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spk01: Greetings and welcome to the Hall of Fame Resort and Entertainment Company second quarter 2021 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, you may press star 1 on your telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Anne Grafis, Executive Vice President of Public Affairs. Thank you. Please go ahead.
spk00: Good morning, and thank you for joining us for our second quarter 2021 earnings conference call. Our latest press release, supplemental slides, and 10Q were posted yesterday evening after market hours. These documents can be found in the investor relations section of our website at hsreco.com. After this brief introduction, Michael Crawford, President and CEO, will give us an overview of the quarter's results and an update of our fiscal year priorities. Jason Crum, our CFO, will then provide detailed analysis of the quarter's financial results and update our fiscal 2021 outlook. During today's call, we will make forward-looking statements that reflect the company's current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties. I encourage you to read the full disclosure concerning forward-looking statements in the earnings press release. Additionally, please note that the company uses non-GAAP results to evaluate performance internally, as detailed in the press release. We have posted a supplementary side deck summarizing the quarterly results. These slides can be accessed on our website and will be archived there along with a replay of this call. If you have additional questions after today's call, please contact me directly. It's now my pleasure to turn the call over to President and CEO Michael Crawford.
spk04: Thanks, Anne. Good morning, everybody. I have a few words that I'd like to just start with. The first are football is back, and it's back very strongly, and we're excited about it. Couldn't have been a greater enshrinement week for us. We hosted the game, of course, between Pittsburgh and Dallas. Just a couple of interesting stats for you. 7.3 million viewers, up 37% from 2019. It was broadcast on Fox, the largest viewed game on Fox since 2011. So two very storied programs. coming to life here at Tom Benson Hall of Fame Stadium at the Hall of Fame Village, powered by Johnson Controls. Absolutely an electric environment for those of you who watched. I'm sure you would agree. And then we went on to Entryment. And we hosted two Entryment classes. Again, I want to congratulate all of the inductees. Some fantastic speeches, really compelling, just exciting for the sport of football. But you can tell these gentlemen really want to do great things, both on the field and off the field, they've done them on the field and now it's their turn to have an impact elsewhere as well. And enshrinement, the two events that we broadcast on the NFL Network and on ESPN as well, over two million viewers in aggregate for those events. So why is that important? Well, it gave us a chance to create one of a kind experiences for our guests, things that you couldn't see in and around campus, VIP tailgate parties, balloon festivals, parades, all the types of things that you would expect to go with big events like we hosted. It gave us significant brand uplift, brand awareness as we welcomed tens of thousands of people to our campus watching these types of events and seeing all the great progress that I'll talk about around construction was really exciting and the commentary that came back to me was it was fantastic to see the progress in some of the buildings that were already coming out of the ground the things that we're going to be able to be present in the future for our guests to experience. And then lastly, of course, for our shareholders and our company, it generated multiple different types of revenue streams for us that these types of events absolutely are predicated upon. So a big week, something that is hard to replicate, but again, we've had multiple things over the last month. During that week, we also hosted our first co-produced live broadcast with World Chase Tag, the number one show on ESPN2 that day. It has since been re-aired on ESPN and on a lot of the ESPN social channels. So exciting for our media division to get out of the gate with such a successful opportunity there. Our Women's Football Alliance Championships, again, very well attended. Exciting to be able to play host to ESPN2. women who have played for decades in this sport and franchises that have been around for equally as long. I want to congratulate the Boston Renegades, the Derby City Dynamite, and the Nevada Storm. They all won their divisions, and the All-Star Game was also really an exciting game to watch. And then lastly, it was a week where we got to ring the bell for the NASDAQ closing, and being listed on the NASDAQ has been an honor. But again, more brand awareness for our company and all the great things that we've been doing across our three business units. We announced a partnership with eSports Entertainment Group. I'll talk about that in just a moment. And we also relaunched our NFT business, and I would say we've relaunched it quite successfully, and I'll talk about that as well. Let me turn to construction because I know there's been questions – being asked and a lot of thought being given around construction progress. We are no different than most out there today as it relates to challenges. Construction labor is challenging, logistics, trucking and shipping challenging, and yet our team of project managers and our partners in Turner and Hunt and Wealthy Construction Group have all done a very good job of contingency planning. We remain on course to finish our Center for Excellence. Some of you may have seen that in the background of all of those live events that I just spoke about. We remain on course to finish that in late Q3. We've continued the tenanting process there, and those tenants are expected to move in in Q4 and start generating revenue out of that facility as well, Q4. The fan engagement area at the east end zone, complete. So brand new Jumbotron, brand new area for fans to enjoy all of the different types of events, sport and non-sport, that we have in our stadium, and another way to monetize a particular area of that location. We've continued the expansion of our Village Youth Sports Complex, and we've done that for two reasons. One, we want to continue to bring great amenities for those participating in our youth sports, and two, we want to expand our capabilities to hold even larger events. This year we expect to welcome, again, hundreds of thousands of participants and fans into this area, so enhancing that was really important to us, and it's under construction and scheduled to finish in Q2 of next year. I've talked about site work, roadway realignments, all the things that we need to do from a utility point of view. That work continues. It's necessary for expanding and developing. Just in another week or two, we will be pouring foundations for our retail promenade. And then our steel arrives for that in late September, and we'll start to erect those buildings, which is really, really exciting. And then the last thing I'd say is our Center for Performance. We have done the site formation work for our Center for Performance Recall. This is our indoor facility that will allow us to expand sport to basketball and volleyball, wrestling, band and cheerleading competitions. But it will also give us a facility where we can host big events. Could be concerts, but it could be other types of festivals, home and garden shows, et cetera. Again, expanding upon our business model and creating year-round attendance to the destination, flattening out seasonality. And this work is really progressing still in a very challenged timeframe. I mean, we all understand what COVID is and where it's at with the Delta variant. But we've challenged our team and our team has responded to make sure that we are contingency planning, as I said, but also adjusting for timing, logistics timing, and making sure that we take advantage of, you know, pricing when we can. and also being pragmatic about when we want to price other items to come in. Our goal is still to finish construction by 2023 with the water park being the last destination that will be there simply because of how long that destination takes to create. That leads me into probably one of the most important topics that I'm sure is on everybody's mind. And we spoke about this at the last call, construction loan and timing of a construction loan. Let me start off by saying that construction loan itself, that actual facility, is a part of the overall construction financing that we have continued to put in place. We have several term sheets and, in fact, signed two of them this week for different types of construction financing. Not the traditional construction loan, in essence, But we're wanting to be very pragmatic about the timing of the facility that we put in place. Construction lending is expensive right now. Again, a tough environment for construction lending as evidenced by some of our peers in different industries in the leisure tourism industry. And our philosophy is we want to make a good decision versus a quick decision. As I just said, construction is continuing. If you know about creating destinations, you'll know that the actual construction loan itself is the last piece of the capital structure that gets spent. You start with your equity, you move through the other public and private financing vehicles that you put in place, and then into the construction loan. So while we have still continued a lot of conversations about the actual construction loan itself, and those conversations are continuing right now, again, we're gonna make the best decision for our shareholders and for our company. And we want a capital structure that is going to be cost effective. And so we're trying to place multiple pieces of that capital structure in place with different types of construction lending to take full advantage of that. And in fact, I would say lower cost construction financing so that when you aggregate overall, it's a much more affordable financing tool and vehicle that we have in place. I hope that helps people understand that Our goals haven't changed. The goalposts haven't moved. But we are being pragmatic, as I said, and quick is not best. Smart and timing of making that decision is really what we're focused on. So as that progresses, we will provide more updates to you on that. The other one that I'm sure is on everybody's mind, because I get asked this question a lot, Mike, what about sports betting? And where are you with sports betting? Recall that we signed a deal with Esports Entertainment Group, and we did that for two reasons. One, they are the absolute best in esports gaming, and we always made, for our gaming division, esports a priority. We were fortunate with Grant Johnson and his team to sign a deal that we think is going to bring tens of thousands of people to our destination for esports tournaments. We're building an esports helix complex There will be an educational component attached to this so we feel very good about what eSports and how eSports will be represented in our location, but if eSports were to become part of the sports betting gaming environment here in Ohio if it were to be legalized we also have a partner that has strong capabilities on the eSports betting front and so we stay very closely connected to what I would refer to as the legislators, the key legislators that are forming the bill and that are putting the bill forward for approval. I think we are well positioned as a company and as a destination to achieve our goal of having a license, a sports betting license at the appropriate time. I think the target of September is one that's been publicly articulated by the legislators And so we are continuing our conversations with key sports betting partners in hopes that we will have a sports betting partner in place as that legislation becomes law. This has not changed from the last update that I provided. I'm excited about the conversations we're having. People are excited about Ohio. I should say companies are excited about Ohio in general and the access to Ohio. And again, as a company that's at the crossroads between sports and entertainment, I think it makes complete sense for us to be in the sports betting environment, and partners, I think, are seeing that. And so we're working diligently, our entire team is, on having a partnership in place at the appropriate time. Let me move on to our Q2 overview and some of the big plays, I would say, that we made during Q2. And across all of our business units, we are really focused on creating synergy between the different business verticals that I spoke about, theme, destination-based assets, our Hall of Fame Village Media Company, and our gaming division as well. Entryment Week is a good example of that. People came, they stayed in our hotel, they hosted big events in our hotel, food and beverage sales were very high, concessions at the stadium, admissions at the stadium, a lot of outside entertainment and hosting. But the synergy between the other things that we had going on, we took advantage of that weekend to host our World Chase Tag. And World Chase Tag, as I mentioned, number one program on ESPN2 and has been reshown on ESPN platforms. We also took advantage of that platform to launch our next round of NFTs that, by the way, are selling quite well into the hundreds with our athletes that we've launched. And I would say the product that we've partnered with Dolphin and created and listed on FTX has been absolutely phenomenal, well received, easily accessed, and so we think as we listen to our investors through our first launch, we've taken significant steps forward in making this product compelling, accessible, and something that is very collectible in the digital space. In terms of our destination-based assets, As you would expect, our Doubletree, the hotel was sold out multiple times during Q2 and over-entryment weekend. ADR is improving quarter over quarter. Weekend occupancy is improving in line with industry trends. And the data is showing that the hotel industry overall is improving and reaching a more normalized state. Of course, you could ask the question about the variant and the impact. We keep a very close eye on that. But as I've stated before, we sort of provide the gas to fuel the engine ourselves. Our youth sports program, our concerts, our festivals, things that we're hosting here, Women's Football Alliance Championships, we're filling our own hotel, and that generates our own business. And more of that will be coming, and I'll talk about that as we look forward to Q3. We're already pre-wired to have a lot of occupancy in our hotel asset. I talked about the Center for Excellence on track, on time for completion. And in fact, I'm being told slightly under budget, which is a good thing. We feel very good about our ability to project manage these assets. We stay close to the commodities markets, steel and lumber. We believe things are starting to normalize a bit, even though some of the logistics challenges we're having. And then again, hosting numerous events in our Tom Benson Hall of Fame Stadium throughout Q2. Multiple more now booked in Q3 and Q4 from small to large. We had a lot of success in our east end zone that we completed. The environment we've created in our stadium really is one of a kind. You feel immersed in whatever event that you're attending between the jumbotron at the east end and our video mesh wall that is still being constructed at our west end on the Constellation Center for Excellence. Retail, we signed partnerships with multiple more groups, Starbucks, our esports entertainment group for that Helix location in our retail promenade. And that's in addition to Shula's and Topgolf Swing Suites. And then also in our Center for Excellence, the agreement we signed with NFL Alumni Health to become a tenant there to really do a lot of innovative work in the area of brain trauma. So exciting progress on partnerships as well. From a media perspective, A lot of new things going on. Existing products that we announced last year, we did make the announcement that the NFL Alumni Academy is gonna come back for a second season. Again, programming for our stadium, programming for our media division. We are out now selling that program in partnership with Sports Illustrated and Studio 101 for the second season. So really looking forward to bringing that docuseries to life. I talked about World Chase Tag co-producing that first live event for our media company. I couldn't have been more proud of the team and how that turned out. NFTs, you know, an unplanned business, but showing how nimble we could be. Listening to our investors, launching with greater quantity, slightly different product, and I think it's been very well received. We have six players out there today with multiple NFT projects. digital collectible assets, and our intention is to add more. If you think about the access that we have to the NFL, previous NFL players, the alumni players, our Hall of Famers, and the archives in the Pro Football Hall of Fame, our intention is to create great digital collectible material that our guests will come back to and look at and buy over and over again. Inspired is the show that we have begun production on, or I should say will begin production on later this year. It will air in 2022. And it really does highlight, I think, the essence we're about, inspirational stories of NFL players doing great things in their communities. And so another show that our media company is intimately involved with. And then Heisman to Hall, I spoke about last time, the 10 players ever to have been inducted into the Pro Football Hall of Fame and also won a Heisman Trophy. More men having walked on the moon than having those two distinctions bestowed upon them. Now funded, going into production, and we hope to have a partnership for distribution on that product in the very near term as well. And by the way, just to mention, that is a good example of not only is it a media project, a documentary that we can developed, but it also fueled part of our NFT program with four of those Heisman to Hall players becoming part of the NFT collectible series that we have. Our gaming division, listen, if you're excited about fantasy, you better be excited about our Hall of Fantasy League. I mean, this is a one-of-a-kind league. Draft happening this Sunday, 5 p.m. Starts with the Vegas Pocket Kings, Seattle Hays, Philadelphia Powder Kegs, New York Bodega Cats, Boston Barflies, LA Sidekicks, Ohio Goats, Chicago Hog Mollies, Texas Yollers, Atlanta Hot Wings. I mean, if you're not jazzed about those names, those logos, those brands, I mean, come on. These are great, great fantasy football franchises. But more importantly, we announced our commissioner, Terrell Davis. I could not have more respect for this guy. If you've seen some of his recent communication, I had a chance to talk with him over in Triamond. He is over the moon jazzed about this league. He asked me about his powers and his authority in the league and how he could dole those out. You know, I simply said, TD, make it happen. You're our guy. And he is a guy of integrity and a guy who has a lot of desire to make this fantasy league work. Going beyond that, we announced our front offices. And again, as we always said, the tie to us is not just brand. It's professional football expertise. And it comes in two forms in our front offices. professional fantasy football expertise with people who have played fantasy and have had great success in fantasy, comprising sort of the GM area of our front office, and then professional football players who have had great success on the field who have also been excited about the fantasy opportunity. This is a multi-billion dollar industry. And when you look at guys like Joe Thomas and Patrick Chung and Harry Douglas and others that we have put in the front offices, These are guys that have played on the field of battle and know exactly how to think about the guys that are playing today. So they're providing real expertise to those that are already staking teams. I would encourage you as the draft and leading up to the draft to go and stake a team. Our Ohio Goats team is staked out. But as we continue to stake more teams, we may reopen that. And that's a good sign that the demand is already there without even knowing the teams. because of the faith in the brand and the faith in the front offices and Terrell Davis as our commissioner. A lot of credibility around this league, but more importantly, I think we're bringing an experience that no one has ever had before. And so, even recently, our commissioner issued a challenge where we're offering sort of a match stake for a certain number of stakers coming into our ecosystem. There is a possibility, a slight possibility I've talked about before, These teams play each other virtually. The league, the schedule is out. If you go onto our app that we also launched, you'll see the games every week and how they're being played. Sports betting could become a part of our ecosystem there as well, either this year or next. And I think most importantly, it gives us another opportunity to engage with fans at our destination, potentially hosting live drafts in the future, although our draft on the 15th will be virtual. We did have our camera crew here and Jeff Eisenberg here capturing a lot of emotion from the players that will be aired during our draft this coming Sunday. So really excited to continue to build our gaming environment with our Hall of Fantasy League. And in esports I spoke about this Helix complex that we're going to have will host some of the big tournaments around the country and one of those were planning on in the near term, sort of after the construction of the facility and the completion of that sort of Q2 next year. Sports betting is still a big part of what we're doing. As I said, we're monitoring and staying diligent around partnerships. And then lastly, we added more partner sponsors. And we have found a lot of excitement across the different types of sponsorship categories that we have, American Standard, Hendrickson, you saw we just announced Anheuser-Busch as well for our music festival, and multiple others in the queue that I think are going to add great value to us in terms of our capabilities, our ability to speak to different audiences, and also to monetize and bring more revenue to the bottom line. So a lot of things going on. You can certainly look at our two new apps that we launched in partnership with One with venue ties, our Hall of Fame Village app that gives you everything you want to know, all the events, all of the construction progress updates, and then our Hall of Fantasy League that keeps you going active with our fantasy launch with our draft on the 15th. Let me now just stop, and I'll turn it over to Jason to go over our financial results.
spk03: Great. Thanks, Mike, and good morning, everyone. We filed our second quarter fiscal 2021 Form 10Q post-market yesterday. That document can be found on the SEC website as well as our investor relations site. We also did file a few prospective supplements last night. I just wanted to take a second to point out that these are not new registration statements, but they're required filings to update existing registration statements with information that was contained in R10Q. Having said that, let's cover the company's financial results. Second quarter total revenue was $2.4 million. That represents an increase of 39% from the same period last year and 23% sequentially from the first quarter of this year. Revenue growth was primarily driven by the Doubletree Hotel, as well as event revenue at the Sports Complex and Tom Benson Hall of Fame Stadium. The company's sponsorship revenue continues to be largely derived from our long-term contracts. Second quarter adjusted EBITDA with a loss of $5.6 million. This was driven by property and hotel operating expenses. These investments are important as we continue to build a solid foundation across all three of our business verticals. We've been disciplined in prioritizing and balancing operating expenses while we continue to invest in the growth of our company. Net income was a positive $15.5 million for the quarter, and that was driven by the accounting treatment of warrant liabilities. Due to the SEC staff warrant accounting statement that came out in the second quarter of 2021, we'll show decreased liabilities and expense if the company's stock price declines. All the line items on the financial statements will vary based on the company's stock price. It does not impact our cash flow from operations, our cash and cash equivalents, or our liquidity for all prior and future periods. Let's move over to the balance sheet, where we finish the quarter with a cash balance of about $74 million. This compares to about $69 million at the end of the first quarter. Both of those values are inclusive of our restricted cash balances. The increase in cash was driven by about $15 million received from the June sale of Series B preferred stock and warrants. Our net debt balance was about $104 million as shown in our notes payable. This is compared to $102 million at the end of the first quarter. Now let's transition more specifically to construction financing. As Mike stated earlier, we have signed several term sheets for portions of certain assets of Phase II construction and we continue to have frequent conversations to round out the rest of our Phase II construction financing. The total anticipated construction spend has not changed. As such, we're working to have the optimal portfolio of financing, which provides the ideal structure for the company and our shareholders. Working through this process does indeed take time, and we continue to work really diligently on this front. We'll provide you with more updates as the financing pieces continue to come together and get finalized. We remain really excited about the rest of 2021 and driving value from the developments that we've announced so far this year. In terms of the overall financials, consistent with prior quarters, we're not going to be providing specific financial guidance for this year. Our expectations remain unchanged, and we still expect revenue to increase this year, driven by a few key factors, which include, but are certainly not limited to, first, the Doubletree Hotel. which will be operational for a full year after opening in November of 2020. The Doubletree has sequentially improved since it opened last November, and we would expect this trend to continue. Second, revenue coming from incremental events booked at Tom Benson Hall of Fame Stadium, our sports complex, and the Doubletree. This past weekend, we were able to showcase some of our incredible assets on a national stage, and we're working to fully monetize them. Third, We've signed multiple new partnership agreements in the third quarter, and we'll begin generating revenue from those deals. And finally, we'll produce incremental revenue from initiatives like the launch of NFTs and teneting of the Constellation Center for Excellence at the end of 2021. In terms of EBITDA, consistent with prior communications, we expect profitability to be marginally better than 2020. However, 2021 will still continue to be an investment year for us. I do want to reiterate that our longer-term goalposts have not moved. By the time construction of Phase 2 is fully complete and operational, we continue to target $150 million of annual run rate revenue and approximately $50 million of annual run rate adjusted EBITDA. This is across our key pillars, which again are destination-based assets, our media platforms, and our gaming vertical. Revenue and EBITDA generation is expected to be diversified across multiple streams. Each one of them is intended to drive synergies which support the ecosystem we're working hard to build. As Mike stated earlier, we'll work to drive the traffic and attendance needed to capitalize and achieve these financial targets. Additionally, we view items like e-gaming and sports betting as potential upside to our targets, and at the very least, an offset to any headwinds that may arise. The company's long-term growth file has resonated. This is in part evidenced by increased institutional ownership throughout the first half of 2021. We appreciate all of our shareholders, their support of our company, and the confidence that they're placing in us as a team to achieve our company's long-term growth objectives. The team continues to execute on our financial priorities that have been communicated. We remain committed to maintaining a balance sheet that provides financial flexibility throughout our growth phase. That will ultimately deliver long-term value to every one of our shareholders. With that, I'll turn it back to Mike who will provide some closing comments.
spk04: Thanks, Jason. So a couple of key takeaways here. Firstly, we are a resorts and entertainment company. You've heard me say that before. But the important part of that is we're building momentum across all of our business verticals. You can tell by the way in which we're progressing in a very difficult environment that partners of high caliber want to partner with us. Athletes want to be a part of how we're creating media and digital collectibles. The events that we're hosting are of the best quality, and fans and guests are coming to participate, and we are building. This is very real. What we're creating is a destination, and it takes time. An interesting statistic that I was given by the Department of Transportation here In 2019, on our property, we hosted a little over 2 million people. Some of that came for our Pro Football Hall of Fame. Some of that came for our youth sporting events. Our target is to double that over the next few years. 30-plus million vehicles drive by our property on an annual basis, and that's on one road. That doesn't include our regional airport, which has just expanded and had a significant renovation. It doesn't include other forms of transportation. And so when I talk about the optimism for attendance growth, when you think about those kinds of numbers and the adjacency to tens of millions of people within a two, four, or five hour drive radius, I have great confidence that we will be able to achieve our targets as we continue to build these assets. Construction financing is exactly where we want it to be. We are putting the pieces of the capital structure in place so that we can continue to build. Construction's progressing. It has not stopped. It is moving forward. And we are being pragmatic about that final loan facility in terms of cost and timing. I know some people wanted to hear me say, it's there, it's done, it's in place right now. I promise you, that is the main target for us. But at the same time, filling in the rest of our cap stack with public and private financing, like tax increment financing, tourism development, bonding, EME financing, PACE financing, all of these different vehicles afford us an opportunity to lower the cost of our financing. And we have been diligent around, as Jason just said, getting term sheets in place. And we look forward to having more of those in the coming weeks. COVID is there. It's still here. But we are making progress. And again, focusing on media and our gaming divisions, creating virtual environments and storytelling, for our guests to enjoy while they may not be as inclined to go into physical destinations in the near term, although travel is still up and hotel bookings are still up, it's uncertain what we're going to be facing. And again, as I said before, we're building at a time where this uncertainty is creating some of the should I or should I not go places attitude Once we open, it's our hope that this has gone away. It's been eradicated. And again, what we showed this past weekend was people are starved to be in environments with other like-minded sports fans. The first completely sold-out football game in over a year. And it was electric. The environment was absolutely fantastic. So COVID has not slowed us down from making progress. We stay safe. We stay diligent. Nothing more important about the safety of our employees and our guests Over 80% of our employees have been vaccinated. We're encouraging that. We're providing them the opportunity to do that. We want to make sure as we welcome guests and sports fans, youth alike, that we're creating a safe environment for them. And then lastly, the rest of this year, as I look at the calendar in Q3 and Q4, the event slate just continues to build. High school football championships. We have the Division III College Football Championship, our music festival that we're hosting here in September. The Black College Football Hall of Fame Classic kicks off as well in September. A lot of big events showcasing the wonderful new developments that we have going on. And as they come back and they see the progress, the guests come back, they get more excited about return visitation. And that's always been a premise of ours. You know, build in phases so that you always have something to talk about and something to execute upon, creating excitement for people to want to come back and visit over and over again. That in combination with the programming that we're already developing is really exciting for me as the president and CEO of the company. We are hiring great talent. We're hiring talent that is booking events and revenue. We're hiring talent that is marketing. We're hiring talent that is building talent for our media division and for our gaming division. And so, again, the team, we view it as building a dynasty. It takes time. It takes commitment. And we're only going to hire the best so that as we bring people in, they can exponentially increase our capabilities to deliver one-of-a-kind experiences for our fans and guests to enjoy. We're executing on the winning plays that we talk about a lot and keeping our eye on the future. I want to thank everybody for your patience. I know you want things to be done faster, so do we, but we want them to be done right. We want them to be done to sustain over the very long term and to be profitable. We hope you understand the messaging that we're trying to give to you this morning. I also want to thank our team. This was an incredible weekend, but we've had an incredible year that this team has stayed focused, stayed dedicated. tirelessly worked to execute, and I think we've shown good results because of it. I'll stop there and open it up for questions now.
spk01: Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is Star 1 for any questions at this time. Our first question is coming from Jack Vanderaarde of Maxim Group. Please go ahead.
spk02: Great. Good morning, guys. Appreciate the quarterly update. Just a couple questions for me. I'll start a question for Michael on the Hall of Fantasy League with the NFL season right around the corner, and you have these 10 teams that are lined up, front offices are established. Can you speak a bit more, though, on the staking aspect of the league, which is, you know, rather unique to other fantasy leagues out there, as well as what the fan engagement kind of aspect is to the league, how the decision-making process works, and how decisions are made and incorporated between the front office and the actual stakeholders themselves? And then maybe a few follow-ups to that.
spk04: Yeah, thanks, Jack, and good morning to you, too. Appreciate you dialing in. Great questions, and ones that we're excited about answering. You know, this is a league that is a league, right? You're not selecting an individual team and playing against your buddies or your family in another platform like ESPN or Yahoo offer. We know that our fantasy participants are going to do those things as well because they're a lot of fun. We think, though, that the fan engagement here is going to be at an all-time high. If you think about what those... leagues are about, it's about giving your buddies or your family a hard time about their trades and their drafts and what were you thinking. We have a role that we call Chief Trash Talking Officer, so everybody has the ability to post their thoughts, interact with the front offices, give their opinions, share their thoughts in their community, And that's what we're trying to create, a community-based league where people feel connected to a franchise, just very much like the NFL. By the way, we're selling merchandise that allows people to go out in public and root and cheer for their teams. I wore my Ohio Goats hat to the gas station the other day, and somebody asked me about what that was and how cool that looked, and I explained it to them, and they said they were going to go stake. Staking is a way in which the participants can back a team and also be rewarded if that team wins. So the league itself, one of the things we're proud of is I think it's 90% of all staking that comes into the league gets returned to the participants, either in the form of first place winnings. So if you stake a team for $5 and your team wins, you win 30 bucks. It's six times the winnings. If you stake a team for $5 and your team comes in second, it's 15 bucks, it's three times. And if you come in third, you get your money back. So that's an important point to be made because there are winnings here. We are also anticipating running potential side hustles or bets, I shouldn't use the word bet because it's illegal, but opportunities for people to participate in some fun gaming activity and have the ability to participate from a financial perspective as well. And so there's a lot of things that we're going to roll out. The app is going to enable us, and we're working on the Android version. I know that was a question as well. We have the Apple version rolled out and, of course, our website where everybody is coming in. And it comes through our partnership, the Staking with StakeKings. We're running promotions on State Kings with them now, the Commissioner's Challenge out there. And, you know, we intend to have a lot of fan engagement. This should be fun. It should be engaging. It should be teams playing each other on a weekly basis. And really, you know, at the end of the year, the championships games get played and, you know, we'll have a lot of engagement along the way. The draft should be incredible as well. I'm excited for that this coming Sunday at 5 p.m.
spk02: Awesome. I appreciate the color there. And then, um, just to follow up on the NFT side of the business, um, maybe can you provide some additional color on your decision process, uh, behind the relaunch, uh, of, of the NFTs on this new NFT or this new FTX platform rather than OpenSea, maybe just what are some of the factors, the trade offs you considered, um, what does this do for you that maybe it's more beneficial, uh, than on OpenSea? Thanks.
spk04: And again, I should say OpenSea is a very high quality platform. What we did was listen to, we beta tested there. We listened to the feedback from collectors, from investors. It was clear to us that there were a few things we wanted to do. We wanted to make these more accessible. More accessible meaning being able to purchase with credit card, debit card versus cryptocurrency. Not a lot of the world uses cryptocurrency yet. It's a level of sophistication in purchasing that I think over time will become much more prolific. And you see companies like AMC and others getting into that space. It's interesting to me as well. But we wanted to make accessibility key for our purchasers, and we have. FTX offered us an opportunity to create a unique marketplace for us. It also has a secondary market. We're seeing a lot of the NFTs that have already sold, by the way, in the hundreds, as I mentioned, now being sold on the secondary market as well. And from a financial point of view, not only do we get the revenue from the first sale, but every other sale down the line. You know, this was a beta that we tried and we wanted to see how it would work. Again, this is a marketplace that is evolving almost daily. And you see everybody sort of dipping their toe into it. And we want to make good decisions that last over a very long period of time. The most important thing is great creative that give people a chance to own a piece of history. And our playbooks, if you see them, really do, the wonderful thing about it is the voice of the athlete talking about the play that was one of the most important plays to them in their football playing history. We went to them and we said, hey, give us some thoughts around the most defining plays that you can remember. So these aren't just things that are made up. These are the plays, when you ask Marcus Allen or Earl Campbell or Tim Brown or Joe Theiser. These are guys saying, I remember that play and it was so impactful. And so we had creative around it and we told the story. They told the story in their voice, which I think makes our product very unique and different. So it was a lot of things. Again, we're still evolving this. We want to make it easier and easier. We're going to be adding more product to our marketplace. We want to create that secondary market that allows guests to continue to sell and buy and make these things even more collectible. But it's a business that we anticipate growing and growing in a very pragmatic way. But launching with this round was important, and I think we've shown it to be successful.
spk03: And Jack, just to jump in, Chase, and I just wanted to go back to the Hall of Fantasy Week really, really quick around the staking side. I believe we said, you know, first place is six times their initial stake. Second place is three times. It's actually two times. And then third place is one time. So just to avoid any confusion. Yeah.
spk02: Thanks for that correction. Sure. I appreciate the follow-up there. And, Mike, I appreciate the color in the NFT side. Maybe just one more quick question for me on kind of your esports gaming and entertainment plans. You have the Helix Center that you've agreed with. esports entertainment group to put into your village. And that sounds like a nice development that's going to be coming in 2022. Can you just talk about maybe how your other plans and how this is roped into your overall, your other offerings with esports and a gaming center? And then obviously you've mentioned the sports betting potential in the future. but just how, how does this fit into your, your overall plan and offerings when, if I'm a guest and I come to the village and I go stay in the double tree hotel and I can go play games at the gaming center that Helix has and just, it's really intriguing how it all comes together. Be curious to get your thoughts there.
spk04: Yeah. And look, I would say that every time we make a decision in one business unit, we always think about how do we create uplift through the others. Right. And so, Esports is a good example of that. There are so many esports gaming tournaments being live streamed on Twitch and other distribution channels. We absolutely anticipate having the ability to do that through our media company as well. On-site, of course, I reference a lot our large youth sports program. You can imagine these kids coming here and looking for great things to do while they're staying with us. Playing esports is a part of that, right? You could imagine challenges with some of the best to ever play the sport against some of the youth athletes while they're here and having fun tournaments like that and also maybe becoming media content for us. And so, you know, we're looking at this as a very synergistic business development opportunity. But again, it drives traffic to the destination. It provides entertainment and it allows fans to engage with sport, and in some cases, in particular, football, and it enhances our offerings to our guests here. The other thing that we've spoken about that's on the horizon that we're looking at, not there yet, but we're looking at is off-site asset development. And when I think about off-site asset development and sort of many replications of Hall of Fame, Professional Football Hall of Fame, potentially in NFL cities, with memorabilia, food and beverage, esports can become a very key component of that. And you're talking about a company in esports entertainment group that has proven to have those capabilities in expanding around the country and running tournaments around the country. So we're excited to think if, hey, we do an off-site asset development strategy, they could become a part of that programming as well.
spk02: Got it. I appreciate the color. That's it for me. I'll hop back in the queue. Thanks. Great. Thanks, Jack. Thanks, Jack.
spk01: Thank you. At this time, I'd like to turn the floor back over to Ms. Grafis for closing comments.
spk00: We actually have a few more questions, and so if you'll join us. A question came in that asks, what are our thoughts regarding where sports betting legislation currently is in Ohio? And additionally, how beneficial could that be for a Hall of Fame resort and an entertainment company?
spk04: Yeah, so what I said earlier, we stay very closely connected with key legislators. And if you look at the bill they're presenting, there are multiple different types of licenses that they're offering, a brick-and-mortar license, a mobile license. As we talk with sports betting partners, both partners that have a presence in Ohio today and those that don't or minimal presence, our ability, you know, we're meeting as the bill is written, our company meets the qualifications to have those licenses. And that's important, right? It's a strategic advantage for us because we're creating economic uplift and job creation and, you know, in a county in the state that is of a certain population, we have the ability to obtain those licenses. That can be very attractive to a partner looking to gain entry into Ohio or looking to expand their footprint in Ohio. I'm not the legislator, so all we can do is stay connected to it as we have, track it, we have consultants helping us do that as well, and really have meaningful conversations with our potential partners and look for the best opportunity for our company. I think an onsite physical location where guests can come and enjoy an environment of sports and enthusiasm and place a bet is something that would be great for us and can drive economics for our destination, our Hall of Fame village. Potentially mobile has a much broader reach, allowing us to drive even greater revenue to our company through that type of partnership and with that license. But important to remember, the numbers that Jason have quoted, 150 and 50, do not include sports betting. It either helps mitigate some of the risk that's out there that we have to face in construction, or it helps enhance those numbers and yet to be determined which one it is.
spk00: Another question has come in asking, how much revenue and profit do you generate from the events and all the happenings of enshrinement week?
spk04: So too early to tell. I mean, it's just a few days removed. But I can tell you that for the most part, all of what we generate is predominantly profit. The expense of the event is through partnership with the NFL, with the Pro Football Hall of Fame, and even the city of Canton. A lot of that is put on by our partners, our content partners. We benefit through concession sales, admission sales, direct impact to our hotel, other private events that are being hosted. And so we anticipate a good uplift from that size of an event, just as we would from a concert or from any other type of event of that scale that we'd be hosting here on property.
spk00: Great. With that, that will conclude our earnings call for Q2 of 2021. I want to thank, on behalf of the company, everyone for joining us and for your continued support of all Hall of Fame Resort and Entertainment companies.
spk01: Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and have a wonderful day.
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