As news broke that Arnold Schwarzenegger would replace presidential candidate Donald Trump on NBC's Celebrity Apprentice, people reacted positively to the announcement. Even Trump responded with approval:
Congrats to my friend @Schwarzenegger who is doing next season’s Celebrity Apprentice. He'll be great & will raise lots of $ for charity.
— Donald J. Trump (@realDonaldTrump) September 14, 2015
Schwarzenegger is such an iconic celebrity today that he's known primarily for his movie stardom and his governorship of California from 2003 to 2011. If he's remembered for a business venture, most people think of the celebrity-sinking franchise restaurant Planet Hollywood, which started strong in 1991 but fizzled from hundreds of locations to just a handful currently.
But Schwarzenegger's most interesting business ventures may be the ones most closely related to his Apprentice predecessor: He made real estate investments that were more instinctual and risky than those made by Trump. And they may have been more successful.
Arnold made his early fortune as a real estate tycoon
In Schwarzenegger's 2012 book Total Recall, he writes about his early years as an Austrian bodybuilder looking to make it in America. At the very least, Schwarzenegger showed a strong interest in portraying his early success as a product of his real estate acumen.
He developed seed money through bodybuilding prizes and a mail-order weightlifting instruction business in the late 1960s and early '70s, but it wasn't an instant rise to movie star millions. As an immigrant American, he worked as a bricklayer with a friend. Real estate quickly filled in the gaps.
"The math of real estate really spoke to me," Schwarzenegger wrote. During the Arab oil embargo of 1973, he reported that he saw arbitrage opportunities in the Los Angeles market, and he leapt on them aggressively. In 1974, he sunk his full savings — $27,000, plus a borrowed $10,000 — into a six-unit apartment building in Santa Monica (near Wilshire Boulevard).
Those early real estate risks supported Schwarzenegger through the lean years in his nascent acting career. He writes that in 1977 he was offered double his initial investment on the Santa Monica building, earning him a profit of $150,000. He immediately doubled down and purchased a 12-apartment building, which he quickly followed with another real estate purchase made from his payment for the bodybuilding classic Pumping Iron.
These early investments were followed by bigger plays once Schwarzenegger established himself as a movie star, and they did involve occasional stumbles. In the 1970s, he and his business partner anticipated a giant, cash cow supersonic airport would come to the desert in Antelope Valley, and Schwarzenegger bought property there for a few thousand dollars, which represented a large portion of his savings at the time. The Concorde fell to earth, and he was stuck with a patch of desert. In the 1980s, he purchased property in Denver that lay fallow for years before a big payday.
Movies became a big source of income, but investments were always part of the package
Still, Schwarzenegger is adamant that it was real estate, not bodybuilding and acting, that helped him make his first million. (He also told the LA Times in 2007 that even his worst investments eventually became profitable.) Schwarzenegger's later financial portfolio took on some more expected ventures, like his massive Arnold Sports Festival, the Planet Hollywood failure, and various production companies and early stage internet investments. He currently makes much of his income from wages earned from movies. But as revealed in 2003 disclosure forms related to his initial gubernatorial campaign, lower-profile, high-risk investments dominate his portfolio, including jet leasing and a significant shopping mall investment (he also revealed he owned a large stake in an investment firm).
So does all that mean Schwarzenegger is a better Celebrity Apprentice candidate than Donald Trump? Vox's Dylan Matthews argues that estimates of Trump's real estate savvy should be handicapped due to the funds he inherited and his early leg up in real estate. Ultimately, both men's specific finances remain somewhat private, with Schwarzenegger's net worth claims ranging from $30 million to $450 million and Trump's famous fortune ranging from $2 billion to his own claim of $10 billion. Judging their business skill is ultimately subjective (to be clear, Schwarzenegger also cited Trump as a business mentor long before taking the Celebrity Apprentice mantle).
That said, Schwarzenegger's early investments show a high-risk, extremely instinctual approach to real estate, and that may be more in line with the bootstrap entrepreneurship of Celebrity Apprentice than Trump's more tumultuous career. At the very least, Schwarzenegger will be qualified to insult contestants like Gary Busey.