Seminole Tribe Buying Hard Rock Cafe Business for $965 Million

[Shaka_Khan]

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AP
Seminole Tribe of Fla. Buying Hard Rock
Thursday December 7, 9:23 pm ET
By Adrian Sainz, Associated Press Writer
Seminole Tribe Buying Hard Rock Cafe Business for $965 Million


MIAMI (AP) -- The Seminole Tribe of Florida said Thursday it was buying the famed Hard Rock business, including its casinos, restaurants, hotels and huge collection of rock 'n' roll memorabilia, in a groundbreaking $965 million deal with a British company.

The deal with London-based Rank Group PLC is believed to be an American Indian tribe's first purchase of a major international corporation of its size, the Seminoles said. It includes 124 Hard Rock Cafes, four Hard Rock Hotels, two Hard Rock Casino Hotels, two Hard Rock Live! concert venues and stakes in three unbranded hotels.

The Seminoles were the first U.S. tribe to get into the gambling business in 1979. More recently, they had partnered with Hard Rock in successful hotel, gambling and entertainment complexes in Tampa and Hollywood in tourist-friendly Florida. They now have the ability to expand their gaming interests nationally by partnering with a well-known brand, experts said.

The tribe also will acquire what is said to be the world's largest collection of rock memorabilia, some 70,000 pieces including Jimi Hendrix's Flying V guitar, one of Madonna's bustiers, a pair of Elton John's high-heeled shoes and guitars formerly owned by Bob Dylan, Eric Clapton and Chuck Berry.

The deal does not include Hard Rock's Las Vegas casino, however, which is owned by Morgans Hotel Group, or Morgans' rights to Hard Rock intellectual property in Australia, Brazil, Israel, Venezuela and many areas of the United States west of the Mississippi River, a Morgans official said.

Rank said the sale freed it to concentrate on gambling. It retained the Hard Rock Casino in London and plans to change it to the Rank Gaming brand.

"Hard Rock is a very strong brand," said Jeffrey Harwood, an analyst with Oriel Securities in London. "It needs further capital to be injected in the business into expanding it, which is one of the reasons Rank decided to sell."

At a Thursday news conference in New York that began with a blessing from a tribal representative, tribe Vice Chairman Max Osceola compared the sale to when American Indians sold Manhattan to the Dutch for "trinkets."

"We're going to buy Manhattan back one hamburger at a time," Osceola said.

Hard Rock International President and Chief Executive Hamish Dodds gave Osceola a guitar that belonged to Hank Williams Sr.

"This is a proud moment for the Seminole Tribe of Florida and for all Indian tribes," said Mitchell Cypress, chairman of the elected Tribal Council. "It is also an opportunity for the Seminole Tribe to diversify its business operations and help a very successful company to achieve even greater growth."

The Seminoles tribe has about 3,300 members living on and off Florida reservations and all of them receive payments due to the success of casinos. They are pacesetters in the growing world of Indian gaming.

After selling tax-free tobacco products, the tribe opened a bingo hall in 1979 in Hollywood. It survived legal challenges from the state over the right to be in the gambling business, which led to other casinos on reservations in Florida and opened the door for tribal gaming across the nation.

U.S. tribes now have more than $22 billion in annual revenues from gambling, according to government figures.

"The Seminoles were in the forefront of those who did it right and did it successfully, so I'm sure they can take what they learned there and put it into other areas of entertainment and hospitality," said Phil Hogan, chairman of the National Indian Gaming Commission, a federal agency that oversees gambling on tribal lands.

In addition to its two Seminole Hard Rock hotels & casinos, the Seminole Tribe owns and operates five other casinos in Florida. More than 90 percent of the tribe's budget now comes from gaming revenue.

The deal also follows a national trend of tribal casinos teaming with large corporations or going to other states to expand their reach. For example, the Mashantucket Pequot tribe, which operates Foxwoods Resort Casino in Connecticut, earlier this year said it was leasing the MGM Grand name from MGM Mirage. A $700 million hotel and casino expansion will be called the MGM Grand but will be operated by Foxwoods employees.

David Schwartz, director of the Center for Gaming Research at University of Nevada Las Vegas, said the Seminoles likely made the deal with gambling expansion at the top of their priorities.

"I don't think that they bought this because they only want to go into the restaurant industry," Schwartz said. "I don't think they want to only serve boneless buffalo wings."

Peter Morton, co-founder of the Hard Rock brand, sold his interests to Rank Group in 1996 for $410 million. He had retained ownership of the Hard Rock Hotel and Casino in Las Vegas, but sold that to Morgans Hotel Group Co. for $770 million in cash in May.

Rank Chief Executive Ian Burke said the company would return 350 million pounds ($690 million) of the sale proceeds to shareholders in a special dividend of 65 pence ($1.28) per share.

"We have maximized the value of Hard Rock through this disposal following a thorough strategic review and competitive auction," Burke said.

Last year, Hard Rock posted revenue of 250.1 million pounds ($493 million) and profit before interest and taxes of 34.8 million pounds ($68.6 million), Rank said.

The sale, which is subject to shareholder approval, is scheduled to be completed in March. The tribe said it expects to fund the purchase price from a combination of debt issued by a new Hard Rock operating company and equity funding from the tribe's gaming division capital structure.

http://www.seminoletribe.com/

http://www.rank.com/

http://www.hardrock.com/

Associated Press Writers Robert Barr in London and Karen Matthews in New York contributed to this report.

I want to be a Seminole. Is there a possibility in which I could gain a Seminole tribal membership? I need some easy money. And Florida sounds like a relaxing place to stay.

[Aenlic]

I read about that. I understand that the selling UK company wants to be prepared for the upcoming liberalization of casino laws in the UK and this sale would allow them to do so.

[Banquo's Ghost]

I want to be a Seminole. Is there a possibility in which I could gain a Seminole tribal membership? I need some easy money. And Florida sounds like a relaxing place to stay.

I wonder if the historians amongst us could pinpoint the date in the last three hundred years when it became a good career move to say the above?

[Fragony]

These traditional tomahawks and tipi's must have been real sellers, who would have thought?

[Redleg]

I wonder if the historians amongst us could pinpoint the date in the last three hundred years when it became a good career move to say the above?

I can.

Basically in the 1960's.

[GoreBag]

These traditional tomahawks and tipi's must have been real sellers, who would have thought?

...I'm pretty sure the Seminoles used neither. I could be wrong, you know, I'm hardly an expert.

[Mooks]

This really ruins the image of the nature loving indian.

I wonder if the seminole's are going to share their wealth with all the indian's. I used to live in Oklahoma, right next to a indian reserve. Some of my best friends were indians. They arent doing so well, pretty poor, live in dirt cheap homes that havent been painted in decades and with horrible looking cars. My brother is a bit of a racist against them (I moved when I was 12, he is 17 and spent most of his life around them). He generalizes them as theives, beggars, and cheap.

[Major Robert Dump]

Daws commission. Expect to see the Indians rebuying old land they previously sold to the government. The agreement allows them to buy it cheap, the prime pieces being along interstates. They're going to hook up with some foreigners and drop a MG auto factory right down the street from me on I-35.

A lot of locals are whining that Indian owned businesses like this (particulalry when they partner with a foreign company) have an unfair advantage due to less taxation = lower prices and better paid employees. I really have no opinion on the issue, except that I would never work for an Indain owned company.

[Mikeus Caesar]

I say good for them. They nearly got wiped out by us and had their land stolen, so it's about time they started owning our businesses.

[Papewaio]

I really have no opinion on the issue, except that I would never work for an Indain owned company.

You wouldn't work for an Indain owned company, but how about an Indian one?, or an American Indian one? or an American Indian one with foreign investment from an Indian company?

[Major Robert Dump]

You wouldn't work for an Indain owned company, but how about an Indian one?, or an American Indian one? or an American Indian one with foreign investment from an Indian company?

American Indian is what I meant, as taken in context with the thread subject. My reasons for this stems from the whole sovereignity issue, so perhaps "not work for a tribal owned company" would have been a better way to put it. In short, the laws that protect people who work for non-tribal, state and national companies fall into a gray area when you are dealing with a tribe that is considered its own little non-america. Maybe I'm just being paranoid. Doesn't matter though, as I dont expect to be working at the hard rock, a casino or a bingo hall anytime soon.

[Mooks]

I love when people dont respond to my posts. Makes me feel that my opinion really matters.


SARCASM

[Major Robert Dump]

I didn't respond to your post because the answer is obvious. The answer is no, they won't share it. Tribes are just like any other business, with the upper echelon reaping the most benefits for the ventures. The income gap amongst rich and poor tribal members is as great as that in non-tribal society. The Indian hospital by Ft. Sill is only visited by the poorest of the poor tribals, because its a crummy operation. Tribe members get their stipend from the government and the tribe, and after that if they want to reap the benefits they have to be proactive and get involved with the endeavors the tribe pursues.

The motivated, intelligent Indians I know are all doing well. They capitalized on their little welfare operation and made good. The Indians who drop out of school, sit around and drink and do drugs get jack squat. Thats not to say beuarucratic crap and greed doesn't keep the tribes from investing in their own people instead of buying million dollar houses, because that happens too.

Its funny though, that Indians now own a business that emplys waitresses and bartenders, who work for tips. I delivered pizzas in college, and the Indians were notorious for not tipping. I bet they tip at the bar, though

[rotorgun]

Why not? Hell...everybody else is buying up a peice of the United States-the Japanese, Germans, British, Arabs, Venzulelans, Jews, etc. It's high time that the original indigenous people get in on the action as well.

Yahta Hei.

[Major Robert Dump]

Maybe you dont understand.

The japanese etc owning a company that is based on (locally owned) land is not the same thing as a tribal company operating on tribal land, governed by tribal laws, privey to tribal rules.

In other words, if I, as a customer who just won 10k at a tribal casino and got robbed in the tribal parkng lot by some thugs, wanted recourse, then technically the tribal law enforcement entity would be responsible for the investigation, rather than the county sheriff, the state police or the FBI. Yay, the Choctaw police are hot on the trail, I feel safer already.


If I, as an employee,were wrongfully terminated from employment by a tribal entity housed on tribal land,I would have an uphill battle vs the tribes considering they are a soveriegn nation operating on their own land, and not subject to typical state and federal laws for the US.

As I said before, maybe i'm just paranoid

[Mooks]

In other words, they are there own mini-nation inside of a bigger nation. Kind of like hezbollah but minus the thirst for vengeance and blood.