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spk04: Good morning and welcome to the Hall of Fame Resort and Entertainment Company's fourth 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 Anne Grafis, Executive Vice President, Public Affairs.
spk05: Thank you, Kyle, and good morning. Thank you all for joining us for our fourth quarter 2021 earnings conference call. Our latest press release, supplemental slides, and Form 10-K were posted yesterday evening after market hours. These documents can be found in the investor relations section of our website at hofreco.com. After this brief introduction, Michael Crawford, our president and CEO, will give an overview of the quarter's results and an update of our fiscal year priorities. John Van Buten, vice president and corporate controller, will then provide analysis of the quarter's financial results as well as an update of our fiscal 2022 financial 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 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 do not hesitate to reach out to me. It's now my pleasure to turn the call over to President and CEO, Michael Crawford.
spk00: Good morning and thank you, Anne. Well, we've got a lot to talk about this morning. 21 was an incredible year on many fronts. I thought maybe I'd just start off by talking about how the professional football season went for the NFL. In December, we were concluding the regular season. You could feel the momentum build. You weren't quite sure who was going to be in the playoffs and the championship. COVID was still there. Injuries were abounding. And yet, people were tuning in every single weekend to the games because it is clearly the most popular sport in America. As we entered into the playoffs and the Super Bowl, could you have asked for any better games than what you saw? Almost every single game being decided by a last second field goal, a last second play, and then it was no different in the Super Bowl. And it was really quite incredible to know that 112 million people worldwide watched the Super Bowl. Now to put that in perspective, On average, you had 10 million viewers per game last year for the NBA Finals, and you had about 12 million viewers per game for the World Series. Both incredible sports, both with great athletes playing in each of those series, but clearly professional football and what we're doing in terms of our company building off of the popularity of the game is stronger than it ever has been before. On a macro level, it was also great for us to see things like airline travel rebounding back to the 2019 levels. Now, 2021 was an up and down year. We had COVID start the year, we took a break in the summer, and then we had Omicron come back. But as of February of this year, 2022, you see increased levels of air travel, hotel stays, and it's very encouraging for us to see as a company that's building and has already built leisure tourism assets. A couple of other things interesting for us, sports betting. The Super Bowl reached record highs in terms of sports betting. And now with the legalization of sports betting and the legislation that was passed last year in Ohio, we're very optimistic about our opportunities to bring a presence both here on campus and a virtual experience that our guests and fans will enjoy. And I'll talk about those in just a couple of moments. One of the things, though, that is really clear to us in all the difficulties that we've faced as a human race over this past year is that never bet against the consumer, and no pun intended. Never bet against our ability to desire an opportunity to escape and create the chance for ourselves to get away from the realities of the world. And that fits right into what we're doing in both creating physical and virtual environments for our guests to enjoy. You know, for us in 21, again, I would characterize the year as an investment year. We developed our physical assets, and we continue to do that. We developed our virtual environments. We clearly brought more people to campus for events. We grew revenue, as you saw in our release last evening. Attendance to those events rebounded from even the 2019 levels certainly beyond 2020, and we set records for attendance on our campus in 2021. All of that signals, you know, the momentum that we have behind us and the excitement that we feel in all of our business verticals as we continue to grow. And frankly, in 2022, we've already made some pretty significant announcements as well, creating an even stronger foundation for us to build off of as we go through this year. Before I jump into 2021 results and some of the key highlights, I did think it was important though to take a step back and put in perspective some of the recent financial transactions and happenings that we've had as a company. You saw recently that we talked about the extension of about $38 million of debt that was coming due this year. We worked very closely and negotiated with our largest shareholder, Industrial Realty Group, and our single largest shareholder, Stu Lichter, to put in place not only the opportunity to extend that over the next two to three years, but to garner additional commercial loans as well. And I'll talk about those in just a moment. Again, what that meant for us as a company is, Extending and flattening the debt profile allowed us to be an even more attractive investment or an even more attractive opportunity for other commercial lenders to come in and finalize the cap stack that we've talked about. We are now in possession of over $150 million of term sheets to finish the assets that we're building here on campus. Let me just talk about what that means. We've received a $4 million executed term sheet for our Center for Performance. We've received a $17.4 million executed term sheet for our fan engagement zone or our retail promenade. We have $75 million worth of PACE lending term sheets that we've executed, $50 million for our theme park, or sorry, our water park and hotel, and another $25 million of refinancing for our stadium. And then lastly, and probably the most difficult part of our capital stack, we've received two term sheets for $50 million of senior lending debt for our water park and hotel. What that means to everybody is we've finished the money that we need from a senior lending point. We're executing that right now. And it gives us the ability to continue to build the destination and complete the assets in phase two. and complete the cap stack with other non-traditional forms of financing that I've spoken about in the past. This just-in-time financing model that we launched last year, we were very clear that taking on $200-plus million of debt all at the same time was not the best decision for us as a company. It would be too costly, and it wasn't practical in terms of what we needed in the context of how we were building and what we were building and the timing of those assets. You know, this has been a year in 2021 that had COVID as a continuation facing all of the issues related to COVID in terms of supply chain, the volatility of the financial markets, the lending markets, and also inflation, rising inflation. The team executed. The team was able to garner the financial support that we needed. And the biggest reason for that is I think the lenders that we're working with now see the history of execution, the reliability of growth, the opportunity to invest in something that will be pretty special and unique that gives those guests and fans an escape that I just talked about from the harsh realities of the world that we're all facing today. All of that is very encouraging for us as a company, and it allows us to maintain our construction schedule as we've talked about in the guidance that we've given to complete a good majority of the assets this year, and then finishing with the hotel-water park combination in Q3 of next year. We've done all of this also, by the way, in an environment where supply chain has created difficulties for almost every company that is building an asset around the world. However, we've maintained our construction schedule. And honestly, we have now reconfigured some of the way in which we're building and the timing of assets we're building to a place that we're slightly under budget, believe it or not, from our original cost projections to build the phase two assets. That's a pretty incredible feat. And I give the team a lot of credit for being creative in the difficult environment and having the opportunity to work directly with our contractors and our suppliers to to be innovative in our solutions. So a really key year for us and start of this year in terms of obtaining that much financing in an environment where that's not necessarily been the case for many others. Lastly, we've also added great talent. We continue to do that through 2021 and you will have just seen in 2022, we added two key executives to our team. Firstly, Rob Borm, who is our executive vice president of gaming. Our gaming division has grown to a place where we needed dedicated leadership. We needed strategic leadership. And Rob has over 20 years of experience in the video game industry, esports industry, and also brand sponsorship and growth in sales. That's what we're focused on here, growing the revenue for that vertical. We now have esports. We now have fantasy sports. And we also have the opportunity to have sports betting as a part of that gaming vertical. And Rob has a history of being very entrepreneurial and growing new businesses. And so we're excited to have him start as of yesterday. The next addition to the team which was critically important to us is Ben Lee as our new CFO. And Ben is joining us from one of the largest and most prestigious financial institutions in the U.S. where he headed up several of their lines of business as CFO. He's bringing in a wealth of capital market experience, and he's evolving and growing our financial experience and expertise in a way that's going to be very relevant for us as an operating company. As we finish up our financing efforts in this year and continue to create assets both physically and virtually, Rob coming in and leading our finance team is very important for us to continue to evolve the experience and oversight there. Let me talk a little bit about each of our verticals in 2021, and I'll start with our theme destination-based assets. Our Doubletree downtown Canton hotel completed its first year of operation. Hard to believe that we opened a hotel as COVID was rearing its ugly head, but this team has done a fantastic job in operating this hotel. We ranked in the top 5% of all Doubletree hotels in terms of customer service. We won the Legacy Award for the top renovated hotel in the Doubletree chain. What that says is we have a commitment to quality in everything we do. We're going to create environments unlike others, and we're going to service our guests and fans in a way in which they would expect us to. Activity in the hotel just is on the rise. Every single weekend from now until the end of this year is completely booked with activity, events, room nights. The weekday business is coming back strong. And I think more importantly here, our business model of synergy and what we've talked about in the way in which we can develop events and we can create activity for ourselves here at the Hall of Fame Village powered by Johnson Controls will drive attendance, room nights, and revenue to our hotel in Canton and the hotel that we're preparing to build on site as well. In terms of our village, the Hall of Fame Village powered by Johnson Controls, Tom Benson Hall of Fame Stadium, the village welcomed more guests than ever before. We hosted more events than ever before. We generated more revenue out of the stadium and our sports complex than in 19, which was our highest year in the history of our company. We held numerous events in Q4 alone. We had the state high school football championships, multiple games being played here in our stadium, to thousands of guests. We kicked off the holiday season with a holiday festival. We signed multiple more events for this year. And then we also, in the start of this year, hosted the AAA national championship game in our stadium as well, continuing to build on the progress that we have made in driving events, attendance to the campus, and then monetizing that attendance through our room nights, through our food and beverage, and through our admissions. We opened our Constellation Center for Excellence. One year, the construction was on time and on budget. The tenanting process is well underway, and we expect to have that facility fully tenanted in the very near term. Now this is a difficult ask in an environment where virtual work has become the norm. Why are people so interested in coming to our Center for Excellence? because we've created an environment unlike any other. It's a one-of-a-kind asset that is there for thought partnership, incubation, a place of excellence where we've already hosted multiple events like our Authentica conference focused on brain health and development. This is not an office building. This is an integrated experience where we have best-in-class tenants coming in to do great things in sport and non-sports. Our fan engagement zone, you will have seen on our website if you look at our construction cam and the flyovers that we do on a regular basis, the core and shell of that entire facility is built. We are now starting the interior fit out of some of those spaces. We expect to have all of that tenanted by mid 2022 and open and running prior to enshrinement. So it's an exciting time to welcome our guests to a very different campus for one of the biggest events in the country with our enshrinement and the kickoff to the NFL preseason. Our Center for Performance. We broke ground on the Center for Performance in Q4. We leveled the foundation. We poured the foundation this year. The dome itself is being constructed off-site, and we have every expectation that that facility is going to be up and running prior to enshrinement. And in fact, for this year, we already have booked multiple events And we predict to have significant revenue being driven out of that asset in Q3 and Q4 of this year. And then lastly, Play Action Plaza. And I get very excited about Play Action Plaza for this year. But last year, we designed an outdoor interactive area that will really bring life to campus. It will host the only two ride attractions in Stark County. We haven't talked about those yet. We will in the future. It'll host an outdoor bar area. amphitheater, water feature. This will be a pre-function area. It'll be a tailgate area. It'll be an area that people can just enjoy a cocktail or a stroll and enjoy the outdoors. It's not just a summer activity. We'll have activity programmed in there year-round. In our media vertical, there have been multiple projects in the works and multiple that were signed over 2021. The media vertical is still in its early stages. But I will say that I'm really proud of the team there. It usually takes two to three years from the time you create content, develop it, produce it, and then distribute it. And we are already doing that in year one. If you recall, we had co-produced a special on ESPN called World Chase Tag. World Chase Tag aired live during enshrinement weekend. It has since aired multiple times, receiving a lot of popular feedback as a non-traditional sport on ESPN. Our media team did that in production partnership. NFTs, this was not a part of our original business model. We quickly pivoted and realized that digital collectibles were going to be something that not only have been popular for fans and guests to collect, but will continue to grow. It's a multi-billion dollar business and we expect to have a significant presence in that space. We launched our partnership with Dolphin, but more importantly, in Q4, we continued to expand the distribution of the NFTs that we have out for sale now. And then early this year, we signed a new relationship extending our footprint in the NFT space with the Pro Football Hall of Fame, and a company called I Got It. Now, this is very interesting for us as well because our playbooks, which are, I think, best-in-class product NFTs already out and for sale, and we will be announcing additional playbooks in the very near term. What we're doing with I Got It is taking that memorabilia that I've talked about many times, that 50 million pieces of memorabilia that we have at our disposal, and we've agreed to take 600 really unique pieces of that memorabilia and launch 200 NFTs per year for our guests to collect. We've learned a lot about this space. We continue to learn a lot about this space. It's evolving, but I'm proud of the fact that we were an early entrant and it's a new opportunity to drive revenue for us and did in 2021. In terms of other projects, I've talked about the NFL Alumni Academy. We had Whistle Studios here for the entire last season. filming these kids as they were training, filming them as they were living, filming them as they were being called up to the NFL. This is going to be a fantastic docuseries, and we expect it to launch later this year. We're in discussions with two different high-profile distribution platforms. They're very excited. We are very excited. Last year alone, we sent up 24 players to either an NFL practice squad or to an NFL team, and you saw those players playing on Monday night football or in games during the regular season and in the playoffs as well. Interestingly enough, as we announced our deal with the USFL and to host their playoffs and championships here this year, we've now also had several of those players participating in our academy being drafted by the USFL team. So it shows our model that we really have the opportunity to impact these kids' futures to grow a business that can help the game and the sport of professional football and also something we can monetize and will continue to monetize here for our company. The other big piece of media that we have out in post-production is the documentary The Perfect Ten, depicting the story of the ten men to win a Heisman Trophy and also be inducted into the Pro Football Hall of Fame. We've done this in partnership with NFL Films. They are the producer for this, along with Hall of Fame Village Media. We have continued to build that relationship and we think that the product is going to be exceptional. I can tell you I was fortunate enough to be a part of one of the tapings in Dallas where we had several of the gentlemen there together talking about who they were and what they did in their careers and some of the things that inspired them. So we're excited to be able to launch this and the goal of this is to launch in early 2023. And then lastly, we built NFTs off of this space as well. Four of our NFTs are around gentlemen that are highlighted in this Perfect 10 series. So a lot of great work going on in our media division. Gaming also became very important to us. You know that we launched our Hall of Fantasy League. We concluded it in Q4. Congratulations to the Atlanta Hot Wings on winning the first ever HOFL Championship and to all of those stakeholders that staked the Atlanta Hot Wings for getting 6X the staking that they put down. We thought it was a very engaging environment for our guests and fans to enjoy. It certainly bared out the model of combining community, making the fantasy world a community sport versus an individual sport, combining that with Hall of Famers like Terrell Davis as our commissioner, previous football players, professional football players in the front offices. And then we concluded the season with a primetime special on Twitch that was co-hosted by former NFL pro Amon Green. Now this was really a pretty interesting event for our guests and our fans. If you watched Monday Night Football this year, you probably would have seen the Manning brothers broadcasting and hosting a lot of special guests and talking about, from their perspective, what was going on in the game, having played the game at the highest levels themselves. We did this with Madden NFL football. We simulated the two teams in the Super Bowl, and then Aman and many other guests came on and gave their perspective on the Super Bowl, on fantasy, and it really just lent to an environment of integration and collaboration between some of the game's best, some of the best professional fantasy football players, And I feel like our second season is going to be even stronger. You know that sports betting legislation was passed in Ohio in December. We couldn't be more excited about that. Just yesterday we had a conversation with the Ohio Casino Control Commission. Our job is to make sure that we are completely informed every step of the way and understand the licensing process. We're very thankful for them to take the time and explain that to us. I think we're well-positioned. to obtain the two licenses that we are going to need, one for our virtual betting platform and one for the retail presence that we're going to have here. You also saw that once sports betting was legalized, within a week we announced two different sports betting partnerships, Rush Street Interactive to lead and manage the sports book that we will have here on property, the retail presence that we'll have, and then Genesis Global, that will lead and manage our virtual environment and our mobile platform. Both of these experiences are going to be fantastic for our guests to engage with. Both of these were not in our plan in terms of revenue. So both of these are creative to the growth of our company. And we're very proud of the fact that as we talked about our goal of signing sports betting relationships and getting a position where we would be successful in obtaining licenses that we feel like we've done that and we've done the necessary diligence that we need as a company to create that opportunity for ourselves this year. Lastly, I want to talk about partnerships and sponsorships, and we group those together in a category for two reasons. One, partnerships enable us to grow as a company and augment talent that we don't have internally and increase our capabilities. Those partnerships typically come with a sponsor model or a payment in terms of a sponsorship. And then there are pure sponsorships that want to have brand affiliation, that want to have an opportunity to be a part of the environments that we're creating both physically and virtually. We had a goal this year to sign 20 new sponsors, sign 26. This was amazing. In a difficult year where COVID, inflation, other macroeconomic impacts were out and working against us, our sponsor team and our partner team was able to extend that goal by another six sponsors. And in fact, of that 26, 13 of those were signed in Q4. And so what that tells us is that as we've moved through the year, companies and individuals feel much better about the opportunity to invest in these types of relationships. And I think since we've demonstrated our capabilities to grow our physical assets, to grow the number of events on campus, that we have shown and proven that we are worthy of these sponsorships and these partnerships. These deals are really important to us, and as I've said before, grow our capabilities on multiple fronts. They grow revenue for us. They open up operating capabilities that we don't have for us today in terms of internal human capital expertise. They offer different product offerings for our guests to enjoy, and they enhance our ability to construct our environments both physically and virtually. So a lot of great progress in Q4. A lot of things that I would say are incredible accomplishments on behalf of the team, and I want to thank them, and things that In the face of adversity, as we talked about at the early part of 2021, our goals, and I'll do that here in a moment for 2022, I think we not only achieved our goals, but we expanded and grew almost in every single respect. So our investors and our shareholders and our guests really should see the upside from that, given where we stand today and where we're headed as a company. Let me now turn it over to John Van Buten, our Vice President of Accounting and Corporate Controller. to give you more of a financial recap of 2021.
spk01: Thanks, Mike, and good morning, everyone. As Ann mentioned earlier, we filed our fiscal 2021 Form 10-K post-market yesterday. That document is available on the SEC website as well as our investor relations site. Fourth quarter 2021 total revenue is $3 million, which represents an increase of 71 percent from the fourth quarter of the prior year. Revenue growth was primarily driven by the Doubletree Hotel and event revenue at Tom Benson Hall of Fame Stadium. Sponsorship revenue was in line with the prior year and continues to be largely derived from our long-term contract. Fourth quarter adjusted EBITDA was a minus $4.8 million, driven by property operating and hotel operating expenses. We remain diligent in balancing operating expenses while investing in the future across all three of our business verticals. Net income was a positive $9.3 million, driven by the accounting treatment of warrant liabilities, which favorably reduced expenses by $19.5 million. Due to the SEC statement from the second quarter of 2021 regarding the accounting for warrants, we will show decreased liabilities and expense if the company's stock price declines. While this line item on the financial statements will vary based on the company's stock price, it does not impact our cash flow from operations cash and cash equivalents, or liquidity for all prior and future periods. Moving to the balance sheet, we finished the quarter with a cash balance of $17 million compared to $28 million at the end of the third quarter. Both values are inclusive of our restricted cash balances. The $11 million decrease in our cash balance is driven by two items, construction spending on campus, which represented $28 million in the quarter, and operating activities, which accounted for approximately $1 million. This was modestly offset by an increase in notes payable as we were able to recapture equity associated with the Constellation Center for Excellence from the closing of loans in December. Our net debt balance increased to $101 million compared to $84 million at the end of the third quarter. The increase in notes payable was the result of $22 million of long-term loans related to the Constellation Center for Excellence. This was mostly offset by a $13 million repayment of our Aquarian Term Loan. Regarding debt, we recently restructured our debt profile by extending the maturities of $38 million of loans. This had several key factors. It showed confidence from our largest shareholder, Industrial Realty Group, and our largest commercial lender, Erie Bank. Moving the maturities out at least 12 months provides financial flexibility allowing the company to continue to focus on operational execution and achieving our long-term goals. I would also like to give a bit more detail on our construction financing. As Mike stated during his earlier remarks, we've received multiple millions of dollars of term sheets for senior loans this calendar year. This senior debt unlocks other public and private financing options available to us. The Phase 2 capital stack is a jigsaw puzzle, and we are working to put the pieces of the puzzle together that provides favorable interest rates and terms for the company. Given our unique position, we were able to unlock financing at lower costs through public financing and pair it with higher interest construction loans to provide a favorable debt profile to provide financial flexibility as we continue to invest for growth. As a younger, high-growth company, we do not want to be burdened with the high-cost loans that limit our ability to invest for future growth. Our team is committed to obtaining the best overall financing options for the company and our shareholders over the long term. We will continue to provide updates as financing gets finalized. We continue to strategically align construction spend with our achievement of financing. This is especially important given global supply chain constraints, construction completion timelines, and volatility within the commodity markets. The expected Phase II total construction spend has not materially changed, and we are working to make sure that we have the right financing with the ideal structure for our company and our shareholders. In fiscal year 2022, we expect construction spend to average in the mid-teens millions of dollars per quarter. We launched an ATM, or at-the-market offering, in the third quarter of 2021, offering up to $50 million of common stock as an opportunistic option that many companies use and to use as an intermediary source of financing while we secure other funding. As we disclosed in our 10-K, we have raised approximately $13 million, or 28%, of the $50 million offering cap. We continue to monitor trading activity to achieve the greatest shareholder value. We provided our initial fiscal 22 outlook on our November earnings call and are reiterating our fiscal 22 guidance with revenue in the mid-$30 million range and adjusted EBITDA to be in the negative mid-teens and millions. This accounts for continued investment across all verticals as we add capabilities and expect to open some of our Phase II assets here on campus around mid-2022. Sports betting was not legal in Ohio at the time of our initial guidance, and with the procurement of the necessary licenses, it will either provide upside potential or risk mitigation to our targets. I want to continue to reiterate that our longer-term goalposts have not moved, And by the time construction on 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 across the key pillars by 2026. Those key pillars, again, are destination-based assets, our media platforms, and our gaming vertical. The revenue and EBITDA generation will be diversified across multiple streams, with each one driving synergies to support the ecosystem that we are building. As Mike stated earlier, we will drive the traffic and attendance needed to capitalize on and achieve these financial targets. The team continues to execute on the financial priorities that have been communicated. We also remain committed to maintaining a balance sheet that provides financial flexibility through our growth phase to deliver long-term value to all our shareholders. Now let me turn it back to Mike, who will provide some closing comments.
spk00: Thanks, John. So let me just conclude by saying a few things. We were worried that we wouldn't be able to build new assets. We've done that. We've continued to obtain the necessary finance. There was difficulty in the environments. There was worry that we wouldn't be able to obtain senior lending. We talked about how our plan was going to work just in time. We've done that. $150 million of new term sheets. allowing us to round out and complete the cap stacks. We talked about adding new events in 21. We did that. Record year in attendance, record year in revenue. These are things that are driven by a team that is highly committed and has the expertise to execute in the most difficult environments. We talked about maintaining the spend on construction. We've not only maintained it, We've actually lowered it in a supply chain and constrained environment. Not a small accomplishment. I term 21 in two ways. Growth. Growth in our physical and virtual environments. Growth in revenue. Growth in partners and sponsors. Growth in our strategy in terms of how we added digital collectibles, how we added the opportunity to obtain sports betting licenses this year, but certainly how we added partners that were going to give us the expertise in that area, and growth and attendance. The second way in which I term it is execution. Our team faced adversity. Our team delivered on all of the things I just spoke about. Our shareholders and guests need to be excited about where we're at. Does anyone like the price of the stock? No, I don't. I think the stock is undervalued. I think what we're doing demonstrates our capability to execute just as we say we're going to execute. My expectation in 22 is this. We finish the assets that we talked about finishing for this year. We start construction on the assets that are needing to be finished next year. We are going to over double the number of events that we're hosting on campus. We're going to start immediately generating revenue out of our Center for Performance with literally hundreds of events in there, sporting and non-sporting events. And it'll start with Entryment Weekend and you'll see a lot of new activity on campus versus activity that's being taken usually off campus that allows us to drive revenue. I expect revenue to grow as we've talked about in the direction that we're headed. And I also expect the team in the media division to develop and produce new content, one of which you'll see aired in early June called Inspired, highlighting the great work that professional football players are doing off the field in their communities. This is an exciting new piece of content, again, early in the life cycle of media, but continuing to prove that our team has the ability to execute in the near, medium, and long term. I expect to see new NFTs launched. I expect to see that business grow and generate revenue unlike what we've been able to do in the past. I expect our second NFL Fantasy League season to be even bigger and better. I expect that to be attached to a media show. I expect sponsorship to be a part of that. I expect the Fantasy League to evolve to include different types of play and activity. And we'll continue to build the technology to allow that to happen. You know, at the end of the day, supply chain issues, construction costs, volatility in the financial markets, inflation, gas, a war in Ukraine, the parade of horribles are facing us. And yet what I know in doing this for over 30 years is people need time. They need time away. They need time with their families. They need time with their friends. They need time to enjoy life as well. It doesn't mean or take away from any of those horrific things that we're facing, but you're dealing with a team that has proven that they can overcome those things, a team that is dedicated. And one thing I can tell you, when you have a team that's dedicated, that shows up every single day focused on how to create value for our shareholders, how to drive excellence in the experiences that we're hosting and the assets that we're building, Never bet against an underdog. And that's how I viewed us. We've fought against the odds, and we've continued to win. Our expectations for 2022 couldn't be higher on all fronts. I look forward to bringing you more updates, announcing more great opportunities both on campus in our virtual environments, in our gaming space, and in our media space. And I think our fans and our guests are really going to enjoy what we're going to have to offer this year. I'll just conclude by thanking everybody for tuning in, and now we'll open it up for questions.
spk04: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd 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. One moment, please, while we poll for questions. Our first question is from Jack Vander Aard with Maxim Group. Please proceed with your question.
spk02: Great. Thanks. Hi, Michael.
spk03: Congrats on the continued momentum, and welcome to Benjamin Lee and Rob Borm. Okay, just a few questions. I'd like to start on the major recent sports betting partnerships you've announced. I'm sure you're happy to welcome Rob to lead some of those efforts. So I understand it's still early stage given the licensing requirements, but the 10-year agreements of Genesis and Rush Street, those are long agreements. I imagine there's a lot of planning going on behind the scenes and negotiations. So I want your overall kind of thoughts on what led you to pick those partners. And then I also want to touch on the sponsorship opportunities that are tied to these agreements. That's a mouthful. I'll let you share some color and thoughts in the first part of that question.
spk00: Yeah, thanks, Jack. Thanks for the question as well. So let's just start with why multiple partners. As we evaluated, and we went through a very lengthy process, probably a good six to eight months talking with all of the usual suspects in the gaming space, what we had to do was consider not only the operational capabilities and the execution that each of those partners were going to bring to bear, but their enthusiasm for us as a partner. And what we focus on is a partnership that delivers opportunity both ways. In addition to that, and just being blunt, we focused on the opportunity to grow revenue. And so why the two sponsors? Because we had a chance to maximize the benefit, the financial benefit to our company. The other reason why the two sponsors, we felt Rush Street Interactive was just best in class in operating retail environments. They had done that. They had proven themselves to not only create, and as I spoke with their CEO, his passion around creating really wonderful, immersive environments that translate into great financial results was something that I was compelled by. And so signing that deal for us I thought was a big win. Genesis Global was very different. Hasn't operated in the US but has done so very successfully overseas and had a different type of technology that was interesting to us. So much so that in our deal we negotiated an opportunity to take an equity stake in their company. We feel like their platform is going to be exciting and compelling. It will be unique in the environment here in the US. They're already engaged in multiple states from a licensing perspective. And so, again, world-class partners that could deliver best-in-class experiences, maximizing financial opportunity, all our goals. Now, each of these also had sponsorship components, meaning the companies are paying us to be affiliated with our assets on-site or our virtual assets like our gaming environments. I'll use Genesys as the example. we felt very strongly that an online betting platform would accommodate very nicely our Hall of Fantasy League. Remember, these are teams playing each other virtually. It's a team-based fantasy league, so they're playing each other virtually on a weekly basis. When teams can play each other virtually, people can place bets on those games. And so Genesis was excited about having the opportunity to host our league, and we're working with them closely to ensure that that can happen. they also know that they want to market and sell to our guests and our ecosystems. And so sponsoring different types of events or sponsoring different physical assets was an important part of the relationship, and both of them contributed financially to those sponsorships. Lastly, the guaranteed revenue was important for us as a company. So why 10 years? It's substantial revenue for us, and over a 10-year period of time, the reliability of those contracts delivering on an annual basis that kind of revenue not only allows the stability of our operating environments but it enhances our ability and has enhanced our ability to garner additional senior lending or commercial financing. So we were very strategic in these two relationships on multiple fronts and I felt like we landed in a great place for us as a company and I think we're going to bring value for them as well.
spk02: Great. I appreciate the color.
spk03: Maybe just a follow-up to that in case you don't have enough to juggle already. I'm curious from a big-picture perspective if you can share your thoughts, if any, on potential longer-term sports betting opportunities outside of Ohio.
spk00: Yeah, so one of the things, if you remember, Jack, we talked about this a while ago that we're interested in doing And look, we don't want to boil the ocean here, but we're trying to be longer term strategic in our planning. We do feel like that there is offsite asset creation that is in our long term strategic plan. What that looks like, I would say a representation of what we're doing here in Canton, nowhere near the size, entertainment in a box that may include some type of sports memorabilia, that may include e-gaming, Sports betting could certainly be a part of that where sports gambling is legalized or sports betting, I should say, is legalized in the states that we're going to be in. I would also just a bit of foreshadowing give you the fact that if you consider our Hall of Fantasy League and what we would want to do there in terms of having our participants be able to bet on the games, it would probably make sense for our franchises to be located in states where sports betting was legalized or where we knew sports betting could be legalized. So, you know, again, an eye towards the future. I do think sports betting will play a part in our company's future, probably a significant part both in terms of onsite here on campus and then virtually, but also offsite as well. And as John said and as I said in my remarks earlier, This is all sort of found opportunity. We didn't have this in the 150 and 50 numbers that we've communicated. So it's either going to be great upside or it's going to cover a shortfall that we may have here or there depending on how the markets continue to evolve and how travel and how the guest experience continues to evolve for us as a company.
spk03: Great. And then just one more for me. It's good to hear the reiterated 2022 guidance parameters, and more importantly, your longer-term revenue and EBITDA targets remain intact. Now, there are clearly a lot of moving parts in the pipeline, but can you maybe help us outline or just walk us through the specific drivers of that 2022 revenue guidance? It's a big pickup from last year, and just so we understand all the new pieces or the expansion of the existing pieces.
spk00: Yeah, sure. First of all, building new assets. Let's start there, right? When you build new assets, you're generating revenue in multiple ways. The leasing of the physical places by all of these great brands that we're bringing on campus, percentage of revenue as well that we would derive from those opportunities. Secondly, the event opportunities grow when you have new assets. We've had the stadium and the sports complex, now the Center for Performance, as I've said, We have already booked literally hundreds of events starting in Q3 and Q4 of this year. That's significant revenue growth. Sponsorships, the more events you have, the more assets that you have, the more media content that you're developing and distributing, the more gaming environment that you have, that's significant growth from a revenue point of view. Sports betting, again, not in our plan. If we obtain our licenses, which we have every expectation of doing so, and we stand up sports betting, sports betting revenue hopefully by the end of this year starts to become part of where that revenue comes from. And then I would also say, you know, the digital collectible space, we expect that space to continue to expand for us, offering new and different types of collectibles with our partnership in the Pro Football Hall of Fame, and I got it. I think these one-of-a-kind artifacts that people haven't seen before, may never have a chance to have an ownership part of, they're going to be very compelling. And I think we've got a good strategy in terms of on-sale and pricing, which we've continued to evolve over this past year. So a lot of new revenue opportunities that just simply didn't exist and a lot of revenue opportunities that we're going to be able to expand upon given the number of assets that we're building the exponential growth in events, and the opportunity to stand up gaming even in a bigger way and the media content that we're going to be pushing out, all of those things represent significant upside for us.
spk02: Great. Well, I appreciate the color, and congrats on the continued execution. Thanks, Mike. Yeah, thank you, Jack.
spk04: Thank you. At this time, I'd like to turn the floor back over to Ann Grafis for additional questions.
spk05: Thank you, Kyle. So we have a few additional questions. Just a couple quick hits for Mike. Related sports betting, we'll continue down that line. Timing of procuring the licenses. Do you have any indication after your conversations this week as it relates to that timing?
spk00: Well, here's what I would say. The conversation that we had yesterday with the Ohio Casino Control Commission couldn't have been more positive. I'm very thankful for their insights. There's no preferential treatment, just to be clear on that. But we meet all of the criteria to obtain licenses. We knew that as we were tracking the legislation from last year. We stayed very close to that. We worked with consultants, we worked with legislators. Everything we do, we do with a purpose. And so what we want to do is, now that we understand the process more clearly, we will be bringing on board the individual groups that have the expertise in writing these applications on our behalf. showing the economic impact that we're already having on our community and in the state of Ohio, which was one of the key criteria, by the way, job creation, economic impact, etc. And then we'll be applying for our licenses, hopefully, you know, in the coming months. I think the rules are still being vetted by the Casino Control Commission. I think they're doing an excellent job at being pragmatic and making sure that when they launch this and recall They will launch everything at the same time. This isn't a first-come, first-served type of situation. They reminded us of that yesterday. I think as we're positioned for success, so are others. And I'm hopeful that by, I'll call it Q3, Q4 of this year, we will have obtained a license, stood up our experiences, and be out entertaining our guests in these environments, both physical and virtual, and allowing them to place bets to enhance the way in which they engage with the sport and all sports.
spk05: Thank you. So you've talked a lot about supply chain constraints, the environments that we're living in. What gives you the confidence that we will be able to reach opening goals for this summer before enshrinement as it relates to several key components on campus?
spk00: Well, yes, supply chain is real. There's no question about it. And anyone who doesn't understand that, I think, I would encourage you to just pick up a newspaper or go online. I mean, every company everywhere is feeling this, from the auto industry to certainly real estate development. Every single industry is feeling this. We're no different. What gives me the confidence? The team that I've surrounded myself with. This team has done phenomenal things to overcome supply chain issues. Again, we deliver the Constellation Center for Excellence on time, on budget. unheard of. The Center for Performance, here's a good example of the creativity that we have in our organization. We originally conceived this building to be a brick and mortar building that we were going to build and it was going to be a very expensive building. We took a hard look at it mid last year and we made the decision that why would we need another brick and mortar building that was going to have to consume a lot of steel, a lot of lumber, things that were going to be high priced, things that were going to be challenged by way of timing to come in, why don't we create this wonderful new architectural statement in this fantastic dome? And it's fantastic. If you've seen it online, it's 100,000 square feet. It's 86 feet high. It's going to be a great statement, not only for our campus, but for the city of Canton and Stark County. Why not create an environment like people are used to seeing in athletic facilities? They like going into domes and playing into domes. What did that do? That cut the cost by two-thirds. It cut the use of steel down by 90%. It took a building that was going to be $40, $50 million down into the price range of $15, $16 million. It helped us to ensure that the execution and the delivery of that building was going to be on time. It wouldn't have been on time if it was going to be a brick-and-mortar building full of steel. What did that do in terms of our ability to then offset costs in other facilities, water park, hotel? Realizing that we didn't need as much steel for this building, we could then place our orders for those other facilities and lower our costs and the timing of execution there. So the point I'm trying to make is we manage this process on a daily basis. This is what we do. I've built these things. Our team has built these things. We know what we refer to as the lookout force, and we are constantly working with our contractors and our advisors to ensure that we do what we say we're gonna do, which is deliver the assets in the timing that we say we're going to deliver them.
spk05: So can you share a little bit or expand upon what's going on related to the Pro Football Hall of Fame, how our company is interacting and continue to move forward as it relates to opportunities that exist there.
spk00: Yeah, I mean, it's been great. You know, Jim Porter took over as president of the Pro Football Hall of Fame. He and I are not only friends, we've worked very closely together on other things in the city. He is an incredible advocate for what we're doing, as am I, for them. We're building around the Pro Football Hall of Fame, off the brand of the Pro Football Hall of Fame, in partnership with the Pro Football Hall of Fame, in addition to the NFL Alumni Association and other activities that we're doing with the NFL themselves. But the goal here is to continue to grow the relationship in a way where it's very synergistic. A good example of that was our deal with I Got It. This was a relationship that the Pro Football Hall of Fame had and decided to expand and include us as we had built expertise in the NFT digital collectible space And so, you know, as we met with I Got It, it was really clear that without a close relationship with the Pro Football Hall of Fame, that opportunity would not be there for us. We would not have been able to generate growth in our NLP space and also growth in revenue opportunity in the future. There are many, many other of those types of events that we're already doing in partnership with the Pro Football Hall of Fame, some of which we're going to be announcing in the very near term. I would say that, you know, as you think about events on campus, concerts, other types of non-sport and sporting events, the USFL event brought to us in partnership from the Pro Football Hall of Fame. These are great new opportunities that through a stronger partnership, our shareholders and our guests are going to benefit greatly from. And honestly, our goal is to help the Pro Football Hall of Fame continue to drive attendance there, continue to evolve and enhance the experience in that already fantastic building. And we're building media content, gaming content, virtual environments off of the greatest that ever played the sport to begin with. And so you have Isaac Bruce doing an ice cream and cookie concept. You have Don Shula, the late coach, who's doing a wonderful – steakhouse concept here. We have other Hall of Famers now calling us and asking us to be a part of our business model. And you see it, Terrell Davis, our commissioner of our league, the perfect 10, on and on and on. So the relationship is strong, getting stronger. Sponsorships, I think we're going to benefit from a closer relationship with the Pro Football Hall of Fame and event growth. Certainly, I talked about there is going to be tremendous as well.
spk05: Great. Well, thank you, Mike. In closing, I just want to reiterate our sincere gratitude to all of our investors, shareholders, partners, supporters, and friends, and thank you very much for taking the time to be with us this morning. Wish you all a wonderful day ahead.
spk00: Thank you.
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