The Seminole Tribe of Florida said Thursday that 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 is believed to be an American Indian tribe's first purchase of a major international corporation of that size. The Hard Rock chain 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.
However, the deal does not include Hard Rock's Las Vegas casino, which is owned by New York-based Morgans Hotel Group Co., or Morgans' rights to Hard Rock intellectual property in Australia, Brazil, Israel, Venezuela and many areas of the U.S. west of the Mississippi River, a Morgans official said.
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, Fla. 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.
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 [to expand] it, which is one of the reasons Rank decided to sell."
At a news conference Thursday at the Hard Rock Cafe in New York's Times Square, 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 Seminole Tribe has about 3,300 members living on and off Florida reservations, and all of them receive payments because of the success of casinos. They are pacesetters in the growing world of Indian gaming.
The tribe opened a bingo hall in 1979 in Hollywood, Fla. 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 and casinos, the Seminole Tribe owns and operates five other casinos in Florida. More than 90% of the tribe's budget comes from gambling 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 Tribal Nation, which operates Foxwoods Resort Casino in Connecticut, said this year that 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.
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 for $770 million in May.