In a deal that marks a new era in American Indian capitalism, the Seminole Tribe of Florida catapulted itself onto the global entertainment scene Thursday with the $965 million purchase of Hard Rock International.
Until two years ago a mere operator of dingy bingo halls and smoke shops, the 3,300 Seminoles will now own one of the world's biggest brands and biggest collections of rock 'n' roll memorabilia -- 70,000 pieces ranging from Madonna's bustier to Eric Clapton's guitar.
The tribe will also take over 68 Hard Rock Cafes in 45 countries and licensing and franchise agreements for 56 other restaurants and five hotels, plus two Hard Rock Live!
concert venues.
''The days when tribes were considered marginal people with a bingo hall are over,'' said Eugene M. Christiansen, chief executive of gaming consultancy Christiansen Capital Advisors.
``It's a milestone.''
The acquisition from Hard Rock parent The Rank Group of London -- fueled by profits from the Seminoles' casino complexes in Tampa and near Hollywood -- is believed to be the first purchase of a major international company by an American Indian tribe.
''It's a proud moment for the Seminole Tribe of Florida and for all Indian tribes,'' said Mitchell Cypress, who heads the Seminoles' elected Tribal Council.
The deal, which is expected to close in March, will give the tribe almost $500 million in annual revenue.
Rank said it is selling Orlando-based Hard Rock International, which has been growing steadily in recent years, in order to focus on its core business of gaming.
The Seminoles and Hard Rock are already business partners.
The tribe owns and operates the two Hard Rock Hotel and Casinos in Tampa and near Hollywood, which rank among the most lucrative casinos in the country, plus five smaller gaming facilities in Florida.
The tribe and Hard Rock started exploring ways they could do more business together a year ago, said James Allen, chief executive of gaming for the Seminoles.
In July, Rank came knocking, saying it was going to auction off Hard Rock.
More than 70 bidders participated, Allen said.
''This was a situation where we were competing with some of the biggest private equity groups in the world,'' he said. ``We prevailed late [Wednesday] night.
''
Allen said the tribe does not plan to make major changes to Hard Rock International. Chief Executive Hamish Dodds will remain with the company.
''A lot of things have been done right,'' Allen said.
``We want to enhance the cafes and continue growth in the hotel sector, especially in casino markets.''
The Seminoles will finance the purchase through a new company, Seminole Hard Rock Entertainment, which will be funded almost half through equity from the tribe and the rest from debt.
The tribe's payments in licensing fees to Hard Rock, which comprise more than a quarter of Hard Rock International's profits, will now be used to buy the brand, Allen said.
''The Seminole Tribe has had some sophisticated financial help from Merrill Lynch, just as any major corporation,'' Christiansen said.
Industry journal Casino City estimates Florida's Indian gaming revenue grew by 36.5 percent to $1.
3 billion last year -- almost all of that from the Seminoles' Hard Rocks. The Miccosukee Tribe, which operates a small casino in western Miami-Dade County, is the state's only other gaming tribe.
With that robust growth and revenue, it was a matter of time before the tribe sought outside businesses, said Vin Narayanan, managing editor of Casino City.
''They're locked from a territorial standpoint,'' he said. ``They've got to look outside for growth opportunities.''
Many tribes are investing in businesses with the proceeds of their gaming activities, said Alan Meister, an economist with The Analysis Group in California.
''They're diversifying,'' he said. ``This is a continuation of that trend.''
The Seminoles, descendants of a few hundred Indians who took refuge in the Everglades in the mid-1800s when the federal government tried to move them to reservations in Oklahoma, have long been recognized as pioneers in the country's Indian gaming industry.
They were one of the first tribes to offer high-stakes bingo, in 1979. After court challenges in Florida and California, Congress allowed tribes to open casinos on their reservations in 1988.
Indian gaming has mushroomed since then: it's now a $22.
7 billion a year industry and growing by double-digit percentages annually.
''Our ancestors sold Manhattan for trinkets,'' Seminole Vice Chairman Max Osceola said at the New York news conference announcing the deal. ``Today, with the acquisition of the Hard Rock Cafe, we're going to buy Manhattan back one hamburger at a time.
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