Is the Miss Universe Pageant an Asset or Liability to Donald Trump?

In 1996, Donald Trump acquired the Miss Universe Organization. At that time, the acquisition seemed to make a lot of sense.

The Miss Universe pageant was being seen as outdated and cheesy and Mr. Trump’s expertise in branding – after all, he has made his name in turning around real estate properties – was seen as something that would revive the pageant. “Trump puts his hand in things that are very profitable and glamorous”, said one pageant expert at that time.

Despite its dwindling audiences in developed countries, Miss Universe was still very popular in Latin America and Asia. Though already known in the United States at that time, Mr. Trump was relatively unrecognizable in the rest of the world. The pageant was supposed to endear Mr. Trump to the countries he planned to expand his businesses in.

The partnership seemed to go in the right direction. The already popular Miss Universe pageant also became known as “Donald Trump’s beauty contest” around the world. Mr. Trump’s expertise in marketing luxury projects found its way in Miss Universe. In 2001, supermodels Elle Macpherson and Naomi Campbell, hosted the Miss Universe contest, in an effort to give the pageant a more upmarket vibe.

Things began to change in 2004. Donald Trump appeared in the show “The Apprentice”. As the show went on to become a worldwide hit, Mr Trump became an international reality superstar. Donald Trump, also known as “The Donald”, was now a celebrity everywhere he went.

If Mr. Trump and Miss Universe go on a tour together, it is probably the former that will get most of the media attention. In fact, the Trump name had become so powerful that it is actually a big business all on its own. The Donald makes a lot of money licensing the Trump name to a variety of products and real estate projects. Many of the condos with the Trump stamp that are being built around the world are not actually owned by Mr. Trump, they are just using his name. In 2011, Forbes magazine put a USD 200 million value on the Trump name; but Mr Trump himself disputed that and hinted that his brand was worth at least USD 3 billion.

One might be wearing the crown, but we all know who here is the real media royalty. Miss Universe 2013 Gabriella Isler and Donald Trump. Image from EFE

 

At the same time, the Miss Universe brand was either stagnating or losing its brand power. There was a time when aspirational brands such as Vacheron Constantin, a Swiss luxry watch maker, was giving away prizes to Miss Universe winners. Now, the pageant’s main sponsors are Chi hair products, Yamamay swimsuits, Chinese Laundry footwear and Sherri Hill dresses; hardly luxurious brands by any stretch.

Mr. Trump had also divested half his ownership of the pageant to NBC, the American broadcasting network that televises both Miss Universe and The Apprentice. Without Mr. Trump’s clout in NBC, due to his popular reality show, on which he is currently paid an estimated USD 3 million per episode, many actually speculate that the pageant would have long met its broadcast TV demise. Miss America and Miss World, pageants that achieved more fame in their heydays than Miss Universe ever did, had long been axed from their American and British broadcast networks respectively. Miss America has made a recent comeback though.

If rumors are to be believed, the reason for the delay in the current Miss Universe pageant is the lack of cities/ countries that want to host the pageant. It is already 2015, and yet the pageant will only crown Miss Universe 2014. Doral, a suburb of Miami in Florida, decided to host the pageant late last year. The decision had met with resistance from local officials and citizens, since the city needed to raise USD 2.5 million to host the pageant. There was speculation that Brazil would host the 2014 pageant, but it was rumored that the country backed out.

Is the Miss Universe pageant still an asset to Mr. Trump, or is it becoming a liability? In 2011, Brazil paid around USD 17 million to host the pageant. In 2013, Russia paid around USD 16 million. This time around, Doral is only paying USD 2.5 million, a bargain actually. Pageant followers may have trouble predicting the winner of this year’s Miss Universe; however, based on the dwindling fees the hosts are willing to shell out for the contest, the fortunes of the pageant company itself may be easier to foretell.

 

– Finance MD

thefinancemd.com

 

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Finance, M.D.

Finance, M.D. is a practicing physician who dabbles in finance and investment. He has passed all three levels of the Chartered Financial Analyst (CFA) exams, all in his first attempts. thefinancemd.com

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