Jim Allen, CEO of Seminole Gaming, said the deal with UK-based Rank Group for Hard Rock International was composed of a $525 million bond offering and a $500 million equity contribution. The additional $35 million was for closing costs and working capital, Allen said.
The deal was completed after details were worked out in London, New York and Florida. It marks the tribe’s entry in the worldwide hospitality industry and gives the tribe’s gaming operations a foothold in states where gambling is legal. The purchase was first announced in December and approved by Rank Group shareholders in January.
To celebrate the deal, more than 200 tribe members attended a colorful signing ceremony, which featured music, a poetry reading and speeches by Seminole council members in English and Miccosukee, a Seminole language. Then, tribal leaders gathered under the Council Oak tree to sign documents symbolizing the sale’s completion.
“The acquisition of the Rank-Hard Rock system today makes our economic survival a little bit more sure,” tribe vice chairman Moses Osceola said, with black, red and yellow flags serving as a backdrop. “We are bound and determined to make this thing work.”
The Hard Rock business includes 124 Hard Rock Cafes, five Hard Rock Hotels, two Hard Rock Casino Hotels, two Hard Rock Live! concert venues and stakes in three unbranded hotels. It also features a collection of rock ‘n’ roll memorabilia that includes 70,000 pieces, including guitars owned by Jimi Hendrix and Eric Clapton.
The Seminoles were the first Native American tribe to get into the gambling business, and it says the deal is an American tribe’s first purchase of a major international corporation.
“The Seminole Tribe has paved the way for Native Americans to get into the big business industry,” tribe chairman Mitchell Cypress said.
The tribe has about 3,300 members and owns and operates seven casinos in Florida, including Hard Rock Hotel and Casinos in Tampa and Hollywood. Before it entered the cigarette and gambling business, the tribe was mired in poverty. Today, more than 90 percent of the tribe’s budget is made up of gaming revenue, which stands at about $500 million, according to court records cited by the South Florida Sun-Sentinel.
Each tribal member receives a monthly dividend from operations. Revenue generated by the tribe’s businesses goes into education, health care and other services.
“It was a good effort by the council to position the tribe for the 21st century in a business sense,” said tribe member Joe Frank, who lives on the Big Cypress reservation. “Tribal membership is growing and we need to diversify our business assets to ensure that all our tribal members have a good future.”
The tribe already has plans to expand the business, with the number of Hard Rock hotels to grow to 15 in the next three to four years, Allen said. This year, Hard Rock plans to finish reconstruction of a hotel and casino in Biloxi, Miss., that was damaged by Hurricane Katrina. It also plans to open a hotel in San Diego, begin development of a hotel and casino in Macau and start building condo-hotel properties at the Copper Mountain Resort in Colorado and in Palm Springs, Calif.
Monday’s 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.
Rank has said the sale freed the company to concentrate on gambling. It retained the Hard Rock Casino in London and plans to change it to the Rank Gaming brand.
In a Rank Group earnings report filed Friday, Hard Rock International reported operating profits increased 18.7 percent to $74.8 million, from $63 million the year before. It saw continued growth and improvement in all four business divisions comprising company-owned cafes, franchise cafes, hotels and casinos, a news release said.