisticated way? BOB GARFIELD: Yes, because you know why? Even though you're making a packet of money and you're doing multibillion dollar deals during the day, you're still doing the wash. ADAM SMITH: I bet not.
In Focus [Back to Top] ADAM SMITH: When a couple of guys from Cleveland started a new cable channel three years ago based on vintage sporting events, many TV industry people laughed. "No one will watch reruns," they said. Well, they were wrong. With its mixture of historic clips and talk, Classic Sports Network has become a big success; a kind of Nick at Nite nostalgia trip for the devoted sports fan. Last year, ESPN, the 800-pound gorilla of sports TV, bought it. My reporter, John DeNatale, has the story In Focus. JOHN DeNATALE, Correspondent: [voice over] Network sports deals have become astronomical. With tens of millions of viewers for the NBA finals and ad revenues hitting every shot, nobody is surprised that professional sporting events are big business. Non-stop action and drama make selling excitement easy. [on camera] You don't have to be a sports fanatic to know that the excitement of the game comes from the fact that it's live. It's fun because you don't know who is going to win. Nobody would come to a game if they already knew the outcome. Right? Well, not quite. [voice over] This man made a fortune selling the idea that a great sporting event is like a great movie. BRIAN BEDOL: It's like watching Casablanca. You know how it ends every time, but every time you've got to watch it. JOHN DeNATALE: [voice over] Brian Bedol created the Classic Sports cable channel. It made him a millionaire 10 times over. And it all started with a simple idea Bedol had while watching old sitcoms on Nickelodeon and sporting events on ESPN. BRIAN BEDOL: I watch most of my television as I'm falling asleep at night. I tend to be a late-night viewer. And one night was channel-surfing between Nick at Nite and ESPN, my two favorite channels at the time. And began thinking about how great it would be if there was a channel to watch old sports. There was great old sitcoms on Nick at Nite, sports on ESPN. You know, it was like the Reese's - chocolate and peanut butter. What could be better? JOHN DeNATALE: [voice over] That midnight snack of an idea came in 1995. Just three years later, a major media giant paid between $170- and $200 million for the channel. But when Bedol first went to investors, they were underwhelmed. [on camera] Were investors skeptical? BRIAN BEDOL: We knocked on the doors of all of the cable companies, all of the sports production entities and didn't have a lot of success. JOHN DeNATALE: [voice over] Most investors were looking for guaranteed subscribers; something Bedol couldn't offer yet. BRIAN BEDOL: As soon as we said we had no subscribers or no commitments, they said when you have 10 million come back; we love the idea, we'd love to invest. And we'd mumble under our breath, well, when we have 10 million, we won't need your money. JOHN DeNATALE: [voice over] But then Bedol and his partner, Steve Greenberg, found their man. BRIAN BEDOL: We had a meeting with Herbert Allen, who asked if we could get the programming. And we laid out the plan that we had discussed with the leagues and the costs - what it would take to acquire, to license the programming. And he said, well, if you can get the programming, you have a business - the distribution will come. JOHN DeNATALE: [voice over] It was a variation on "if you build it, they will come." If you get the rights to the old classic footage, distribution will follow. And it did. BRIAN BEDOL: We knew that if we couldn't get three of the four leagues, or at least two of the four leagues to commit to licensing us programming, we weren't going to have a business. We ended up getting all four of the leagues. And it was a good day. JOHN DeNATALE: [voice over] A good day that led to many others. BRIAN BEDOL: Keep the network on the air, okay? JOHN DeNATALE: [voice over] The network's three years on the air got attention. And last September, it got the attention of ESPN, when the Disney-owned company bought Classic Sports for upwards of $170 million. BRIAN BEDOL: It's a dream come true. Our goal is to get into 40 million homes in the next three to four years. JOHN DeNATALE: Tell me your favorite sports moment. BRIAN BEDOL: Ali-Frasier - the Thriller in Manila. To me, it had drama. It had a beginning, a middle and an end. JOHN DeNATALE: [voice over] This knock-down by Frasier set the stage for Ali's triumphant comeback. BRIAN BEDOL: It had all of the elements of drama that make sporting- that make sports so special. We all grew up with the adage, "It doesn't matter whether you win or lose, it's how you play the game." Classic Sports is really all about how they played the game. [Graphic: Did You Know?Brian Bedol's business partner is the son of Detroit Tiger legend and Hall of Famer Hank Greenberg.]
Personal Best [Back to Top] ADAM SMITH: A few weeks ago, Suze Orman was my guest here enthusing about the new Roth IRA and what it can do. A lot of you wrote to us wanting to know whether you should convert your existing IRA into a Roth. The truth is Roths are not necessarily good for everyone. With me now once again is Lynn Brenner of Bloomberg Personal magazine to point out how to turn your IRA saving strategy into a personal best. The Roth IRA is not for everyone. Not everybody should convert their existing IRA into a Roth IRA? LYNN BRENNER, Bloomberg Personal: No, they shouldn't. The younger you are, the more sense conversion makes for you because you're going to pay taxes up front. To do that conversion you're going to pay taxes on the money that you take out of your traditional IRA and you're going to try to recoup and more than recoup that money with the tax-free earnings of the Roth. ADAM SMITH: How old- what's the dividing point among a spectrum of ages? LYNN BRENNER: I guess if you are under 50, it's something that you should certainly consider seriously. And even if you're considerably above 50 and your main objective is to have your kids or your grandchildren inherit that money tax-free, because then you have a much longer horizon than just for your own needs. ADAM SMITH: I didn't know grandchildren and children could inherit that money tax free. LYNN BRENNER: Income tax free, yes. ADAM SMITH: But not estate tax free? LYNN BRENNER: Not estate tax free. ADAM SMITH: Okay, so if you're under 50 you should think about converting your IRA into a Roth IRA? LYNN BRENNER: Yes, but you should be very aware that there are potential pitfalls. For example, if you do a conversion this year you can spread the tax over four years. But your income during those four years will be increased in each year by one-fourth of the amount you converted. That could make you ineligible for tax benefits that are more attractive than the Roth account. For example, last year's tax legislation created the Hope Scholarship and the Lifetime Learning Credit for kids in college. Those creditsÄ those tax credits could reduce your income taxes by as much as $2,500 a year if you're eligible. And the eligibility depends on your income level. ADAM SMITH: Is there a colorful handy book that guides you? Actually, you could do it very quickly but you do have to sit down with a pencil and a pad and figure out how many years you have left, what your income gets reduced to or what it gets increased by. LYNN BRENNER: Yes. I would say look at how much bigger your tax bill is going to be in the next four years. Consider whether you have the money to pay those taxes outside of your IRA because ideally you want to roll over into the Roth your entire IRA amount. You don't want to have to pay taxes out of that IRA. ADAM SMITH: You want to keep 100 percent of the money that's in the IRA in the IRA and you want to pay the tax from your other income even if you have to borrow it. Right? LYNN BRENNER: Depending on what kind of interest rate you pay on it, yes. And I would say the other thing to be aware of is ask your tax accountant if there are any benefits that are limited by income eligibility that you would otherwise- ADAM SMITH: For example? LYNN BRENNER: Well, now for every child under 17 years old you have you get a $400 tax credit. If you have three kids under 17, that's $1,200 a year off your taxes. But if you earn over $110,000 a year, you're ineligible for that credit. [Graphic: Lynn Brenner's Roth IRA Pitfalls - Unlike traditional IRAs, Roth IRAs aren't legally protected from your creditors in most states. - A 1998 Roth conversion will increase your taxable income for four years. - A Roth conversion usually isn't worth doing unless you can pay the taxes on it from non-retirement account savings.] ADAM SMITH: What question would you like answered to help you do your personal best in the money game? Get in touch at our e-mail address, letters@adamsmith.net. Or write to us the old-fashioned way at Adam Smith's Money Game, 885 Third Avenue, Suite 2800, New York, New York 10022. We look forward to hearing from you. And if we answer your letter on the air, I'll be sending you a personally signed copy of my book, The Money Game. I'm Adam Smith. See you next week as the Money Game continues. ANNOUNCER: For more of the Money Game, visit us in cyberspace at www.adamsmith.net. ANNOUNCER: This program is made possible by a grant from MetLife with over $330 billion in assets under management. Funding has also been provided by the Roy R. and Marie S. Neuberger Foundation. Back to Top CREDITS Produced by ADAM SMITH EDUCATIONAL PRODUCTION Thanks to: Special thanks to: 3-D Models Provided in Part by 3-D CAFE For a VHS cassette send $19.95 or $5.00 for a printed transcript to: Copyright _ 1998 Adam Smith Educational Productions Ltd.
|
|
OTHER ITEMS About Adam Smith Global Television Transcripts
|
