AP file photo by Lynne Sladky|
The Seminole Hard Rock Hotel and Casino in Hollywood, Fla. The Seminole Tribe of Florida finalized its $965 million purchase of Hard Rock International’s restaurants, hotels and related businesses from U.K.-based The Rank Group PLC on March 5.
Seminoles buy out Hard Rock
Native Americans first tribe to purchase multinational firm
By Adrian Sainz
AP Business Writer
BIG CYPRESS SEMINOLE INDIAN RESERVATION, Fla. — The Seminole Tribe of Florida fought the U.S. Army in the 1800s and resisted forced migration to Oklahoma. A century later, they rescued themselves from poverty by becoming the first tribe to venture into the gambling business.
Now is the time for an ambitious new challenge — being the first American Indian tribe to buy a global company.
The Seminoles finished their $965 million purchase of Hard Rock International’s restaurants, hotels and related businesses from U.K.-based The Rank Group PLC on March 5. Its 3,300 members are now in the position to add to their already impressive wealth.
But the acquisition also speaks to something deeper, a respect for an ancestry of “unconquered warriors” whose kin are motivated by history and preserving their culture.
“I don’t think the measure of how much money comes in to the tribe is the benchmark,” tribe Vice Chairman Max Osceola said. “I think the measurement is what you do with it. Money only buys convenience. It doesn’t buy character.”
Where it started
American Indian tribes are profiting from gambling, and Florida is where it all began.
The Seminoles became the first U.S. tribe to offer high-stakes gambling in 1979, when they opened a bingo hall in Hollywood, Fla.
The bingo hall survived several court challenges, and in 1988, Congress passed the Indian Gaming Regulatory Act, which established federal regulatory authority and standards.
Since then, Indian gaming has greatly expanded. It generated $22.6 billion in revenue in 2005, up 14.6 percent from the previous year, according to the Indian Gaming Industry Report by Alan Meister, an economist with Analysis Group.
Florida’s tribes — the Seminoles and the Miccosukee Tribe of Indians — placed sixth among the highest grossing states with more than $1.26 billion in revenue in 2005 — up 36.1 percent from 2004, the study showed.
The Seminoles account for a large chunk of the state’s Indian gaming revenue, and 90 percent of their budget comes from gambling. They have seven casinos, including thriving Hard Rock Hotel and Casinos in Hollywood and Tampa.
Indian tribes do not pay corporate income taxes on tribal revenue. But for their Hard Rock deal, the Seminoles created a separate taxpaying corporation to own and manage Hard Rock that’s subject to public disclosures.
“Entering the commercial arena would require them to disclose more information that they already do and that’s a quantum leap for many tribes,” said David Katz, gaming and lodging analyst for CIBC World Markets.
The tribe’s likeliest move toward expanding Hard Rock will probably be into commercial markets where gambling is allowed, such as Atlantic City, Katz said. And Osceola said other gaming tribes have contacted the Seminoles to see if they can use the Hard Rock name at their facilities.
These moves have the potential to increase the tribe’s revenue, which would only mean more prosperity for its members. But where does all that money go?
The road cuts a winding path toward the north. Buzzards swoop down and pick at a carcass, forcing cars to swerve onto soft shoulders that give way to canals. Cows graze in the midmorning sun, as white egrets perch on mangroves lining the canals. In the distance stand stately cypress trees, a reminder of the location — Florida’s Everglades.
A sign welcomes motorists to the 35,000-acre Big Cypress Seminole Indian Reservation, established in 1936.
The Seminoles spent decades fighting the U.S. Army, and fled south to the Everglades to avoid the forced migration known as the Trail of Tears in 1830. President Tyler ordered the end of military actions against the Seminoles in May 1842, and the tribe never surrendered to the U.S. Army.
The Seminoles settled in the Everglades, and were mired in poverty for decades. Tribal elders recall days when they had to hunt their own food and lived without utilities.
The tribe sold tax-free tobacco products while also raising cattle and growing citrus. Still, it was gambling that significantly increased the members’ yearly dividend, which the tribe won’t publicly discuss. The Associated Press reported in 2003 that each Seminole receives $42,000 a year — before the two Florida Hard Rock hotels and casinos got off the ground.
At a glance, the Big Cypress reservation looks like any small town. There’s a school and a day care, a gymnasium and a government building.
But there are also signals this is not a regular town. There’s a long airstrip, and a hangar holding a private jet and helicopters.
Just east, next to an abandoned bingo hall, sits an air-conditioned tent housing about 40-plus slot machines. A tourist attraction allows visitors to see alligator wrestling and journey through the Everglades on airboats and swamp buggies.
This reservation and others in the state are the final destinations for the tribe’s money. They govern themselves and pay for health services, education, housing and public safety with a combination of tribal money and federal assistance. But the federal involvement also leads to frequent clashes with the government.
“Today we don’t have military wars, but we have to fight what I call paper bullets,” Osceola said.
Terry Porter is principal at the Ahfachkee School, where about 150 students from kindergarten through 12th grade learn reading, writing, math, science. But they also require daily cultural classes, held outside under chickee huts, where students plant crops, weave clothing, cook and learn other tasks that fall into the Seminole tradition.
About 20 percent of the school’s funding comes from the federal Bureau of Indian Education, with the rest coming from the Seminoles. The school is getting two new portable classrooms because of an expected rise in enrollment.
Porter, 42, says the students are receptive to learning about the culture, but it’s a challenge in an era where technology and media pervade everyday life.
“It’s real important that we do help our children step into that modern world, but at the same time try to help them understand to never forget where you came from, never forget what your people went through to get you where you’re at today,” Porter said.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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