CNB looks to diversify tribal business interests

Assistant Editor – @cp_tsnell
04/08/2005 12:53 PM
Main Cherokee Phoenix
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CATOOSA, Okla. - Sitting atop a hill overlooking the Cherokee Hills Golf Course and the Cherokee Casino & Resort stands a building that once served as both the golf course’s clubhouse and as Cherokee Nation Enterprises corporate headquarters. With the clubhouse and CNE headquarters relocated, the building now serves as the corporate office to Cherokee Nation’s newest venture, Cherokee Nation Businesses.

If the venture were a car, it might still have that new car smell because CNB has no corporate logo and only one official employee in Chief Executive Officer Jim Carrington.

Carrington, a Cherokee citizen, said CNB officially began in June 2004 when the tribe invested about $200,000 in CNB stock to diversify its business interests.

He said currently CN is primarily involved in two businesses with its sister companies - gaming through CNE and manufacturing for government entities through Cherokee Nation Industries. CNB was formed to "broaden those (business) interests beyond those two primary concerns," Carrington said.

"So we will look at a wide variety of other businesses to get into," he added. "They can range anywhere from environmental services, land-man services, oil-and-gas services to real estate, and we’re at the stage right now where we’re trying to identify the best means to diversify."

Carrington said deciding what business areas to move into will follow a "relatively strict process," but the corporation must first come up with a long-term strategy for diversifying the tribe’s business interests.

"We first will identify the landscape that we are operating in," he said. "What are the assets that the Nation has? What are some of the competitive advantages that we would have by being owned by the Cherokee Nation? What are our competitors doing? Once we understand the landscape, then we will understand what advantage we will bring to bare when we either partner with other companies or chose to invest in another company or to start a company."

After nailing down a long-term strategy, CNB must then put it to use. Carrington said this implementation of strategy would probably come by partnering with existing businesses. "We’re going to diversify into areas that we currently don’t operate in," he said. "That means we have no real strong experience in some of these areas, and the best way to jump into those is to partner with people who have already been there. We will most likely partner people who have a strong operating history, who have been in that business for quite a while and who have a strong management team."

Carrington said if and when CNB enters into joint ventures with existing companies, CNB would start out as a majority owner, owning at least 51 percent, and probably retain an option to buy out the company over several years.

"We’re not likely to invest in a company as a minority investor," he said. "One reason is because we want to bring to our partner the advantages of Cherokee Nation. You can’t really do that unless it’s an entity that’s owned as a majority by the Nation."

The tribe’s business advantages include the ability of getting government contracts, gaming and tax advantages. However, one right that American Indian tribes enjoy - sovereign immunity - isn’t being looked at as a business advantage by Carrington.

"It’s an issue that outside companies are leery of," he said. "Unfortunately, until we can really educate business partners, that may be seen by them as a disadvantage, but we will address that by a case-by-case basis to the extent that we can protect and retain our sovereign immunity when dealing with a business partner."

Carrington said sovereign immunity may have to be waived to some degree in order to venture into some business areas such as government contracts. He said the federal government insists that tribes waive sovereign immunity in order to qualify as a Section 8 (A) company that is given government contract preferences.

Carrington said CNI is an 8 (A) company and that he sees CNB probably going toward that status as well so it can help CNI grow.

"Not only is CNB seeking to diversify, but CNB is also helping CNI and CNE grow to the extent that we can," he said. "But I think that our first priority is to really help bring in government contracts for CNI, but we still need to step back and develop the long-term strategy for diversification. Until we do that, I can’t really identify any certain area that we really want to jump into. We would however like to narrow the opportunities to those that will bring jobs to Cherokee Nation and hopefully as well bring them to northeastern Oklahoma."

CNB closed one transaction one month after it began in 2004 when it started Cherokee ConneX, a wireless internet access company that serves the Tulsa metro area with CN owning 51 percent.

"We are close to completing a couple of other partnerships," Carrington said. "We can’t divulge those yet because we have partners that are involved."

"It is part of the vision of Cherokee Nation," he said of the tribe’s desire for business diversification. "They want to maintain cultural identity, have a strong government and have economic self-reliance. The economic self-reliance requires, as a nation, that we have our own source of funds rather than relying on federal funds. Stage 1 is that we need to grow businesses for economic self-reliance."

Seeking economic self-reliance is a challenge for many tribes including the Cherokee Nation, but Carrington said he believes he’s up to the challenge as CEO of CNB.

"Luckily, I’ve had experience in transactions as a lawyer with a couple of large companies," he said. "I’ve done corporate development work, which is really the buying and selling of companies. I’ve been a merger and acquisitions attorney, so a lot of what we’re doing, I’m familiar with."

About the Author
Travis Snell has worked for the Cherokee Phoenix since 2000. He began as a staff writer, a position that allowed him to win numerous writing awards from the Native American Journalists Association, including the Richard LaCourse Award for best investigative story in 2003. He was promoted to assistant editor in 2007, ... • 918-453-5358
Travis Snell has worked for the Cherokee Phoenix since 2000. He began as a staff writer, a position that allowed him to win numerous writing awards from the Native American Journalists Association, including the Richard LaCourse Award for best investigative story in 2003. He was promoted to assistant editor in 2007, ...


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