WEBVTT - Hard Rock’s $1.5 Billion Expansion in Florida

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<v Speaker 1>This is Bloomberg Business Week with Carol Masser and Jason

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<v Speaker 1>Kelly on Bloomberg Radio. All right, so hospitality, gaming and

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<v Speaker 1>we love to talk about all of it, and no

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<v Speaker 1>one better to talk about it. And really at the

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<v Speaker 1>center of all that Jim Allen. He's the chairman of

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<v Speaker 1>hard Rock International, also the CEO of Seminole Gaming, based

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<v Speaker 1>down in Fort Lauderdale, Florida, here in our Bloomberg Interactive

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<v Speaker 1>Broker's studio today. Jim, great to have you with us.

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<v Speaker 1>Thanks for having us. All right, well, I want to

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<v Speaker 1>start just before we even get into it, asking you

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<v Speaker 1>about New Orleans. Obviously that has been top of mind

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<v Speaker 1>for a lot of people in your business, certainly top

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<v Speaker 1>of mind for you, specifically what's the latest and what

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<v Speaker 1>happens next? You know, first thing and most importantly, our

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<v Speaker 1>prayers go out to the families of the victims and

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<v Speaker 1>those that were injured, and also the supporting businesses around

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<v Speaker 1>the site itself. So that is really where our focus

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<v Speaker 1>is right now. A major tragedy and we look forward

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<v Speaker 1>to working with the mayor of the city officials to

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<v Speaker 1>try to move forward, right and will you ultimately rebuild

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<v Speaker 1>in New Orleans. We certainly love New Orleans. UM Our

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<v Speaker 1>Cafe has been there for over twenty years, an amazing site,

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<v Speaker 1>but certainly we have to work with the local partners

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<v Speaker 1>and and obviously be respectful to the situation we're in now,

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<v Speaker 1>right exactly, UM, do you I have you guys that

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<v Speaker 1>have gotten to the bottom of it in terms of

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<v Speaker 1>what happened. No, you know, the site is really still

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<v Speaker 1>um you know, and it's in a search mode if

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<v Speaker 1>you will, So no one is really going down that

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<v Speaker 1>particular path at this time. And as a respect to

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<v Speaker 1>the victims. All right, so let's talk about the expansion

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<v Speaker 1>that's happening heavily underway. This is an iconic brand in

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<v Speaker 1>a lot of ways. You and I were talking about

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<v Speaker 1>a little bit before we came on air. Uh, the

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<v Speaker 1>guitar Hotel. Tell me about that. Well, we are opening

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<v Speaker 1>the world's for s guitar shaped hotel UM this Thursday,

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<v Speaker 1>octob really excited about it. Is an iconic structure. Nothing

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<v Speaker 1>else in the world has ever been designed similar to it,

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<v Speaker 1>and we look forward to an amazing opening. Well, tell

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<v Speaker 1>us a little bit about that, and and tell us

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<v Speaker 1>about kind of what kind of space you're hoping to

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<v Speaker 1>create and who you're hoping to attract. It's a one

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<v Speaker 1>point five billion dollar expansion and hard Rock being one

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<v Speaker 1>of the most globally recognized brands, this really becomes the

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<v Speaker 1>flagship when we look at what we do both in

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<v Speaker 1>the restaurant business, the retail certainly the gaming business online gaming.

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<v Speaker 1>But this is truly an integrated resort and a true destination,

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<v Speaker 1>and that really takes us to a whole another level.

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<v Speaker 1>All Right, So I gotta talk a little Vegas. Um.

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<v Speaker 1>You know, you and I were talking again before we

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<v Speaker 1>came on air. I mentioned that I had stayed at

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<v Speaker 1>at that property, which is not your property, and that's

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<v Speaker 1>important because where the hard Rock Hotel and casino once

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<v Speaker 1>we're that branding is coming off Brandon, I believe is

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<v Speaker 1>rebranding that that would seem to provide an opening for you.

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<v Speaker 1>What are your Vegas plans? Yeah, when we actually purchased

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<v Speaker 1>hard Rock back in two thousand seven, Peter Morton still

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<v Speaker 1>owned in Las Vegas. So, um, we look at this

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<v Speaker 1>as a as a great opportunity for our brand. We

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<v Speaker 1>certainly recognize the amazing success that the brand has had

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<v Speaker 1>off strip, but if something comes up in the future,

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<v Speaker 1>we certainly would look forward to seeing what opportunities may

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<v Speaker 1>be created in that particular environment. And you would think

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<v Speaker 1>on strip at this point is that where you'd be looking.

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<v Speaker 1>I don't think we're looking at this point, but I

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<v Speaker 1>would say that, you know, as we look at opportunities. Um,

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<v Speaker 1>certainly on strip is one of the possibilities. We're hearing

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<v Speaker 1>Planet Hollywood and Valleys, maybe it for sale any interest? Well, Um,

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<v Speaker 1>Planet Hollywood's very interesting and obviously the Bally's Corner is

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<v Speaker 1>certainly one of the more legendary corners on the Las

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<v Speaker 1>Vegas Strip. But it would be premature for us to

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<v Speaker 1>say that we want to do something at this time,

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<v Speaker 1>but certainly down the road, Um, if the transaction with

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<v Speaker 1>RGIN is completed then and certainly that is one of

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<v Speaker 1>the possibilities. There's also the Cosmopolitan. I'm just gonna say

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<v Speaker 1>that rumor has been out there for quite some time,

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<v Speaker 1>but no, we're not interested in purchasing the Cosmopolitan. We

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<v Speaker 1>can go official on that one. Do they do you

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<v Speaker 1>have more capacity to borrow after all the expansion you've

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<v Speaker 1>done so far. You know, one of the great things

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<v Speaker 1>we've been able to do is focus on the balance sheet.

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<v Speaker 1>In the history of our industry. We're the only organization

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<v Speaker 1>that has ever enjoyed an investment grade rating from Moody's

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<v Speaker 1>Standard and Poor and Fitch simultaneously. We're levered a little

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<v Speaker 1>around one point five coverages, you know, approaching twenty times.

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<v Speaker 1>So that is the strength of the organization. So yes,

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<v Speaker 1>if the right opportunity comes along, we're certainly very competitive

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<v Speaker 1>in Japan right now. So clearly you know that equity

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<v Speaker 1>check will be substantial if we're selected. But you know,

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<v Speaker 1>if the right opportunity comes along, our balance sheet is

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<v Speaker 1>obviously incredibly strong with the investment grade ratings, all right,

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<v Speaker 1>So Jim, as we look across the country, it feels

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<v Speaker 1>like we're think a moment when especially when it comes

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<v Speaker 1>to sports betting. You know, a lot of enthusiasm around that,

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<v Speaker 1>just candidly, a lot of enthusiasm around uh gambling in general.

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<v Speaker 1>Where do you go next? Or their states? I mean Illinois, Indiana,

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<v Speaker 1>I mean are those places where you may be doing

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<v Speaker 1>more well? You know, we've been selected both in Illinois

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<v Speaker 1>in Rockford and in Indiana. So there are two projects

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<v Speaker 1>that we just recently announced that our casino projects, you know,

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<v Speaker 1>with hospitality and other amenities. Certainly the online gaming business

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<v Speaker 1>were already in that obviously active in the Atlantic City market,

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<v Speaker 1>and the same with sports betting. We definitely believe that

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<v Speaker 1>both of those sectors on a going forward basis over

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<v Speaker 1>the next three to five ten years are going to

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<v Speaker 1>be very important for the growth of the business on

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<v Speaker 1>a long term basis. Can you talk a bit more

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<v Speaker 1>about Atlantic City? I was there or was it about

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<v Speaker 1>a year year and a half are just before hard

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<v Speaker 1>Rock opened, uh, and was doing one of our shows

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<v Speaker 1>down there, I mean Atlantic City. Uh, it's not it's

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<v Speaker 1>hard not to be impressed by the investment going back in,

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<v Speaker 1>but we've seen these cycles before and it just seems

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<v Speaker 1>like a hard nut to crack. Well, I would say

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<v Speaker 1>two things. We are incredibly excited about the success that

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<v Speaker 1>we've had, you know, basically open a little over a

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<v Speaker 1>year now for I believe it's six months running strong

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<v Speaker 1>number two in the marketplace, right behind MGMs property to Burgata,

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<v Speaker 1>so to literally surpass Caesars in Tropicana and Harris and

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<v Speaker 1>all those other brands gold Nuggets that have been there

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<v Speaker 1>for decades. We're very proud of those results. I will

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<v Speaker 1>tell you we are disappointed that some of the things

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<v Speaker 1>that we were believe what happened from both the State

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<v Speaker 1>of New Jersey and and the city of Atlantic City

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<v Speaker 1>are moving a little slower than what we had hoped for.

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<v Speaker 1>So we continue to try to work with Governor Murphy

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<v Speaker 1>to stress the importance, you know, of the size of

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<v Speaker 1>this market. It's still the second largest gaming market in

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<v Speaker 1>the United States at two point six billion dollars and

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<v Speaker 1>frankly grew double digit last year. But the infrastructure Atlantic

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<v Speaker 1>City continues to need additional assistance. All right, Jim, only

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<v Speaker 1>got about third seconds left. You've been in the hospitality

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<v Speaker 1>business for a long time. You've seen cycles come and go.

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<v Speaker 1>Where are we when it comes to the consumer right now,

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<v Speaker 1>the health of the especially the tourist consumer. I would

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<v Speaker 1>say caution is probably something that would be advisable. Um,

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<v Speaker 1>we've basically been on a nine ten year run in

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<v Speaker 1>the hotel sector here, you know, with multiple hitting fourteen

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<v Speaker 1>sixteen times. You mentioned the Cosmo, you know, going for

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<v Speaker 1>guidance of three billion dollars um. So I think caution

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<v Speaker 1>is very um prudent at this particular point. Um. We

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<v Speaker 1>certainly think the industry obviously still has some tremendous upset.

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<v Speaker 1>All right, great to spend some time with you. Thank

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<v Speaker 1>you so much for coming by. Jim Allen is a

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<v Speaker 1>chairman of hard Rock International, the CEO of Seminal Gaming

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<v Speaker 1>as well, based down in Fort Lauderdale, Florida.