Hall of Fame Resort & Entertainment Company

Good morning and welcome to the Hall of Fame Resort and Entertainment Company's Third Quarter 2021 Earnings Conference Call. This conference call is being recorded and all participants are in a listen-only mode. We will open the conference up for questions and answers following the prepared remarks. I will now turn the conference over to Ann Grafitt, Executive Vice President of Public Affairs.

Good morning and thank you for joining us for our Third 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 hosreco.com. After this brief introduction, Michael Crawford, our President and CEO, will give an overview of the quarter's results and an update on our fiscal year priorities. Jason Krom, our CFO, will then provide analysis of the quarter's financial results an update on our fiscal 2021 and fiscal 2022 financial outlooks. 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 the company uses non-GAAP results to evaluate performance internally as detailed in the press release. We have posted a supplementary slide 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 any additional questions after today's call, please contact me directly. It's now my pleasure to turn the call over to Michael Crawford.

Thank you, Anne. Good morning, everybody. I think it's only fitting that we start this call by recognizing that it's Veterans Day today. My father, my grandfathers all served in the military, and while we get wrapped up in our day-to-day grind, for me it's very personal to recognize the individuals that have served and are still serving to keep the freedoms that we cherish so much. We wouldn't be here today doing the things we're doing creating this company, creating great experiences, and having opportunities to talk about them like we're getting ready to do without the service of these men and women. So I just want to say a very heartfelt thank you on this Veterans Day. There's been a lot going on in this past quarter. Probably the biggest thing to talk about is the successful enshrinement events, concerts, all of the happenings around that weekend. The great NFL football game that kicked off the preseason between the Cowboys and the Steelers. The viewership for all of those events were at all-time highs for the last several years. I mean, we had well over 100,000 people on campus, and it really does get me excited that as we continue to add more of those types of events, that the synergies between our business units, media, gaming, and on-site asset creation are really going to drive great value for our shareholders. We also have had a lot of progress on construction, and for those of you who have continued to monitor on our website, our construction cam, I hope you've seen the progress that I'm talking about and will talk about in just a moment. Before I get into the business of Q3, I do believe that there are three things that I really wanted to talk a little bit more deeply about, things that we've heard from analysts and from our investors that are incredibly important to you as it relates to our company. And the first one probably is not going to be a surprise. Where do we stand with construction financing? Well, We've done many things, and as you've seen recently, we announced signing a term sheet with Erie Bank for the Constellation Center for Excellence. That was an important domino because it allows others to fall, and it unlocks a lot of public and private financing that we also have term sheets around. And so the magnitude of that is exponentially growing our capabilities and our cap stack to the tune of millions of dollars. We've been active in terms of conversations with other lenders. You know, when we have continued to build assets and had the opportunity to talk through the business thesis to these investors, or sorry, these lenders, they get very excited. And always our eye on lowering the cost of debt, maximizing the potential of our cap stack, and really leveraging this concept that I keep referring to as just-in-time financing. The world is in an incredibly difficult place, and I think it's important that we acknowledge that. You know, the supply chain issue is real for us, just as it's real for many other companies around the world. You see efforts through infrastructure planning to try to improve supply chain. We have been victimized by that even in Q3, and just a few small examples, but the steel for our fan engagement zone, the retail promenade that we've talked about, was due to arrive to us in May of this year. We received it in September. The mesh video wall that is on the side of Constellation Center for Excellence that faces Tom Benson Hall of Fame Stadium. If you tuned in to any of the events over enshrinement weekend, you saw a quarter of that wall up and operating. The rest of it hung up in the supply chain, on trucks, on trains, still trying to get to us. So we have been overcoming the supply chain challenges just as we've been overcoming some of the challenges with hiring and other supplies and equipment that we need to effectively develop. The good news, again, is our team has been very nimble. We have been actively planning for those types of challenges, and I think we've done a good job of overcoming them, and I'll talk about another example of that in just a moment. As it relates to other financing vehicles, I'm sure you would have seen our filing for an at-the-market offering. I talked about earlier in the year not having to need to raise additional equity. This ATM, as it's referred to, simply allows us greater flexibility as a company. Most companies file for this type of flexibility. And at the end of the day, it also allows us to take advantage of timing and pricing so that if we want to raise additional equity, we have that ability to do so. I think as Jason talks about how we've progressed along that front, you'll quickly realize our goal is to be very pragmatic. We haven't gone deep on that vehicle yet, and we will be very pragmatic going forward in terms of how we use that. The material costs for construction are continuing to rise. And so we're monitoring that very closely. We've done construction studies and surveys, uh, things that we can impact in terms of design and redesign we are doing. And as an example of that, our center for performance, which by the way, right now has already broken ground. And we're incredibly excited to start the foundations of that in Q4. and hopefully have that facility up and running prior to enshrinement of 22, we redesigned that entire facility. Why was that important? Number one, it allowed us to make a really unique and different architectural statement at the campus in Canton, which we're excited about. And we'll start to show images of that in the very near term. But it's a dome and gives us year-round capacity for sporting events and non-sporting events that allows us to draw attendance to the destination 365 days out of the year. But why that was important was, while the cost of steel and lumber and everything else continues to escalate, the redesign of that facility allowed us to offset a significant portion of those incremental costs for other buildings, like our football-themed water park, like our on-site tapestry hotel. So we have tried to be very smart about minimizing the impact of costs and supply chain management. And I think our team has done a great job and I want to congratulate them for that. The last thing I'd say on construction financing and just the experience I've had in this over the years is even if you were able to take on all of the debt that you wanted to right now, it wouldn't be the smartest decision to make. You'd be paying interest and fees on that debt. And as I talked about the supply chain, you would have a hard time spending that money all at the same time. And so this just in time financing concept allows us to be smart about taking that when we need it to continue with construction on time so that we can start to drive revenue out of those assets and the synergies out of those assets that we've talked about. So really good progress on construction financing. And I'm optimistic. that in Q4 and Q1 of next year, we'll have other financing vehicles that we can talk about that allows us to continue with construction as we've planned. The second point that I wanted to address is one that I know is continuing to sort of rumble around out in the stratosphere here, which is the topic of sports betting. As you know, Ohio is not legalized for sports betting today. I'm sure many of you have tracked this. There is legislation that has been working its way around the Statehouse in Columbus, and we stay very closely connected to that. I've said that before. We have consultants that advise us on this. We ensure that we are positioned well for the types of licenses that have been talked about in the bill that is being passed around between the Senate and the House. The two biggest components for us that are very exciting and that will allow us to drive, we believe, significant fan engagement experience and also revenue to our company are number one, having an on-site presence, meaning an on-site sports betting, sports bar facility that will really enhance and engage guests and fans coming to the destination in Canton, Ohio. Number two, allowing ourselves to have a mobile license that will extend both the opportunity for our fans and our brand to engage with sports betting while they're not on campus in Canton. And so both of those are things that we have been building plans around. There is nothing to announce. I will continue to say we stay informed. We talk to sports betting companies. There is active interest in us as a company and a brand in terms of a partnership. But as we have updates, we will make sure that we make those public. And we do believe that it will enhance the experience and drive revenue for our shareholders. The last topic before I go into Q3 is the change in leadership at the Hall of Fame, Professional Football Hall of Fame. We've been asked multiple times, how does that impact our company as the publicly traded company? And here's the answer that I give. I think it impacts us in a very positive way. The new leadership, Jim Porter, as president of the Hall of Fame, I've known Jim for many years. I consider Jim a friend. Jim is a person of integrity. And we're already having incredibly productive conversations around extending our partnership as we've talked about in the past. This enables us to create integrated experiences with the Pro Football Hall of Fame, This allows us to also access, you know, the types of materials, intellectual property that we continue to need to drive business within our gaming division, our media division, and, of course, at our theme destination resort in Canton, Ohio. We are two separate legal entities, and so the Pro Football Hall of Fame does have representation on the board of the Hall of Fame Resort and Entertainment Company. They are a significant shareholder of the company. And so in their interest lies our interest. We are completely aligned with how we continue to grow as a company. They're there to support us and we're there to support them. And so that leadership change I took very positively and we're incredibly excited about what the future represents. So I want to make sure everybody understands that that impact net net is a positive for us going forward. When we started this year, we stated some very clear goals. construction financing and maintaining our construction schedule, getting into the media space in a significant way, launching our gaming division and making sure that we were able to stand up a one-of-a-kind unique gaming experience, and ensuring our integrated business model, which we have already started to show having success is something that we will be able to build upon and drive great value around for our shareholders. To that end, when I talk about our gaming division, we're really starting to ramp up our efforts there. You'll recall that this past quarter we signed a deal with Esports Entertainment Group, and Grant Johnson is a good friend, the CEO of that company. I think very highly of them and their capabilities there. So esports will become a big component of what we do into 22. Sports betting we've talked about in our fantasy league, I'll talk about in a moment. I feel like we need to have now the right leader in place to lead that division for us. So we have started and are continuing to conduct a search, and I'm hopeful that we will find the right person that will really wake up every day thinking about new business development, synergy opportunities, and how to continue to leverage esports gaming as a potential growth for our business, but also a really good way to engage our fans and guests both on-site and off-site. And then lastly, we want to make sure that as we continue to create the different business verticals that synergy, as I talked about, remains at the heart of everything we do. And so I'll give you some examples of that. I think Q3 for us really started to frame in our minds how powerful this synergistic model can be between the business units. We've achieved a lot of that already, which has driven great results from a fan perspective, a guest perspective, and also a revenue perspective and allows us to continue to grow revenue quarter over quarter and now year over year. Before I get into the specific business verticals for Q3, You know, again, an example of that synergy that I just referenced. We started the second season of our NFL Alumni Academy. This is a developmental academy for kids that just didn't make the last cut of an NFL franchise team. Exciting for me to continue to help them realize their dreams. Our motto, honor the past, inspire the future, certainly inspiring these kids, training these kids, giving them the development that they need to realize their dreams to get into the NFL. But more importantly for us as a company, those kids stay in our onsite or our offsite hotel, our Doubletree Hotel downtown. So it drives synergy from a revenue perspective there. It allowed us to sign a partnership with Whistle Studios to produce an original docu-series around the growth and the development, the stories of these kids, these coaches, as they're being called up to the NFL. And it allows us to have a greater connectivity to the NFL itself. We've had several players called up already this season. And, in fact, excitingly enough, two weeks ago, one of our academy individuals was starting for the New Orleans Saints on a Monday night football game. And we've had others this year as well and last year. So that's just a great example of the synergy that we can take advantage of and create uplift from a revenue perspective. and from all of our business verticals. Let me talk about destination-based assets. As you know, we've had our Hilton Doubletree Hotel in downtown Canton for one year now. In fact, just this week, we celebrated the one-year anniversary. One year of a very difficult environment during COVID, and yet, month over month, occupancy, RevPar, have continued to grow. And this is the premier asset, I believe, within our county that really is now starting to gain recognition, not only from a can we fill it with our own events, like our youth sporting events, concerts, enshrinement, et cetera, but now business travel is starting to uptick as well, and we're starting to take advantage of that. This business is very tricky right now, and as you see other industry leaders starting to report, weekend business, leisure travel is coming back strong, business travel is coming back slowly. Hard to predict right now the impact of COVID and how long COVID has continued to hang on, what that's done to the mental aspect of travel. But here's the thing that is very gratifying for us. The team there has done a great job. They have an entrepreneurial mindset. They're selling every day and they're taking advantage of other opportunities to really grow that business. And you can imagine as we start the development of our onsite tapestry hotel, which, by the way, I was just out in Las Vegas and finalizing the design of, which is going to be a fantastic new asset for us, we can take even more advantage of on-site activities and leverage them into our own hotel, creating uplift from a revenue perspective there as well. We finished our Constellation Center for Excellence. We received our Certificate of Occupancy. We are going to start moving tenants into that facility starting in Q4. We are going to start programming into that facility uh over the next month or so um this is a facility that has a great ted talk slash what in football terms we would refer to as a chalk talk room the technology capabilities inside of that room allow us to host smaller intimate events but to grow those even bigger and have the connectivity between that room and our two jumbotrons in the tom benson hall of fame stadium so that we could do things like movie premieres or big events where you want to address larger crowds. And so I'm very excited about what that building represents for us as the asset that we've just completed. The Tom Benson Hall of Fame Stadium, I think you know we've completed now the West End Zone Jumbotron there. Again, a really fun and engaging environment we've created with our East End Zone fan area. and the jumbotron we placed there. We are well underway with our fan engagement zone. This is the retail promenade. Hopefully you've seen some of that on our webcams, our construction cam, and some of the updates that we've put out. An amazing new area that will be open by mid-July next year. In time for enshrinement, you've hopefully also seen some of the fantastic concepts that we've signed deals with there. not only hosting an esports Helix complex, a Shula's one-of-a-kind restaurant there, the opportunity to have, you know, Topgolf, Brew Kettle, a lot of concepts that are going to really engage our fans from an entertainment perspective, but from a food and beverage perspective as well. That should be enclosed. Those facilities should be enclosed by the end of this year with work then progressing through the winter on the interiors of to then open, as I said, mid next year. The other thing I get very excited about, which we haven't talked a lot about, is the expansion of our Hall of Fame Village Sports Complex. Again, we host hundreds of thousands of both adult and youth sporting events at this complex every year. The expansion does two things. Number one, it adds additional amenities, ticket sales amenities, concession amenities, coaching and athlete amenities that allow us to expand the offering there and really engage in a world-class way with those coming. That also drives revenue for us. The second way that of course we're excited about is the opportunity to expand capacity. We have had significant demand and in fact demand that we've had to share with surrounding area fields and facilities, which is not a bad thing. but that we haven't been able to capture on site. Adding additional fields allows us already, and we're booking bigger events next year, more people on campus, more people staying in our hotels, more people eating in our restaurants and having fun in our entertainment venues, significant uplift in revenue opportunity there as well. I talked about Tom Vinson Hall of Fame Stadium. From an events point of view, we're hosting the Ohio State Football Championships, We have the Division III College Football Championship we're hosting there. You would have seen the announcement of ASM Global. This is a very important step for us. ASM is one of the best event booking companies, from my perspective, in the United States. And so we have a big event agenda for 22 and beyond, and we're excited to get them going, and they are already going for us to really expand get those events, festivals, concerts, other things lined up. Moving on to media, media has had a lot of progress in Q3. Some of the existing projects that I've already spoken about are NFL Alumni Academy is in production with Whistle Studios. We're looking forward to both short-form and long-form content being distributed. We've had several players called up. These are real life stories that I think our fans are going to be excited to watch. And we couldn't be more pleased with the progress that the Alumni Academy has allowed for onsite engagement, hotel stays, studio media events. And so that is well under production. Inspired was another project that we spoke briefly about before, but NFL athletes doing great things in their community. And again, we'll be in production later this year with the goal of finalizing and distributing to be on air in 2022. I think this really encapsulates the kinds of projects from a media perspective that we want to do heartfelt stories that inspire others to do great things, leveraging our access to intellectual property and athletes that other companies don't have access to. And so a project that we're looking forward to in 22 coming forward, inspiring people, and also, again, driving that revenue and potential synergy with our other business units. I've talked to the Perfect 10 project in the past. I was fortunate enough to be a part of watching the production of this happening over the last couple of months. We looked to end production towards the end of this year. and developed this documentary for distribution in 22. So a lot of exciting things in 22 from a media perspective, along with NFTs, the non-fungible tokens. We believe that this medium will continue to grow. We were early to the party. We have had success there. Athletes continue to sign with us. We haven't announced new athletes yet. We have sort of reframed our strategy in terms of distribution. We talked about that in Q3. We've sold several thousands of these now. The ability to drive unique type of product through the digital space, the digital collectible space, is something that as a company we feel very strongly about, and giving access to our fans and our guests to that product is something that we think will continue to not only drive revenue for us as a company, but synergy in terms of marketing and positioning other product. And so as an example of that, the perfect 10, the 10 gentlemen that won a Heisman trophy and also been inducted into the pro football hall of fame, we've put out several NFTs that have highlighted great moments in their careers. And these are the best to have ever played and in a very unique club. And so we're excited about adding more talent and more content to to that as well. The other thing we were successful in doing in the NFT space is really helping launch our Hall of Fantasy League in our gaming space with an original NFT for that game, the league, as it started. And so more revenue from that perspective, but more marketing for the league itself. Moving into gaming, I think you would have seen the Hall of Fantasy League has launched. You know, two mobile apps, certainly our website, our relationship with State Kings, our online merchandise store, all very active. And probably as important, the business thesis of a community-based fantasy league that had franchises that were being run by professional fantasy football players, ex-professional football players themselves, a Hall of Fame commissioner, And so the ecosystem that we've created there, I'm very proud of, and the social dynamic and interaction between the fans and the front offices on our Discord just continues to escalate. The other thing that we've done is allowed for what we call side action. You know, weekly gaming that allows our stakers to participate and win cash in predicting outcomes of certain aspects of the games. So again, activating that was really important from a media perspective. We do a weekly show on Twitch hosted by Jeff Eisenban. We have lots of guests that come on there and talk about the fantasy space, talk about the league. And again, I referenced that NFT opportunity there as well. And I wouldn't be surprised if we'll continue to look for opportunities from an NFT perspective in our league. It again showcases all the different ways that we can synergize and drive revenue And you can imagine, at least from my perspective, this is a league where we have teams playing each other virtually on a weekly basis. And we all know that the prop betting or the micro betting, when teams play each other, it also allows for potential betting to occur. So that's another area of opportunity that we'll be focusing on as it relates to our league next year. Sports betting, I've already spoken about that, but there is potential for e-gaming from a betting perspective as well. And we're waiting to see how the legislation in Ohio evolves. Traditional sports betting, of course, but sports betting as e-gaming really takes off is something that could be interesting for us as a new way to engage those fans that are there watching the e-gaming tournaments or virtually engaging with those tournaments and placing bets on their favorite athletes or teams. Lastly, partnerships and sponsorships. Hopefully you would have also seen that we've continued to drive new partnerships. It's great to see big brands that really want to be and are excited to be associated with our company. Brands like Comscope, brands like Kilshore Clark, Hendrickson, a deal that I talked about earlier with ASM that will really power our booking engine for new events. These are all the types of partnerships that as a company that will enable us to grow much more quickly, enable us to grow revenue, events, and significant contribution to construction as well over time. So, again, I think from my seat, Q3 was a very successful integration, demonstration of synergy and standing up all the verticals, delivering upon what we committed to do this year in terms of the objectives that we laid out. Let me now turn it over to Jason Crom, and Jason can take us through our financial results, and then I'll come back and have some closing statements and then take Q&A from there. Jason.