The Barona Tribe of Mission Indians recently landed a $200 million deal to fund the construction of the Barona Valley Ranch Resort & Casino. Andy Laub, executive v.p. financing of consulting firm VCAT, says the funding will go toward the construction of a hotel and casino. In March of 1999, voters in the State of California amended the state Constitution to allow tribes to enter the gaming industry. Laub says the tribe is seeking financing now due to competition from other tribes building gaming resorts. "The market is competitive, and we wanted to get better market share," he said. Gaming casinos must be built on Indian reservations, and since there's a limited number of space, that fuels the competition from various tribes, Laub added.
Laub, who has prior experience securing deals for Indian tribes, says it's similar to securing a deal for a company. "They must waive their status as a sovereign nation to have the financing arbitrated," said Laub. Profits from casino resorts must go toward facilities like community centers, museums and elder housing for the tribe.
The deal was oversubscribed, with the tribe initially going for $175 million. Laub said some banks won't finance gaming deals, so that limited the pool of potential bidders. Bank of America and Wells Fargo are the co-leads and co-agents.