MIAMI — For Seminole Indian Tribe Vice Chairman Max Osceola, the tribe's ambitious purchase of the famed Hard Rock Cafe business for $965 million reminds him of another deal in Native American history.
"Our ancestors sold Manhattan for trinkets," Osceola said Thursday. "Today, with the acquisition of the Hard Rock Cafe, we're going to buy Manhattan back one hamburger at a time."
Osceola spoke at a news conference announcing the deal with British company Rank Group PLC for Hard Rock's casinos, restaurants — including one in Salt Lake City — hotels and what is said to be the world's largest collection of rock memorabilia.
The Seminoles said they believe the deal is an American Indian tribe's first purchase of a major international corporation, and called the deal a milestone that shows its growing economic power. Experts called the purchase a bold move that could make the Seminoles an important player in the gambling and hospitality industry by acquiring a well-known international brand.
The Seminoles — the first U.S. tribe to get into the gambling business — already had partnered with Hard Rock in successful hotel, gambling and entertainment complexes in Tampa and Hollywood in tourist-friendly Florida.
"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 Seminoles, descendants of the Creek people, spent decades fighting their forced removal out of Florida, battling Andrew Jackson and other prominent U.S. generals. President John Tyler ordered the end of military actions against the Seminoles in May 1842, and the tribe never surrendered to the United States. Florida's remaining Seminoles settled in rural areas near Lake Okeechobee and in South Florida.
After selling tax-free tobacco products, the tribe opened a bingo hall in 1979 in Hollywood. The move survived legal challenges from the state over the tribe's right to be in the gambling business, which led to other casinos on reservations in Florida and opened the door for tribal gambling 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.
Today, the Seminoles have about 3,300 members living on and off Florida reservations, and all of them receive payments from the casinos. 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 percent of the tribe's budget now comes from gambling.
"To provide for the tribe, we're looking beyond the border, the four square borders of our reservation," Osceola said. "We're looking not just in the United States but we're looking in the world. So this income will provide for our tribe, for our young people that are coming up."
The deal announced Thursday 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.
The memorabilia collection includes some 70,000 pieces, including Jimi Hendrix's Flying V guitar, one of Madonna's bustiers, and guitars formerly owned by Bob Dylan, Eric Clapton and Chuck Berry.
At the news conference, Hard Rock International President and Chief Executive Hamish Dodds gave Osceola a guitar that belonged to Hank Williams Sr. Dodds described the memorabilia collection's worth as "priceless."
However, the deal does not include Hard Rock's Las Vegas casino, which is owned by Morgans Hotel Group, or Morgans' rights to Hard Rock intellectual property in Australia, Brazil, Israel, Venezuela and many areas of the United States west of the Mississippi River, a Morgans official said.
Kristen Hauser, spokeswoman for Hard Rock International, said Thursday that all of the Hard Rock Cafe restaurants in the United States, including the Salt Lake restaurant, are "company-owned." As such, Hauser said, "they would fall under the Hard Rock International umbrella, which will change hands with the Seminole Tribe of Florida in relation to the announcement today."
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 into expanding it, which is one of the reasons Rank decided to sell."
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.
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.