(Bloomberg) -- Ron DeSantis did just enough in the Iowa caucuses to keep alive his argument that he’s the most formidable Republican challenger to Donald Trump for the party’s nomination.
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The Florida governor, who visited all of Iowa’s 99 counties and spent the lion’s share of his resources campaigning there, cast his runner-up finish Monday as a triumph that will extend his 2024 candidacy. But Trump’s historically wide margin of victory was a disappointment for DeSantis, who staked his bid on a strong showing in the first nominating contest.
The result raised questions about how much longer he can remain in the race, given that his campaign has been plagued by financial issues in recent months and faces difficult contests in New Hampshire and South Carolina.
DeSantis only narrowly edged rival Nikki Haley, the former South Carolina governor who faces questions about her own viability heading into New Hampshire. Voters cast their primary ballots there in a week. Haley is polling much higher than DeSantis, but still 14 percentage points behind Trump, according to the RealClearPolitcs average, and her third-place finish in Iowa threatens to stymie her effort to use New Hampshire as a springboard.
The Iowa caucuses failed to produce a clear Trump alternative and only prolonged what polling has shown for months: Haley and DeSantis are locked in a battle for second place, nearly 50 percentage points behind Trump nationally. That dynamic will make it more difficult for both campaigns to convince donors to write checks to fund bids that Trump is increasingly likely to trounce.
Trump’s victory was so decisive that news organizations called the race on Monday evening just over half an hour after voting began, and before ballots had been passed out at some sites. DeSantis’ campaign used that move to blame the media for his performance.
DeSantis at an election-night party said his opponents had spent tens of millions of dollars attacking him, but declared his second-place finish a success and said he would stay in the race. He plans to make a campaign stop in South Carolina on Tuesday before continuing to New Hampshire. DeSantis spokesman Andrew Romeo predicted the race would soon become a two-person contest between the Florida governor and Trump.
“I don’t think you have to beat Trump to win tonight,” DeSantis national finance co-chairman Roy Bailey told Bloomberg News on Monday before voting started.
Bailey acknowledged it would be difficult for DeSantis — or any other Trump challenger — to continue to raise enough money if their Iowa results fell short of expectations.
“From a financial standpoint, it’d be tough because people invest into a pathway to win,” he said.
David Bahnsen of The Bahnsen Group and a DeSantis donor, predicted support from backers could dry up.
“I believe there is unlikely to be much donor support at this stage,” Bahnsen said. “He underperformed the expectations that were set six to nine months ago, and those were the expectations that drove tens of millions of dollars of spending in Iowa, and a visit to all 99 counties,” he added.
Dan Lufkin, co-founder of investment bank Donaldson, Lufkin & Jenrette and a Haley donor, downplayed the impact of the former South Carolina governor’s third-place Iowa finish on her momentum.
“To the extent they were neck-and-neck, that’s a bad sign for DeSantis,” he said. “It would be nice if Nikki had won half a percentage point in front of DeSantis.”
Campaigns have only a week to shift their entire ground operations to New Hampshire ahead of the state’s Jan. 23 primary.
Haley and her super PAC have $3.4 million in airtime booked in New Hampshire after the Iowa caucuses, according to AdImpact, which tracks political advertising, while Trump and his allies are slated to spend $2.8 million.
DeSantis has almost no infrastructure in New Hampshire and he and his allied super PACs stopped advertising in the Granite State to concentrate on Iowa. They have yet to renew ad buys there.
Haley has the advantage over DeSantis in New Hampshire where she has 29% support compared to his 6.5%, according to the RealClearPolitics average. She’s also poised to likely pick up votes from backers of former New Jersey Governor Chris Christie, who is polling at 11%, but dropped out of the race last week. That would put her within striking distance of Trump, who is at 43.5% in the average of New Hampshire polls.
Haley’s campaign shifted strategy on Tuesday morning, announcing that the former UN Ambassador would not participate in two debates scheduled for the coming days unless Trump were to participate. Haley is a strong debater who has participated in five forums so far this cycle, raising her profile, but the change comes after DeSantis improved his own debate skills. The two participated in a bruising debate ahead of Iowa as the only two contenders on stage.
Haley supporters expressed optimism about her changes in the next contest.
“Nikki could very well take New Hampshire, or come close enough to show this is an election, not a coronation,” said Simone Levinson, a Haley supporter who’s hosted fundraisers for her in New York and Florida.
“Iowa was about DeSantis. He failed,” said Eric Levine of Eiseman Levine Lehrhaupt & Kakoyiannis, P.C., who co-hosted a fundraiser for Haley. He called New Hampshire a two-person race. “If she wins there, and she can, it will be a long primary season.”
Still, Scott Spradling, a former New Hampshire political journalist turned messaging strategist, said the expectations now were for a “double-digit Trump victory” there following Iowa. He said Haley does not need to beat Trump in the state to prolong her candidacy but needs to at least come within single digits of the frontrunner.
“It all needs to line up perfectly for her,” Spradling said. “If he runs the table in the first three states, I don’t know where she goes from there.”
--With assistance from Hadriana Lowenkron, Stephanie Lai, Bill Allison and Gregory Korte.
(Updates to add comments from Bahnsen in paragraphs 11-12 and from Levine in paragraph 22)
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