Seminole Tribe buys Hard Rock cafe business

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Hard Rock’s Seminole event
Dec. 7: The Seminole Tribe of Florida is buying the Hard Rock chain of restaurants, music venues, hotels and casinos in a $965 million deal, CNBC Hampton Pearson reports.

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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.

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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.

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