Seminole Tribe buys Hard Rock, Poker & Gambling Holdings go Global

Late last week, the Seminole Tribe of Florida and British hotel and casino company Rank Group PLC announced that the tribe purchased the Hard Rock business for $965 million (490m pounds).

"This is a proud moment for the Seminole Tribe of Florida and for all Indian tribes," Mitchell Cypress, Seminole tribe Chairman, said in a statement.

Cypress added, "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 deal includes four Hard Rock hotels, 124 Hard Rock cafes in 40 countries worldwide, two Hard Rock Live! concert venues, two Hard Rock casino hotels, and stakes in three unbranded hotels. It also included one of the world's largest collections of rock 'n' roll memorabilia-about 70,000 pieces.

This would be added to the Seminole tribe's existing holdings of two Hard Rock hotel-casinos-and five other casinos-in Florida. Gambling revenues contribute to more than 90 percent of the tribe's budget.

About 3,300 Seminoles tribe members live on and off Florida reservations. All of them receive payments due to the success of casinos. They have in the past, and continue to set the standard in Indian gaming.

The tribe first opened a bingo hall in 1979. When it survived legal challenges, it led to other approved casinos on reservations in Florida and opened the door for legalized gambling for all tribes 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.

The sale, which is subject to shareholder approval and scheduled to close in March, does not include all of the Hard Rock brands.

Rank retained the Hard Rock Casino in London, England and intends to change the property to the Rank Gaming brand.

Additionally, Morgans Hotel Group Co. retains the Hard Rock Hotel in Las Vegas, which it purchased in May for $770 million. The deal also excludes Morgans' Hard Rock intellectual property rights in Australia, Israel, Venezuela, Brazil and many areas of the United States west of the Mississippi River.

"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 into expanding it, which is one of the reasons Rank decided to sell."

In a company statement, Ian Burke, chief executive of Rank, said, "Today's announcement sets a clear strategic course for Rank as a focused gaming business." He also said that Rank would return $690 million of the sale proceeds to shareholders in a special dividend of $1.28 per share.

Burke referred to UK legislation to expand legalized gambling taking effect the fall of 2007 by saying, "We have established clear plans to capitalise on the changes taking place in UK gaming in order to generate sustained growth in profits and improvements in our return on capital employed."

Rank said that last year Hard Rock posted revenue of $493 million, with profit before taxes and interest of $68.6 million

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