The long history of issues between Trump and the Pritzker family
President Donald Trump and Illinois Gov. JB Pritzker have had their recent share of dust-ups. That testy relationship between Trump and the Pritzker family isn’t new, dating back as far as the 1970s.
Pritzker/Trump history
The relationship began in 1977, when the two partnered on the Grand Hyatt Hotel in New York City.
The Pritzker family owned, and currently owns, Hyatt Hotels. Specifically, Jay Pritzker and his brother Donald, who is JB’s father. As part of that partnership, the Chicago-based Pritzkers were not permitted to build or manage any other hotels in New York City.
“In the hotel business, you don’t really want a competing hotel next door with the same ownership,” Marc Norman, associate dean at NYU Schack Institute of Real Estate, told Straight Arrow News. “Because the question is, where is your emphasis, right?”
Over the next few decades, the business relationship had issues, including two arbitration cases.
Things really came to a head during the recession of the 1990s. Trump nearly went bankrupt at the time, owing more than $3 billion to various entities and unable to pay.
The Pritzker family wanted to renovate the Grand Hyatt to remain competitive in the market. They said that would require significant funding from each investor, including Trump, who was in no position to help with the roughly $35 million price tag.
“I would be very dubious that it wasn’t something that was part of their strategic plan that had been intended all along,” Richard Peiser, professor of real estate development at Harvard Graduate School of Design, told SAN. “Now it is possible that the costs were a lot more than was agreed upon or understood or expected, and that could be part of the suit.”
Trump lawsuit
“It’s business, but you know, you’ve signed a contract, right?” Norman said. “That does open you up to potential lawsuits.”
Which is exactly what happened. Trump filed a suit against the Pritzkers in 1993.
“They had a 50/50 partnership, and the Pritzkers wanted to renovate the hotel, and it was at a bad time for Trump,” Peisar said.
Trump claimed it was clearly an attempt to force him out of the deal and the Grand Hyatt.
“Trump may have a point that the Pritzkers were taking advantage of the fact that they knew he was not in a position to pay up on the renovation right at that time,” Norman said. “But still, they like to keep their properties in prime shape. So it’s certainly justifiable to want to renovate it to maintain the standard.”
The future president disagreed.
“There I was, at the lowest point of my financial life,” Trump said at the time. “And they tried to force me to default or sell my hotel cheaply.”
Jay Pritzker, who died in 1999, defended the renovation plan.
“While it is true that he had a problem, we also had a problem,” Pritzker said at the time to the New York Times. “We had a hotel to maintain. There was nothing personal about it.”
Trump disagreed, called them a “racketeering enterprise,” and filed a suit demanding $500 million and the removal of Hyatt from its management contract.
“We have a lot of satisfied partners,” Pritzker continued. “If you want to see what kind of partner Mr. Trump is, read his book.”
Pritzker was referring to “The Art of the Deal,” in which Trump boasts of getting the best of any transaction.
“There is a history of strained business relationships with [Trump] and his organizations,” Norman said.
The suit also accused the Pritzkers of tanking the hotel to enable them to build new hotels in the area.
“What they want to do is make the hotel so unprofitable that I would sell them my interest for nothing and they could get out of the restrictive covenant,” Trump said.
Pritzker countersuit
Roughly eight months later, in 1994, the Pritzkers filed a countersuit against Trump over the renovations.
“On the surface of it, it doesn’t sound like what the Pritzkers were asking for, for his share of the cost of renovation was unreasonable,” Peiser said.
They sued for $100 million, alleging Trump had deliberately blocked the renovations at the Grand Hyatt. The suit alleged the hotel had deteriorated physically, losing its competitive position among first-class hotels in New York City.
“Hyatt is merely trying to cover up their total incompetence in the running of the Grand Hyatt,” Trump said in an interview following the filing of that suit. “Never before in my career have I witnessed such gross mismanagement. It’s unbelievable.”
The suit also claimed Trump threatened to disparage Hyatt’s management of the Grand Hyatt and that he secretly ceded his interest in the Grand Hyatt to two of his creditors. The latter would’ve been a violation of the partnership.
Lawsuit settlement
Eventually, the two sides reached a confidential settlement in 1995.
One year later, Hyatt bought out Trump’s 50% in the Grand Hyatt for $140 million, ending the contentious business relationship between the two sides.
“Sounds like a fair price,” Peiser said.
Current issues
Now, 30 years later, Trump is feuding with the son and nephew of his former business partners. However, this time it is a little different for this member of the Pritzker family.
“He’s now the governor and was elected and is responsible for the people of Illinois, including Chicago,” Norman said. “So, I think first and foremost, he’s probably thinking less about that feud and more about the sovereignty and the agency of people and agencies in Chicago to do their thing.”
Trump has deployed National Guard troops to Chicago despite Pritzker’s rebuke of that move.
Because of that move, we may get to see another chapter in the court battles between Trump and the Pritzkers. The state of Illinois and the city of Chicago have filed lawsuits to stop Trump’s deployment.
“You have a place that’s been targeted, like other places in the country,” Norman said, referring to troop deployments in Los Angeles and Washington, D.C. “So I’m not sure how much to read into a feud from 30 years ago, 35 years ago.”
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Ella Rae Greene, Editor In Chief
