Speaker 1: Face is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly from Bloomberg Radio. I'm Jason Kelly and I'm Carol Masser.
Speaker 1: Welcome to the Bloomberg Business Week Extra. It's our weekly
Speaker 1: podcast bringing you an in depth interview you will not
Speaker 1: hear anywhere else. Well and a very timely one, to
Speaker 1: say the least. Jim Allen, he is the chairman and
Speaker 1: CEO of hard Rock International. They've got their name on
Speaker 1: the stadium where the super Bowl is being played right here.
Speaker 1: Also spent a lot of money on a super Bowl
Speaker 1: ad with some two D venues including cafes, hotels, casinos,
Speaker 1: live music and the Rock Shop and within seventy six countries.
Speaker 1: Hard Rock International is also Jason going to be on
Speaker 1: everyone's radar for the Big Game. First, of course, because
Speaker 1: the super Bowl is gonna be played in hard Rock
Speaker 1: Stadium right and there's gonna be a big ad and
Speaker 1: it's gonna be one I predict that we're gonna be
Speaker 1: talking about in part because one of the stars is
Speaker 1: j Lo. She's also performing at the Big Game. Jim
Speaker 1: Allen is here with us, back with us, I should say,
Speaker 1: great to see you. A big week obviously for the
Speaker 1: whole enterprise in a lot of ways. Tell us what
Speaker 1: this means for the company? Oh amazingly excited about obviously
Speaker 1: Super Bowl Week and having a commercial you know, as
Speaker 1: part of the halftime festivities for a Super Bowl the
Speaker 1: hundred year anniversary of the NFL at hard Rock Stadium.
Speaker 1: So tell us though about why, I mean, you guys
Speaker 1: have not done right and add at the Super Bowl,
Speaker 1: So why why is now the right time? You know?
Speaker 1: It all kind of came together with the opening of
Speaker 1: the world's first guitar shaped hotel, the hundred year anniversary
Speaker 1: of the NFL hard Rock Stadium, and it just seemed like,
Speaker 1: if we're going to be involved, you know, let's get
Speaker 1: involved on a big time basis. But Jamal and tell
Speaker 1: us about the Super Bowl audience. What is it about
Speaker 1: that audience that you know, man, this is a place
Speaker 1: you want to run an ad. The most watched event
Speaker 1: in the world, over a hundred million people see this
Speaker 1: particular event that's just on the TV broadcast itself when
Speaker 1: you look at them online, it certainly creates a lot
Speaker 1: more media impressions, you know, for a global basis for
Speaker 1: the hard rock brand, and that's something we're very excited about.
Speaker 1: So tell us what you can about the ad. Obviously
Speaker 1: want to leave some for this everything you can about
Speaker 1: the ad because because of that audience people, as you
Speaker 1: know and I know we know some of them, there
Speaker 1: are people who tune in just for the ads. They
Speaker 1: don't even care about the game. So the stakes are high.
Speaker 1: As they say in your Business. Well, we have our
Speaker 1: verbals from the NFL and Fox UM, so we're still
Speaker 1: literally a few hours away of getting the final approvals.
Speaker 1: But certainly with that said, we didn't want it just
Speaker 1: to be a spot about the brand, so we kind
Speaker 1: of created this storyline. Obviously, hiring a director and producer
Speaker 1: like Michael Bay speaks for itself that we're committed here
Speaker 1: long term. So the spot is almost like a mini
Speaker 1: story that then eventually takes you to our websites, our
Speaker 1: relationship with j Low and frankly creates, you know, the
Speaker 1: introduction to the two million dollar sweepstakes which will be announcing.
Speaker 1: So Michael Bay, so is it going to have like
Speaker 1: an Armageddon Transformers kind of feel which will have a
Speaker 1: Hollywood feel? Promise you that did you guys really spend
Speaker 1: about five point six million to make this commercial. Well,
Speaker 1: give us an idea. Well, I could say we're north
Speaker 1: of ten million all in. Wow, was that a hard
Speaker 1: check to write? Well, rank with the spots themselves, you know,
Speaker 1: were approaching that, and you know Kennily were well north
Speaker 1: of ten million all in. And so Michael Bay tell
Speaker 1: us how he gets the nod? He lives in Miami,
Speaker 1: I think, and so he's got some connections here. Well,
Speaker 1: I think we wanted to create something that was special, right,
Speaker 1: and not just because of all the amazing movies that
Speaker 1: he's directed, but also did a lot of music videos,
Speaker 1: so he certainly understands the brand. Certainly, being in Miami
Speaker 1: made it a little bit easier as far as proximity,
Speaker 1: you know, to the guitar shaped hotel. But frankly, we
Speaker 1: did look at some other candidates and he by far
Speaker 1: was the one we were hoping for and when he
Speaker 1: said yes, we were certainly very excited. Yeah, it's really
Speaker 1: cool to have him and I can't imagine how how
Speaker 1: much fun it was to work with him. What is
Speaker 1: this a bet on Jim? Is it a bet on
Speaker 1: the hotel business? Is it on online gaming, which you
Speaker 1: guys have been moving certainly aggressively into what what is
Speaker 1: it about for you? What do you hope to get
Speaker 1: out of it? Well, I think the hard Rock brand, um,
Speaker 1: we know that, you know, coming up on our fifty
Speaker 1: year anniversary, is one of the most recognized brands in
Speaker 1: the world. But we want to continue to position as
Speaker 1: a brand of entertainment. And obviously the Super Bowl is
Speaker 1: much more than a football game. It's about entertainment when
Speaker 1: you think about people coming together in houses and all
Speaker 1: the different things they do. So being part of this
Speaker 1: was something that was very important for me to position
Speaker 1: hard Rock is not just a brand of hospitality but
Speaker 1: a brand of entertainment. But what do you hope that
Speaker 1: in terms of people say, oh, hard Rock, I didn't
Speaker 1: know that they I forgot that they're doing this, or
Speaker 1: they're doing this. Well, we are certainly hopeful that will
Speaker 1: drive some foot traffic to all the locations on a
Speaker 1: global basis. But you know, I don't think it's about
Speaker 1: quote unquote internet gambling. I think it's more about the
Speaker 1: brand itself, which obviously has many different sectors that we're
Speaker 1: looking for additional foot traffic to come to our facilities,
Speaker 1: both in person and then certainly online through through the
Speaker 1: online retail or internet gaming, etcetera. All right, so, speaking
Speaker 1: of foot traffic and eyeballs, a lot of people are
Speaker 1: going to be walking in and watching a game that's
Speaker 1: held in the stadium that you named. You paid I
Speaker 1: believe to un fifty million dollars for the for the
Speaker 1: naming rights, no small chunk of change. What was the
Speaker 1: obviously this is going back a little bit, but what
Speaker 1: was the thinking behind putting your name on that particular stadium?
Speaker 1: You know, we had been approached about this many times,
Speaker 1: and um, we looked at it and we said, no,
Speaker 1: it's probably not for us because we were concerned in
Speaker 1: different cities you're talking about, well, frankly in many cities,
Speaker 1: but but specifically in South Florida. Um. And once we
Speaker 1: understood that Mr Ross, Steve Ross, who's the owner of
Speaker 1: the Miami Dolphins and the actual physical structure itself, was
Speaker 1: committed to really create something that was more than just
Speaker 1: a football stadium. That piqued my interest. And you know,
Speaker 1: Steve would say that it was rather interesting, you know,
Speaker 1: back and forth between him and myself, but we were
Speaker 1: really excited when we saw he wanted to do things
Speaker 1: other than just football. So whether it's the Rolling Stones
Speaker 1: excuse me. You know, with their last show there beyond
Speaker 1: a jay Z you two, Formula one, you know, the
Speaker 1: Miami Open moving you know obviously from Biscayne Now to
Speaker 1: hard Rock Stadium. It's really an entertainment destination. And once
Speaker 1: we were convinced that was going to be part of
Speaker 1: the script, not just the football, very very excited. So
Speaker 1: tell us a little bit about that back and forth
Speaker 1: if you can. We know Stephen Ross, well, he's gonna
Speaker 1: be joining us actually later this week in a big
Speaker 1: conference we're doing down there. He's a tough businessman. You're
Speaker 1: a tough businessman. So what were you really sort of
Speaker 1: haggling over at the end of the day. I don't
Speaker 1: know if it was haggling, but I think it was
Speaker 1: more about making sure that we understood what the entertainment
Speaker 1: commitment was going to be obviously, then tying that back
Speaker 1: to the actual dollars associated with the sponsorship. And then
Speaker 1: most importantly, we did not want to do this on
Speaker 1: a short term basis. We were in and we were
Speaker 1: all in um or. We didn't want to end up
Speaker 1: in a situation where we've got a five year sponsorship
Speaker 1: and then hypothetically the name changes a guy, So you know,
Speaker 1: people are gonna know hard Rock Stadium for the next
Speaker 1: you know, well, actually we're already three years into the
Speaker 1: deal for the next seventeen years, and that was very
Speaker 1: important to us. So what does it mean for the
Speaker 1: future stadium. I do feel like there's more challenges for
Speaker 1: people time, new fans, younger fans. They want a different
Speaker 1: type of experience. So what does it mean for you
Speaker 1: guys in terms of what you'll be doing with that
Speaker 1: stadium going forward? Twenty years commitment, that's a long time,
Speaker 1: So what's the future. But you know, I think like
Speaker 1: in any physical building, you know, there's always a conversation
Speaker 1: about reinvesting in Capex and if we look at Steve's
Speaker 1: incredible success you know, look at the Hudson Yards here.
Speaker 1: I mean, obviously he and his companies have a long
Speaker 1: track record at continuing to reinvest to create a world
Speaker 1: class product. So frankly that was something that was very
Speaker 1: important to me um which we believe that the same
Speaker 1: will continue at hard Rock Stadium as we move forward.
Speaker 1: Even if you look at what's happened since we actually
Speaker 1: signed the deal, we certainly knew that Super Bowls were
Speaker 1: a strong possibility. Nothing is guaranteed, because obviously the NFL
Speaker 1: has to approve that, but it was very clear in
Speaker 1: the contract, which the NFL was aware of, that if
Speaker 1: a Super Bowl occurs, then certain financial and economic things
Speaker 1: may or may not happen. With the relationship between Mr
Speaker 1: Ross and ourselves. We believe the same will happen as
Speaker 1: we continue to grow the partnership on a long term
Speaker 1: and basis. And do you have any sense of how
Speaker 1: many super Bowls? I mean, obviously they don't go too
Speaker 1: far out, but I mean you could get multiple in uh,
Speaker 1: in that period of time. Well, first of all, there's
Speaker 1: been more Super Bowls in South Florida than anywhere else
Speaker 1: in the United States. Um, it's just such the it's
Speaker 1: such an ideal place for the super Bowl because obviously
Speaker 1: Miami is an international gateway city, tremendous amount of hotel rooms.
Speaker 1: You don't have to bring in cruise ships to try
Speaker 1: to put people for a place to stay. Um, the
Speaker 1: Guitar Hotel, all the amenities that we offer at at
Speaker 1: hard Rock. We just think it's a natural. So we're
Speaker 1: very hopeful that many more will come in the future.
Speaker 1: So what about some of the other properties, And I'm
Speaker 1: thinking about Atlantic City. I've spent some time down they
Speaker 1: are talking to UM, your team and other folks. UM,
Speaker 1: you were pretty critical about what's going on in Atlantic
Speaker 1: City recently in terms of the city itself, the safety. UM,
Speaker 1: first of all, tell us how the property is doing.
Speaker 1: Property is doing very well. You know, first year of
Speaker 1: first full year of operation actually rose to number two
Speaker 1: in the marketplace in gross gaming revenue. So that's something
Speaker 1: that we were very proud of. When you look at
Speaker 1: the amazing brands like Harrison Caesar's Tropicanical Nugget that have
Speaker 1: been there. You know, she has been there for over
Speaker 1: fourty years, so UM, huge database. You know, to go
Speaker 1: up and compete against that in the first year to
Speaker 1: get the number two, it's very important. Jim. Is it
Speaker 1: a different type of individual who's coming to hard rock
Speaker 1: down Atlantic City versus in the past. No doubt. We
Speaker 1: certainly focused on entertainment, you know Live three. I mean
Speaker 1: that was really about creating and not just music, right,
Speaker 1: so whether it's comedy with Harry Mendel, whether it's with
Speaker 1: the knea Lander family, with all the Broadway shows we're doing,
Speaker 1: and frankly really exceeded our expectations. I think it's a
Speaker 1: real compliment to the hard Rock brand, the knee Lander family.
Speaker 1: But frankly, Atlantic City because the numbers we did with
Speaker 1: Jersey Boys, we're really really strong. So now we're going
Speaker 1: to do four Broadway series this upcoming season. As far
Speaker 1: as the town itself, it's not that we feel it's
Speaker 1: quote unquote unsafe. We just feel as though that trenton
Speaker 1: the c r d A, you know, unfortunately, that mayor
Speaker 1: was arrested again. You know, we've seen this so many times.
Speaker 1: Now is the time to come together to say, look,
Speaker 1: we've had a company like hard Rock invest over five
Speaker 1: hundred million dollars. Let's live up to what we said
Speaker 1: we're going to do to take the next step together.
Speaker 1: But you did tell a p you said, frankly, the
Speaker 1: towns and worst shaped today than it was when we
Speaker 1: bought the building. When you're in a resort environment where
Speaker 1: safety and security is so important, if the city can't
Speaker 1: get something fixed as simple as the street lighting, that
Speaker 1: maybe a change is needed. I mean frustrating. Yeah, So
Speaker 1: that and and specifically street lights. You would think that
Speaker 1: the local municipality would be handled that. And if they
Speaker 1: don't understand that, if you don't keep up with street lights,
Speaker 1: then safety can become an issue. But to be fair,
Speaker 1: we haven't seen crime issues at hard Rock at all,
Speaker 1: to be fair to the city. But frankly, if you
Speaker 1: don't fix the street lights, you're going to have crime,
Speaker 1: and that's the issue. And so we've talked about Miami,
Speaker 1: talked a little bit about Atlantic City. Tell us where
Speaker 1: else you're sort of looking to, either to expand an
Speaker 1: existing footprint or areas of the country or even the
Speaker 1: world that might be more interesting to you going forward. Well,
Speaker 1: you know, Rate literally a few blocks away here in
Speaker 1: New York City, just was there yesterday morning at the site.
Speaker 1: We're up to about four number floor and our new,
Speaker 1: brand new hard Rock hotel over on forty Street. So
Speaker 1: we're very excited about that. UM. On a global basis,
Speaker 1: we're opening Dublin, Madrid, Barcelona, UM. You know, as we
Speaker 1: look expanding the hotel division, that's something that's very important
Speaker 1: to us. So Budapest another city where we're opening. Certainly
Speaker 1: we have gaming integrated resort deals in UM separate from
Speaker 1: the hotel in Barcelona, but also at port Aventura in
Speaker 1: Barcelona technically Catalonia. And then UM obviously Mexico City is
Speaker 1: a project that we're extremely excited about. What about Vegas,
Speaker 1: Let's dott you talk to us. In October we made
Speaker 1: some headlines. We got a great little story, UM are
Speaker 1: what's happening in Vegas? You know, we'll have to ask
Speaker 1: our friends at Virgin UM. We saw a story last
Speaker 1: week and now they're back on UM. We're very hopeful.
Speaker 1: We wish everybody the best of luck. UM. Certainly, the
Speaker 1: hard rock in Las Vegas is not a property we
Speaker 1: control our own, UM, so it's supposed to close, we believe,
Speaker 1: next weekend and be reconverted into a Virgin you know.
Speaker 1: And if that happens, we certainly wish everybody the best
Speaker 1: of laws. And that opens up the possibility for you
Speaker 1: down the road. We made a a transaction we completed
Speaker 1: with Brookfield back in September of two thousand and sixteen
Speaker 1: that if the brand comes off of it, then the
Speaker 1: brand rights because we already bought the rest of the
Speaker 1: brand rights back at that period, but specifically Las Vegas
Speaker 1: then comes back to us. How quickly would you like
Speaker 1: to make the footprint in Vegas of all of that
Speaker 1: plays out. You know, I'm very very neutral and conservative
Speaker 1: on Las Vegas right now. We certainly understand long term,
Speaker 1: Las Vegas is always going to be the gambling capital
Speaker 1: of the United States. But when you look at room
Speaker 1: rates and you look at the product, you know, it's
Speaker 1: just kind of in a neutral position right now. So
Speaker 1: I think it's important to be building um at the
Speaker 1: right time in Las Vegas. Clearly we've seen you know,
Speaker 1: ten plus years of economic growth. Um. I'm not an economist,
Speaker 1: but certainly something is going to happen sometime in the
Speaker 1: next year or two. So I think timing in Las
Speaker 1: Vegas is very important. We would love to be opening
Speaker 1: if if our brand was available to be utilized, say
Speaker 1: more on a strip coming out of an economic situation,
Speaker 1: rather than going into one. Alright, so back to football
Speaker 1: for a second. Speaking of which, Las Vegas they're going
Speaker 1: to get a football team, so maybe that makes Las
Speaker 1: Vegas a little more interesting. Um, you know, tell us
Speaker 1: about what this moment means for sort of your leadership
Speaker 1: of the company. I mean, this is a big week
Speaker 1: as we've been talking about Super Bowl coming to your stadium.
Speaker 1: Your name's on it, big super Bowl. Add like, what
Speaker 1: where do you sort of put yourself in sort of
Speaker 1: what you want to get done with this brand right now. Well,
Speaker 1: I think that when we look at the two point
Speaker 1: two billion dollars that we just you know finished in
Speaker 1: capital investment, completing construction wise in Tampa, in Hollywood, and
Speaker 1: to have those open on time and very humbly, you know,
Speaker 1: frankly exceeding um projections in a major way. I mean,
Speaker 1: they're doing very very well. We opened Sacramento, we opened Cabo.
Speaker 1: It was a very very busy quarter for us. The
Speaker 1: last quarter of last year we closed on the Cincinnati transaction,
Speaker 1: which now we'll be converting that into a hard rock
Speaker 1: you know, Destination announced, Rockford announced Indiana, So you know,
Speaker 1: we've been very, very busy. So I think all that
Speaker 1: coming together is very very favorable for the brand. But
Speaker 1: at the same time, it's very important to me that
Speaker 1: we do not expand too rapidly. You know. I keep
Speaker 1: telling the team, you know, we've got to be cognizant
Speaker 1: that all the little things matter. And I think really
Speaker 1: that's our focus for you know, finish up what we have.
Speaker 1: We're always going to sign between fifteen and twenty international
Speaker 1: cafes and you know, between ten and twelve hotels, but
Speaker 1: really focusing on, you know, getting the service and all
Speaker 1: those things to the highest level possible. What what's your
Speaker 1: outlook because it's interesting to hear you talk because obviously
Speaker 1: you're you're finishing up, you know, building a bunch of hotels,
Speaker 1: and those are commitments that you made a while ago
Speaker 1: or so on. So but I'm just curious about the outlook.
Speaker 1: You know. It sounds like a little bit of cautiousness
Speaker 1: in there, is there? Listen. I understand that the election
Speaker 1: you know, in November could have tremendous impact on what
Speaker 1: may or may not occur with the economy. Right, but
Speaker 1: even if things stay the same, you know, and I
Speaker 1: might referring to the presidency, but the Senate in the House,
Speaker 1: and who knows what may or may not happen here. Um,
Speaker 1: I think one has to be cautious that if you
Speaker 1: look historically, you know, over ten years of economic growth,
Speaker 1: now lapping numbers were quote unquote, the new tax advantage
Speaker 1: you know for corporations, you know, is already in play.
Speaker 1: There certainly has been obviously some regulatory you know, things
Speaker 1: from a business perspective that people think are positive. I
Speaker 1: recognize remember Hard Rocks a brand about love all serve
Speaker 1: all and save the planet. There's another side of that,
Speaker 1: and we're very, very respectful to that. But I just
Speaker 1: think one has to be cautious. This can't go on forever,
Speaker 1: right and so do you then how does that sort
Speaker 1: of play through to the business decisions you make, maybe
Speaker 1: for the balance of you know, fundamentally, if we go back.
Speaker 1: You know, when I first met the Seminole tribe, when
Speaker 1: we started this business back in late two thousand, only
Speaker 1: two thousand and one, it was always about focusing on
Speaker 1: the balance sheet. So you know, we're still levered. If
Speaker 1: they're just expanding two point two billion dollars in Florida
Speaker 1: and only one point six one point seven. You know,
Speaker 1: we imposed on ourselves in Wall Street did not to
Speaker 1: de lever, so we'll be back down to one or
Speaker 1: under within the next five five and a half years.
Speaker 1: So we'll always focus on a very strong investment grade
Speaker 1: balance sheet to whether these storms. We don't understand how
Speaker 1: some companies get out there and make these commitments for
Speaker 1: short term EPs and then obviously when times get rough
Speaker 1: and you know, room rates move ten fift twenty hours,
Speaker 1: how do you generate the cash to pay all this
Speaker 1: amazing interest that people obviously get themselves into one thing
Speaker 1: that Tason I'd like to ask her, Betty, and last question,
Speaker 1: what's your biggest existential threat right now facing you in
Speaker 1: terms of your company your business? I think that you know,
Speaker 1: the world economy is something that we always have to
Speaker 1: be focused on. And literally in three weeks, you know,
Speaker 1: if you looked at futures this morning down four hundred plus,
Speaker 1: you know obviously the markets down hundred and eighties, some
Speaker 1: points are so right now, literally in days, the world
Speaker 1: economy can change that may or may not be within
Speaker 1: you know, us businesses control. And since we're in seventy
Speaker 1: six countries, I think it's very important for us to
Speaker 1: always be focused on the world economy. Right And do
Speaker 1: you worry about this particular situation right now coming out
Speaker 1: of China for your business? Well, your right hospitality, right
Speaker 1: this is you know we've closed to cafes already. You
Speaker 1: know what our sins End hotel was most likely going
Speaker 1: to close until we navigate through what may or may
Speaker 1: not occur, always being respectful in this particular case to
Speaker 1: the Chinese government. You know they have over forty million
Speaker 1: people now in some type of quarantine, So certainly no
Speaker 1: matter what your viewpoint is. You have to keep an
Speaker 1: eye on that. But do I think it's going to
Speaker 1: have a major impact on our profitability? No, I do not,
Speaker 1: even though it's the lunar New Year, right, this is
Speaker 1: such an important time in terms of travelers over in Asia,
Speaker 1: well certainly on a global basis when we look at
Speaker 1: the Chinese there, you know, not quite but another couple
Speaker 1: of years be the largest traveling group in the world.
Speaker 1: So I think that's always important. But you know, these
Speaker 1: things seem to kind of come and go. Um. I
Speaker 1: don't think, you know obviously if it continues, but it
Speaker 1: seems like the world health organizations are stepping in and
Speaker 1: people are becoming very cognizant very quickly. And that was
Speaker 1: Jamal and the chairman and CEO of hard Rock International.
Speaker 1: Great to catch up with him ahead of the big
Speaker 1: game because they really are involved in it in so
Speaker 1: many different ways, and also just to get his global perspective.
Speaker 1: This is a company that is in seventy six countries,
Speaker 1: just to see what he says is going on in
Speaker 1: terms of the consumer and the world well exactly, and
Speaker 1: especially at a time when businesses are starting to wrestle
Speaker 1: with the implications of this virus that started in China,
Speaker 1: where that goes from here. They are clearly keeping an
Speaker 1: eye on it. You've been listening to Bloomberg Business Week Extra.
Speaker 1: We sort of tune into Bloomberg Business Week Radio Live
Speaker 1: Monday through Friday at two pm Wall Street Time. I'm
Speaker 1: Bloomberg Radio. I'm Carol Masser, and I'm Jason Kelly. This
Speaker 1: is Bloomberg