USA / UNITED KINGDOM: Rank Group agrees to sell Hard Rock to native American tribe

Record ID: 811208

  • Title: USA / UNITED KINGDOM: Rank Group agrees to sell Hard Rock to native American tribe
  • Date: 8th December 2006
  • Summary: (SOUNDBITE) (English) JIM ALLEN, SEMINOLE GAMING CHIEF EXECUTIVE, SAYING: "No we just paid 965 million dollars for one of the greatest brands in the world, so we certainty don't want to change too many things when it comes to logos and things like that. The things I think we will change, because of the success that the tribe has had, we have the ability to bring in a larger economic engine to continue to expand the brand."
  • Embargoed: 23rd December 2006 12:00
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  • Topics: Finance
  • Reuters ID: LVA9YLEPVNJLXHKGYAE5XP4D54EY
  • Story Text: Britain's Rank Group has agreed to sell its Hard Rock cafe and casino business for $965 million to the native American Seminole Tribe of Florida, which already makes 90 percent of its revenues from gambling.
    Rank said on Thursday (December 07) the sale of the rock music-themed chain would leave the company as a pure gaming group, focusing on Britain's plans to open up its casino market from next year.
    Seminole Gaming, the main revenue earner for the Florida tribe, plans to expand the hotel and cafe business through key gateway cities around the world and hopes to expand Hard Rock casinos internationally, but not in Britain.
    "So this income will provide for our tribe, for our young people that are coming up, they are going to have the ability to manage, operate, and this is the first step, this is the first stone being thrown into the pond that's going to go into the tidal wave. With this acquisition, it's going to do nothing but help the tribe and we're going to invite people to come and see and we're going to rock," said Seminole Councilman Max Osceola.
    The tribe, which pioneered Indian gaming in the U.S. by being the first to open a high-stakes bingo hall in 1979, already manages two Hard Rock casino-hotels in Florida. It beat 70 other bidders, said Jim Allen, Seminole Gaming Chief Executive.
    "This is a monumental transaction. The Seminole tribe competed with some of the biggest investment houses in the world. I believe there were over 70 bidders who started looking at this process back in July, and we sat down internally and we looked at the options, we looked at all the things that could be in front of us, and we realized that this is something that certainly the tribe had the financial ability to do it, but this was the step to go out in the world and play with the big boys."
    Allen said the company will not alter the Hard Rock name or logo to highlight its Seminole ownership.
    Thursday's deal includes 124 Hard Rock Cafes as well as hotels, casino hotels and two Hard Rock Live! concert venues. It also includes Hard Rock's collection of rock memorabilia, which fronts its cafes -- including a David Bowie Fender guitar and Madonna's black lace bustier.
    Allen said the Seminole tribe, which is exempt from paying taxes on transactions that occur on its reservations, set up a corporation that will pay tax like any other. He said, "The tribe had the ability to set this up as an LLC, Limited Liability Cooperation, which then any profits from it would have been tax-exempt. We believe that at this particular point, in order to compete in this type of arena, we set the company up to purchase the asset as a C corporation. Therefore, it is responsible, like any other C corp, to pay taxes."
    Nearly 3,300 Seminole Indians live in Florida reservations, descendants of a few hundred that escaped U.S. government attempts to relocate them in the mid 1800s. Besides earning money from gambling, the Seminole Tribe also produces citrus fruit, cattle and tobacco.
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