by Sandra Hale Schulman

Miami Florida (NFIC)

The rumors had been circulating for months – the Seminole, already in a partnership with the Hard Rock Cafe and Casino Resorts, were looking to buy all of it. On December 8th in New York City, they announced the deal. For tribal Vice Chairman Max Osceola, the tribe’s ambitious purchase of the famed business for $965 million reminds him of another deal in Native American history.

“Our ancestors sold Manhattan for trinkets,” Osceola said. “Now, with the acquisition of the Hard Rock Cafe, we’re going to buy Manhattan back one hamburger at a time.”

Osceola spoke at a news conference announcing the deal with British company Rank Group PLC for Hard Rock’s casinos, restaurants, hotels and what is said to be the world’s largest collection of rock memorabilia.

The Seminoles said they believe the deal is an American tribe’s first purchase of a major international corporation, and called the deal a milestone that shows its growing economic power. Experts called the purchase a bold move that could make the Seminoles an important player in the gambling and hospitality industry by acquiring a well-known international brand.

The Seminole – the first U.S. tribe to get into the gambling business – started with a few bingo halls back in the late 70s. As a journalist in South Florida then, I used to drive by the chickee huts selling cigarettes and the small warehouse structures used for Bingo and marvel at the millions they were already raking in. By the late 90s, they already had partnered with Hard Rock in successful hotel, gambling and entertainment complexes in Tampa and Hollywood in tourist-friendly Florida.

“This is a proud moment for the Seminole Tribe of Florida and for all Indian tribes,” said Mitchell Cypress, chairman of the 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.”

Battled Andrew Jackson

The Seminoles, descendants of the Creek people, spent decades fighting their forced removal out of Florida, battling Andrew Jackson and other prominent U.S. generals. President John Tyler ordered the end of military actions against the Seminoles in May 1842, and the tribe never surrendered to the United States. Florida’s remaining Seminoles settled in rural areas near Lake Okeechobee and in South Florida.

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

Today, the Seminoles have about 3,300 members living on and off Florida reservations and all of them receive payments from the casinos.

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

In Florida alone, the Seminoles’ seven casinos and the one Miccosukee casino generated an estimated $1.3 billion in revenue last year.

Seminole average $500 million

The Seminole Tribe has averaged an annual profit of more than $500 million from its gambling operations since the opening of the Hard Rock hotels and casinos near Hollywood and Tampa, according to court documents.

Rank Group put Hard Rock International on the auction block this summer after deciding to focus on gambling in the United Kingdom. Hard Rock generated $493 million in revenue last year and $68.6 million in profit before interest and taxes.

“To provide for the tribe, we’re looking beyond the border, the four square borders of our reservation,” Osceola said. “We’re looking not just in the United States but we’re looking in the world. So this income will provide for our tribe, for our young people that are coming up.”

The deal 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 tribe would like 25 to 50 Hard Rock hotels to open nationwide within the next decade. Tribal leaders discussed adding “Seminole” to the Hard Rock name, but decided to leave the name and logo unchanged.

The only hotels with the “Seminole Hard Rock” label will continue to be the hotel/casinos near Hollywood and Tampa.

The Seminoles bought the Hard Rock brand name as well as 68 company-owned Hard Rock Cafe Restaurants and retail stores, primarily in the United States. The tribe also acquired licensing or franchise agreements for 56 more restaurants, five hotels and two Hard Rock Live! concert venues.

70,000 pieces of memorabilia

The memorabilia collection includes some 70,000 pieces, including Jimi Hendrix’s Flying V guitar, one of Madonna’s bustiers, and guitars formerly owned by Bob Dylan, Eric Clapton and Chuck Berry. Felipe Rose of the Village People donated a headdress and gold record in February.

At the news conference, Hard Rock International President and Chief Executive Hamish Dodds gave Osceola a guitar that belonged to Hank Williams Sr. Dodds described the memorabilia collection’s worth as “priceless.”

However, the deal does not include Hard Rock’s Las Vegas casino, 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.

The deal also follows a national trend of tribal casinos teaming with large corporations or going to other states to expand their reach.

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.

Schwartz said what’s appealing about the Hard Rock brand is that it’s always evolving so it can attract new audiences. The properties appeal to Baby Boomers who want to see Eric Clapton’s guitar, but also teens who want to see the jacket of a pop band’s lead singer.

The Hard Rock purchase fits with moves by other tribes to diversify outside gambling, said David Palermo, managing editor of Indian Gaming Business magazine. More than 90 percent of the Seminoles’ budget comes from gambling revenue.

“The magnitude [of the deal] is impressive and a bit unique, but it will only be precedent-setting for a short time,” said Palermo, who observed that other tribes have deals in the works for agricultural and energy development. The National Indian Gaming Association, a non-profit organization representing 184 Indian nations, also hailed the deal as a sign of things to come.

Sharing the American Dream

“What it says is that with a little opportunity, American Indians can share in the American dream,” said Ernest Stevens, the organization’s chairman.

The tribe’s expanding finances and gambling influence has translated into greater wealth for its nearly 3,300 members. Each Seminole, children and adults alike, receives a monthly dividend check of $7,000, or $84,000 annually, as his or her share of money made from the casinos.

In 2003, one year before the Seminole Hard Rock opened in Hollywood, each member made $36,000 per year, and that jumped to about $50,000 in late 2004, according to tribal members.

Osceola said the Hard Rock purchase will give tribal members a chance to work around the world from Barcelona to Japan.

“The sun will always shine on Seminoles’ Hard Rock Cafes,” he said.

On The Net:

www.semtribe.com