Businessweek Extra - Hard Rock’s Jim Allen

Also spent a lot of money on a super Bowl ad with some two D venues including cafes, hotels, casinos, live music and the Rock Shop and within seventy six countries. Hard Rock International is also Jason going to be on everyone's radar for the Big Game. First, of course, because the super Bowl is gonna be played in hard Rock Stadium right and there's gonna be a big ad and it's gonna be one I predict that we're gonna be talking about in part because one of the stars is

j Lo. She's also performing at the Big Game. Jim Allen is here with us, back with us, I should say, great to see you. A big week obviously for the whole enterprise in a lot of ways. Tell us what this means for the company? Oh amazingly excited about obviously Super Bowl Week and having a commercial you know, as part of the halftime festivities for a Super Bowl the hundred year anniversary of the NFL at hard Rock Stadium.

So tell us though about why, I mean, you guys have not done right and add at the Super Bowl, So why why is now the right time? You know? It all kind of came together with the opening of the world's first guitar shaped hotel, the hundred year anniversary of the NFL hard Rock Stadium, and it just seemed like, if we're going to be involved, you know, let's get involved on a big time basis. But Jamal and tell

us about the Super Bowl audience. What is it about that audience that you know, man, this is a place you want to run an ad. The most watched event in the world, over a hundred million people see this particular event that's just on the TV broadcast itself when you look at them online, it certainly creates a lot more media impressions, you know, for a global basis for the hard rock brand, and that's something we're very excited about.

So tell us what you can about the ad. Obviously want to leave some for this everything you can about the ad because because of that audience people, as you know and I know we know some of them, there are people who tune in just for the ads. They don't even care about the game. So the stakes are high. As they say in your Business. Well, we have our verbals from the NFL and Fox UM, so we're still literally a few hours away of getting the final approvals.

But certainly with that said, we didn't want it just to be a spot about the brand, so we kind of created this storyline. Obviously, hiring a director and producer like Michael Bay speaks for itself that we're committed here long term. So the spot is almost like a mini story that then eventually takes you to our websites, our relationship with j Low and frankly creates, you know, the introduction to the two million dollar sweepstakes which will be announcing.

So Michael Bay, so is it going to have like an Armageddon Transformers kind of feel which will have a Hollywood feel? Promise you that did you guys really spend about five point six million to make this commercial. Well, give us an idea. Well, I could say we're north of ten million all in. Wow, was that a hard check to write? Well, rank with the spots themselves, you know, were approaching that, and you know Kennily were well north of ten million all in. And so Michael Bay tell

us how he gets the nod? He lives in Miami, I think, and so he's got some connections here. Well, I think we wanted to create something that was special, right, and not just because of all the amazing movies that he's directed, but also did a lot of music videos, so he certainly understands the brand. Certainly, being in Miami made it a little bit easier as far as proximity,

you know, to the guitar shaped hotel. But frankly, we did look at some other candidates and he by far was the one we were hoping for and when he said yes, we were certainly very excited. Yeah, it's really cool to have him and I can't imagine how how much fun it was to work with him. What is this a bet on Jim? Is it a bet on the hotel business? Is it on online gaming, which you guys have been moving certainly aggressively into what what is it about for you? What do you hope to get

out of it? Well, I think the hard Rock brand, um, we know that, you know, coming up on our fifty year anniversary, is one of the most recognized brands in the world. But we want to continue to position as a brand of entertainment. And obviously the Super Bowl is much more than a football game. It's about entertainment when you think about people coming together in houses and all

the different things they do. So being part of this was something that was very important for me to position hard Rock is not just a brand of hospitality but a brand of entertainment. But what do you hope that in terms of people say, oh, hard Rock, I didn't know that they I forgot that they're doing this, or they're doing this. Well, we are certainly hopeful that will drive some foot traffic to all the locations on a global basis. But you know, I don't think it's about

quote unquote internet gambling. I think it's more about the brand itself, which obviously has many different sectors that we're looking for additional foot traffic to come to our facilities, both in person and then certainly online through through the online retail or internet gaming, etcetera. All right, so, speaking of foot traffic and eyeballs, a lot of people are going to be walking in and watching a game that's

held in the stadium that you named. You paid I believe to un fifty million dollars for the for the naming rights, no small chunk of change. What was the obviously this is going back a little bit, but what was the thinking behind putting your name on that particular stadium? You know, we had been approached about this many times, and um, we looked at it and we said, no, it's probably not for us because we were concerned in different cities you're talking about, well, frankly in many cities,

but but specifically in South Florida. Um. And once we understood that Mr Ross, Steve Ross, who's the owner of the Miami Dolphins and the actual physical structure itself, was committed to really create something that was more than just a football stadium. That piqued my interest. And you know, Steve would say that it was rather interesting, you know, back and forth between him and myself, but we were really excited when we saw he wanted to do things

other than just football. So whether it's the Rolling Stones excuse me. You know, with their last show there beyond a jay Z you two, Formula one, you know, the Miami Open moving you know obviously from Biscayne Now to hard Rock Stadium. It's really an entertainment destination. And once we were convinced that was going to be part of the script, not just the football, very very excited. So tell us a little bit about that back and forth

if you can. We know Stephen Ross, well, he's gonna be joining us actually later this week in a big conference we're doing down there. He's a tough businessman. You're a tough businessman. So what were you really sort of haggling over at the end of the day. I don't know if it was haggling, but I think it was more about making sure that we understood what the entertainment commitment was going to be obviously, then tying that back

to the actual dollars associated with the sponsorship. And then most importantly, we did not want to do this on a short term basis. We were in and we were all in um or. We didn't want to end up in a situation where we've got a five year sponsorship and then hypothetically the name changes a guy, So you know, people are gonna know hard Rock Stadium for the next you know, well, actually we're already three years into the deal for the next seventeen years, and that was very

important to us. So what does it mean for the future stadium. I do feel like there's more challenges for people time, new fans, younger fans. They want a different type of experience. So what does it mean for you guys in terms of what you'll be doing with that stadium going forward? Twenty years commitment, that's a long time,

So what's the future. But you know, I think like in any physical building, you know, there's always a conversation about reinvesting in Capex and if we look at Steve's incredible success you know, look at the Hudson Yards here. I mean, obviously he and his companies have a long track record at continuing to reinvest to create a world class product. So frankly that was something that was very important to me um which we believe that the same will continue at hard Rock Stadium as we move forward.

Even if you look at what's happened since we actually signed the deal, we certainly knew that Super Bowls were a strong possibility. Nothing is guaranteed, because obviously the NFL has to approve that, but it was very clear in the contract, which the NFL was aware of, that if a Super Bowl occurs, then certain financial and economic things may or may not happen. With the relationship between Mr

Ross and ourselves. We believe the same will happen as we continue to grow the partnership on a long term and basis. And do you have any sense of how many super Bowls? I mean, obviously they don't go too far out, but I mean you could get multiple in uh, in that period of time. Well, first of all, there's been more Super Bowls in South Florida than anywhere else

in the United States. Um, it's just such the it's such an ideal place for the super Bowl because obviously Miami is an international gateway city, tremendous amount of hotel rooms. You don't have to bring in cruise ships to try to put people for a place to stay. Um, the Guitar Hotel, all the amenities that we offer at at hard Rock. We just think it's a natural. So we're very hopeful that many more will come in the future. So what about some of the other properties, And I'm

thinking about Atlantic City. I've spent some time down they are talking to UM, your team and other folks. UM, you were pretty critical about what's going on in Atlantic City recently in terms of the city itself, the safety. UM, first of all, tell us how the property is doing. Property is doing very well. You know, first year of first full year of operation actually rose to number two in the marketplace in gross gaming revenue. So that's something

that we were very proud of. When you look at the amazing brands like Harrison Caesar's Tropicanical Nugget that have been there. You know, she has been there for over fourty years, so UM, huge database. You know, to go up and compete against that in the first year to get the number two, it's very important. Jim. Is it a different type of individual who's coming to hard rock down Atlantic City versus in the past. No doubt. We

certainly focused on entertainment, you know Live three. I mean that was really about creating and not just music, right, so whether it's comedy with Harry Mendel, whether it's with the knea Lander family, with all the Broadway shows we're doing, and frankly really exceeded our expectations. I think it's a real compliment to the hard Rock brand, the knee Lander family. But frankly, Atlantic City because the numbers we did with Jersey Boys, we're really really strong. So now we're going

to do four Broadway series this upcoming season. As far as the town itself, it's not that we feel it's quote unquote unsafe. We just feel as though that trenton the c r d A, you know, unfortunately, that mayor was arrested again. You know, we've seen this so many times. Now is the time to come together to say, look, we've had a company like hard Rock invest over five hundred million dollars. Let's live up to what we said we're going to do to take the next step together.

But you did tell a p you said, frankly, the towns and worst shaped today than it was when we bought the building. When you're in a resort environment where safety and security is so important, if the city can't get something fixed as simple as the street lighting, that maybe a change is needed. I mean frustrating. Yeah, So that and and specifically street lights. You would think that

the local municipality would be handled that. And if they don't understand that, if you don't keep up with street lights, then safety can become an issue. But to be fair, we haven't seen crime issues at hard Rock at all, to be fair to the city. But frankly, if you don't fix the street lights, you're going to have crime, and that's the issue. And so we've talked about Miami,

talked a little bit about Atlantic City. Tell us where else you're sort of looking to, either to expand an existing footprint or areas of the country or even the world that might be more interesting to you going forward. Well, you know, Rate literally a few blocks away here in New York City, just was there yesterday morning at the site. We're up to about four number floor and our new, brand new hard Rock hotel over on forty Street. So we're very excited about that. UM. On a global basis,

we're opening Dublin, Madrid, Barcelona, UM. You know, as we look expanding the hotel division, that's something that's very important to us. So Budapest another city where we're opening. Certainly we have gaming integrated resort deals in UM separate from the hotel in Barcelona, but also at port Aventura in Barcelona technically Catalonia. And then UM obviously Mexico City is a project that we're extremely excited about. What about Vegas, Let's dott you talk to us. In October we made

some headlines. We got a great little story, UM are what's happening in Vegas? You know, we'll have to ask our friends at Virgin UM. We saw a story last week and now they're back on UM. We're very hopeful. We wish everybody the best of luck. UM. Certainly, the hard rock in Las Vegas is not a property we control our own, UM, so it's supposed to close, we believe, next weekend and be reconverted into a Virgin you know. And if that happens, we certainly wish everybody the best

of laws. And that opens up the possibility for you down the road. We made a a transaction we completed with Brookfield back in September of two thousand and sixteen that if the brand comes off of it, then the brand rights because we already bought the rest of the brand rights back at that period, but specifically Las Vegas then comes back to us. How quickly would you like to make the footprint in Vegas of all of that plays out. You know, I'm very very neutral and conservative

on Las Vegas right now. We certainly understand long term, Las Vegas is always going to be the gambling capital of the United States. But when you look at room rates and you look at the product, you know, it's just kind of in a neutral position right now. So I think it's important to be building um at the right time in Las Vegas. Clearly we've seen you know, ten plus years of economic growth. Um. I'm not an economist, but certainly something is going to happen sometime in the

next year or two. So I think timing in Las Vegas is very important. We would love to be opening if if our brand was available to be utilized, say more on a strip coming out of an economic situation, rather than going into one. Alright, so back to football for a second. Speaking of which, Las Vegas they're going to get a football team, so maybe that makes Las Vegas a little more interesting. Um, you know, tell us about what this moment means for sort of your leadership

of the company. I mean, this is a big week as we've been talking about Super Bowl coming to your stadium. Your name's on it, big super Bowl. Add like, what where do you sort of put yourself in sort of what you want to get done with this brand right now. Well, I think that when we look at the two point two billion dollars that we just you know finished in capital investment, completing construction wise in Tampa, in Hollywood, and to have those open on time and very humbly, you know,

frankly exceeding um projections in a major way. I mean, they're doing very very well. We opened Sacramento, we opened Cabo. It was a very very busy quarter for us. The last quarter of last year we closed on the Cincinnati transaction, which now we'll be converting that into a hard rock you know, Destination announced, Rockford announced Indiana, So you know, we've been very, very busy. So I think all that

coming together is very very favorable for the brand. But at the same time, it's very important to me that we do not expand too rapidly. You know. I keep telling the team, you know, we've got to be cognizant that all the little things matter. And I think really that's our focus for you know, finish up what we have. We're always going to sign between fifteen and twenty international cafes and you know, between ten and twelve hotels, but really focusing on, you know, getting the service and all

those things to the highest level possible. What what's your outlook because it's interesting to hear you talk because obviously you're you're finishing up, you know, building a bunch of hotels, and those are commitments that you made a while ago or so on. So but I'm just curious about the outlook. You know. It sounds like a little bit of cautiousness in there, is there? Listen. I understand that the election you know, in November could have tremendous impact on what

may or may not occur with the economy. Right, but even if things stay the same, you know, and I might referring to the presidency, but the Senate in the House, and who knows what may or may not happen here. Um, I think one has to be cautious that if you look historically, you know, over ten years of economic growth, now lapping numbers were quote unquote, the new tax advantage you know for corporations, you know, is already in play.

There certainly has been obviously some regulatory you know, things from a business perspective that people think are positive. I recognize remember Hard Rocks a brand about love all serve all and save the planet. There's another side of that, and we're very, very respectful to that. But I just

think one has to be cautious. This can't go on forever, right and so do you then how does that sort of play through to the business decisions you make, maybe for the balance of you know, fundamentally, if we go back. You know, when I first met the Seminole tribe, when we started this business back in late two thousand, only two thousand and one, it was always about focusing on the balance sheet. So you know, we're still levered. If they're just expanding two point two billion dollars in Florida

and only one point six one point seven. You know, we imposed on ourselves in Wall Street did not to de lever, so we'll be back down to one or under within the next five five and a half years. So we'll always focus on a very strong investment grade

balance sheet to whether these storms. We don't understand how some companies get out there and make these commitments for short term EPs and then obviously when times get rough and you know, room rates move ten fift twenty hours, how do you generate the cash to pay all this amazing interest that people obviously get themselves into one thing that Tason I'd like to ask her, Betty, and last question, what's your biggest existential threat right now facing you in

terms of your company your business? I think that you know, the world economy is something that we always have to be focused on. And literally in three weeks, you know, if you looked at futures this morning down four hundred plus, you know obviously the markets down hundred and eighties, some points are so right now, literally in days, the world economy can change that may or may not be within

you know, us businesses control. And since we're in seventy six countries, I think it's very important for us to always be focused on the world economy. Right And do you worry about this particular situation right now coming out of China for your business? Well, your right hospitality, right

this is you know we've closed to cafes already. You know what our sins End hotel was most likely going to close until we navigate through what may or may not occur, always being respectful in this particular case to the Chinese government. You know they have over forty million people now in some type of quarantine, So certainly no matter what your viewpoint is. You have to keep an eye on that. But do I think it's going to

have a major impact on our profitability? No, I do not, even though it's the lunar New Year, right, this is such an important time in terms of travelers over in Asia, well certainly on a global basis when we look at the Chinese there, you know, not quite but another couple of years be the largest traveling group in the world. So I think that's always important. But you know, these

things seem to kind of come and go. Um. I don't think, you know obviously if it continues, but it seems like the world health organizations are stepping in and people are becoming very cognizant very quickly. And that was Jamal and the chairman and CEO of hard Rock International. Great to catch up with him ahead of the big game because they really are involved in it in so many different ways, and also just to get his global perspective.

This is a company that is in seventy six countries, just to see what he says is going on in terms of the consumer and the world well exactly, and especially at a time when businesses are starting to wrestle with the implications of this virus that started in China, where that goes from here. They are clearly keeping an eye on it. You've been listening to Bloomberg Business Week Extra. We sort of tune into Bloomberg Business Week Radio Live Monday through Friday at two pm Wall Street Time. I'm

Bloomberg Radio. I'm Carol Masser, and I'm Jason Kelly. This is Bloomberg