Max Osceola, a tribal council member of the Florida
Seminoles, has a sharp sense of humor. He calls himself a "high-tech redskin,"
as he casually shuts off his cell phone and sets his Blackberry on vibrate.
Osceola is sitting outside the Seminole corporate headquarters in Hollywood,
Fla., under an open-air, thatch-roof chikee, a traditional Seminole structure.
He’s almost ready to talk about his tribe’s $1 billion purchase of the Hard Rock
hotel and casino brand a few months ago, but first he wants to reminisce about
where he’s come from. Osceola remembers his childhood on the reservation. His mother
would take him to the lot where his father parked cars, and there they would
wait until his father had earned enough tips to buy food, their first meal of
the day. He laughs when he recalls the "commods" or commodities that the welfare
office would deliver to the reservation during the 1960s when Osceola was a
teenager. "The best were the big blocks of cheese that would come every month,"
he says. They made grilled cheese sandwiches and macaroni and cheese that they
lived on for weeks. Osceola still has the thick shoulders of a University of
Miami lineman—class of 1974—and they shake when he chuckles. "Every day is
good," he says, "but some days are better than others." Indeed. Last winter, investment bankers from Merrill Lynch
invited Osceola to ride with them in their Gulfstream IV while they traveled the
country to launch a $500 million bond offering to leverage part of the tribe’s
bid to buy Hard Rock International from its London-based parent, Rank Group. The
purchase would include the entire Hard Rock organization, including 26
restaurants, three casinos and three hotels, plus several licensing agreements
already in the works to build casinos in Macau and Biloxi, Miss. The offering
was oversubscribed by a factor of six, and the Seminoles turned away many hungry
investors before the road show ended. TOP VIEW
As Indian gaming explodes,
various tribes find themselves in a dizzying financial ascent. These groups
pursue aggressive expansion of their gaming interests, diversify into new
businesses outside of gaming, and work with other tribes for mutual benefit. But
as many tribes discover, success breeds resentment and envy among nonnatives,
coupled with saber-rattling by revenue-hungry politicians and lawsuits from
business partners. For America’s newest affluent group, wealth is both a
blessing and a challenge. |
For some tribes, the days of welfare and government cheese are
gone forever. As Indian gaming explodes, those tribes with the right properties
in the right locations, guided by seasoned casino executives, find themselves in
a dizzying financial ascent. "We want Wall Street to understand that you can do
business with a Native American tribe and make money," Osceola says. He’s no
longer laughing. And neither is anybody else. Tribes in Connecticut,
Wisconsin, Arizona, Washington, California and Minnesota are transforming
themselves into successful enterprises. Like the Seminoles, they pursue
aggressive expansion of their gaming interests and diversification into new
businesses outside of gambling, all while working with other tribes to mutual
benefit. But this newfound wealth brings to the surface the lingering
hostility of nonnatives, along with saber-rattling by politicians eager for a
cut of the profits. It also inspires lawsuits from estranged business partners
and opportunistic competitors. "When we sold trinkets by the roadside, nobody
cared if we made a hundred dollars or a thousand dollars," Osceola says. "All of
a sudden they see the profits that come in from gaming; and the local and
federal governments, they’re all here with their hands out, saying, ‘OK, how
much do I get?’"
Five years ago, the Seminole tribe was in no position to buy a
$1 billion company like Hard Rock. The tribe ran five bingo parlors in
warehouses on reservation land and bused in players from neighboring
communities. Enter Baltimore-based real estate developer David Cordish and his
Cordish Co. He approached the Seminoles with a plan to build casino complexes in
Tampa and Hollywood and set up a licensing agreement with Hard Rock to open the
only Hard Rock–themed hotels and casinos outside of Las Vegas. Cordish’s plan seemed promising, but a huge obstacle stood in
the way: Traditional slot machines are illegal in Florida. According to the
Indian Gaming Regulatory Act of 1988, tribes cannot engage in table games or
offer slot machines—also known as Class III gaming—in any state where that type
of gambling is not already legal. To create an exception, a tribe must
negotiate a compact with the state, which allows the state to demand a
revenue-sharing agreement. In Connecticut, a compact ensures that the state
collects $20 million or more per month from gaming tribes. California
renegotiated with the Pechanga Band of Luiseño Indians in 2006 to garner an
additional $3 billion payable over the life of its agreement, which ends in
2030. Florida, however, has no such compact. Governors have steadfastly refused
to negotiate one in the hopes that their obstinacy will keep Vegas-style gaming
out of the state.
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