Funded by their casinos in Florida, the Seminole Tribe is buying the Hard Rock business for $965 million, including its massive collection of rock ”˜n’ roll memorabilia.
The Hard Rock business — owned by British casino and hotel company Rank Group PLC — includes 124 Hard Rock Cafes, four Hard Rock Hotels, two Hard Rock Casino Hotels, two Hard Rock concert venues, and stakes in three unbranded hotels.
In addition, the tribe acquires 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.
"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 Seminole deal is just the latest among Native American casino operators who want to diversify their businesses.
The Chickasaw Nation, among the most prosperous tribes in the United States thanks to its 18 casinos, recently joined American investors and China’s oldest automaker to manufacture the MG, the sporty British icon, at an abandoned military base in Oklahoma.
The auto deal is part of the Chickasaw Nation’s efforts to reduce its reliance on gambling, which represents 90% of the tribe’s $200 million in projected revenue in 2007. The tribe already owns a successful government contracting business, a chain of long-term care facilities, a bank, several radio stations and a chocolate factory, among other businesses.
In Florida, the Seminole Tribe owns and operates five other casinos, in addition to its two Seminole Hard Rock hotels & casinos. More than 90 percent of the tribe’s budget now comes from gaming revenue.
Nearly 3,300 Seminole Indians live on and off reservations throughout Florida.
The tribe was the first American Indian group to get into the gambling business when it opened a bingo hall in 1979 in Hollywood, Florida. That led to other casinos on reservations in Florida and sparked the interest of other tribes across the nation.
U.S. tribes now rake in more than $22 billion in annual revenues from gambling, according to government figures.
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 last May.
Rank, which said the sale freed it to concentrate on gambling, retained the Hard Rock Casino in London and plans to change it to the Rank Gaming brand.
"We have maximized the value of Hard Rock through this disposal following a thorough strategic review and competitive auction," said Rank Chief Executive Ian Burke.
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.
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.