Developer sues Seminoles, accuses tribe of rigging sale of Hard Rock empire

By John Holland
South Florida Sun-Sentinel

The Seminole Tribe cut a secret deal guaranteeing it would win control of the Hard Rock Cafe empire at the expense of shareholders and potential bidders, according to a lawsuit filed by a rival suitor.

The Cordish Co., which built the tribe's lucrative casinos in Hollywood and Tampa, accuses the Seminoles of orchestrating a bid-rigging scheme in the months before buying the Hard Rock trademark, memorabilia and most of its properties for $965 million. Baltimore-based Cordish claims it would have paid substantially more but was blocked from bidding because the tribe conspired with some Hard Rock executives to discourage competition and keep the price low.

In return, the Seminoles promised those executives jobs in its new company and other, unspecified "financial rewards," the lawsuit alleges.

"Defendants' conduct in colluding to preclude plaintiffs from bidding ... was unfair and deceptive," Miami attorney Marty Steinberg wrote for Cordish and its affiliated contractor, Power Plant Entertainment.

The "lawsuit has no merit," the Seminole Tribe and its new company, Seminole Hard Rock Entertainment, said Tuesday in a prepared statement.

The suit, filed Friday in Broward Circuit Court, seeks triple damages that would likely reach hundreds of millions of dollars if it is successful, based on financial projections of future profits announced at the time of the Dec. 7 sale.

When Rank Group LLC of London, which is not named as a defendant in the suit, announced the sale of its Hard Rock Cafe International to the Seminoles, both sides hailed the deal as historic. For the first time, an American Indian tribe was expanding boldly into the international financial arena.

But financial analysts quickly questioned the price, with many saying the Rank Group could have made as much as $100 million more. Since the sale was announced, Rank's stock price has fallen almost 15 percent, according to the lawsuit.

Rank shareholders are scheduled to vote in London on Monday whether to ratify the sale.

In its statement, the Seminole Tribe said it "was awarded the right to buy Hard Rock International after a lengthy and open bidding process. In a simple statement, this is just David Cordish being a sore loser."

The reference to Cordish, president and chairman of the company, shows how much the relationship between the developer and the tribe has eroded in the past three years, despite both sides becoming enormously wealthy during their partnership. Cordish Co. and Power Plant built two Seminole Hard Rock hotels and casinos that have generated more than $1 billion in profits since opening in 2003.

Cordish, which negotiated the initial Hard Rock and tribe partnership, stands to make at least $1.5 billion over the course of its various agreements with the Seminoles, which run between 10 and 15 years. The tribe's profits are expected to top $17 billion over that period, both sides have said.

But that hasn't translated into a happy relationship. There are three lawsuits, plus countersuits, pending in state and federal courts stemming from the partnership, including one by Donald Trump claiming Cordish Co. and others stole his idea of building a Seminole casino hotel.

The latest lawsuit involves Rank Group's attempts to sell its Hard Rock group and streamline the company, which has significant holdings in the United Kingdom. According to letters and other correspondence attached to the lawsuit, Cordish and Power Plant set out to buy Hard Rock in August 2005, only to be told by Rank executives it wasn't for sale.

Then early last year, Rank announced it would seek outside bidders and contacted Merrill Lynch to aid in the sale. Cordish, Power Plant and their financial adviser, Goldman Sachs, tried entering the fray but were rebuffed, the lawsuit says.

As all this was going on, Seminole executives and Hamish Dodds, president of Hard Rock Cafe International USA, were working out a deal that would guarantee him a job with the Seminoles' new company if he helped derail bids by Cordish and other qualified bidders, according to the lawsuit.

"Mr. Dodds' conduct in persuading Rank and Merrill [Lynch] not to deal with Cordish, PPE or Goldman Sachs ... was based solely with ulterior purposes for his own benefit," the lawsuit said.

Dodds was the only Hard Rock executive to be accused by name in the suit.

Calls to Dodds at Hard Rock International headquarters in Orlando were referred to John Gogarty of New Jersey-based Coyne Public Relations. Gogarty could not be reached for comment, despite several attempts by phone. In its statement, the tribe said the latest lawsuit is a continuation of the ongoing legal battles between the Seminoles and Cordish.

In June, the tribe filed a $2 billion lawsuit seeking to break a development agreement it signed with Cordish to develop its sprawling properties in Hollywood and Tampa. The tribe does not accuse Cordish of wrongdoing, but said the projects have been so financially successful that Cordish's share of the profits is simply too large. They claim Indian tribes are protected from entering -- even knowingly -- into contracts that give too much tribal money to outside entities.

In 2005, the tribe made more than $500 million in profit, while Cordish received about $150 million, according to statements contained in the lawsuits.