THe Indian tribe who bought the Hard Rock cafe

Less than a generation ago, the Seminole tribe of Florida were living a precarious life of poverty in the Everglade swamps. Yet last week, they acquired the whole Hard Rock restaurant chain from the Rank Group (LON: RNK) for a knock-down $965m. For the Indians, who arrived for the announcement at the Hard Rock Cafe in Times Square in traditional dress, the deal has huge symbolic significance. “Our ancestors sold Manhattan for trinkets,” said tribe council member Max Osceola Jr. “We’re going to buy Manhattan back, one hamburger at a time.”
 
The Seminoles have always been fighters, says the FT: they boast they never surrendered during the mid-19th century American Indian wars, despite coming close to extinction after being cornered in alligator-infested swamps by federal troops. After four decades, the hostilities ceased; but it wasn’t until the 1950s that the tribe acquired sovereign nation status. For the next 30 years, they eked out a living from tobacco, citrus fruit and cattle.

The Seminole Indians: from bingo halls to Hard Rock

Then, in 1979, under a colourful chief, James Billie, they became the first Native American tribe to move into gambling. The Seminoles’ first “high-stakes bingo hall” was a ramshackle affair, but it piled on the profits – paving the way for a thriving, Florida-based casino empire generating some $900m a year for the 3,300-strong tribe, notes USA Today. Others soon copied: the Seminoles were thus the pioneers of a mighty pan-American tribal gaming empire now pumping out more than $20bn annually. “They’re Rainmakers, in every sense of the word.”

Outwardly, the Seminoles are a model of democracy, channelling nearly two
thirds of profits back into the tribe, says The Guardian. But their ascent hasn’t lacked incident. In 2001, Billie – hitherto best known for having lost a finger during a wrestling match with an alligator – “was sacked over accusations of financial impropriety and for allegedly trying to force an employee, pregnant with his child, to have an abortion”. Meanwhile, a dispute over the financing of the tribe’s Hard Rock franchises in Tampa and Hollywood – acquired in 2001 – is still playing out in the courts, following a tax probe. And the Seminoles are not popular with the 200 residents of a mobile-home park who were summarily evicted to build the Hollywood site. 

The Seminole Indians: a ‘tremendous opportunity’

One thing’s for sure, says The Sunday Times, these guys “know how to throw a party”. When they opened their first Hard Rock venue, they topped the chain’s traditional guitar smashing ceremony with “a team of ten skydiving Elvis impersonators”. Now they’ve clinched the entire 124-strong chain, they’re promising something even better. The tribe has yet to outline its strategy, says The Independent, but “nothing too drastic needs to be done to the basic business plan”. Hard Rock (motto: “Love All, Serve All”) has been mainly in profit ever since its founders opened their first café in London in 1971. Last year, it made $68m on $493m turnover and, having seen off several rivals, notably Planet Hollywood, it remains much loved.

The Seminoles see “tremendous opportunity” in expanding the brand, but will leave its basic values untouched. “The only people who managed to put a damper on all the excitement were in the City of London,” says The Sunday Times. Rank Group shares fell heavily as analysts claimed the price fell short of the Hard Rock chain’s real value. However, “it is unlikely that too many members of the Seminole tribe will be complaining”.

The divergent fortunes of America’s indigenous tribes

The Seminoles’ Hard Rock triumph marks the first major international deal ever struck by an Indian tribe, says the Canadian National Post. It is unlikely to be the last. Where the Seminoles lead, other tribes follow; and the Seminoles have identified a pressing need to diversify beyond the ever-riskier world of gaming, with all its competitive, legal and tax challenges. Some 220 of America’s 560 Indian tribes now operate casinos on their reservations, says the FT, and the fortunes of many have been transformed. Success stories include the Winnebago Tribe of Nebraska, which used gaming to fund moves into property and internet business; the Choctaws of Mississippi, now the state’s second-largest employer; and the Salish and Kootenai tribes of Montana, who own a technology firm that counts Nasa and the US AirForce among its customers.

The result of all this is that economic growth among native tribes has been about three times the US rate since the early 1990s. However, the wealth is not evenly spread: more than a quarter of Native Americans live below the poverty line, a state of affairs that tends to lead to conflict, says
The Independent. Since individual tribes can decide who is a member and who is not (rules about bloodlines vary), disagreements are inevitable and those who are not granted tribal status end up suffering in terms of lost medical care, education and housing. “For more than four centuries…
native tribes have fought to keep their cultures alive”, concludes the FT. Their “divergent fortunes” suggest they “have failed to avoid the social inequality that mars the rest of US society”.