Hall of Fame Resort & Entertainment Company

The call is being recorded, and all participants are in listen-only mode. We will open up the conference for questions and answers following the prepared remarks. I will now turn the conference over to Anne Grafis, Executive Vice President, Global Marketing and Public Affairs.

Good morning, and thank you for joining us for our second quarter 2023 earnings conference call. Our latest press release supplemental slides in Form 10-Q 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 update on the company's strategy and outlook. Benjamin Lee, Chief Financial Officer, will then provide analysis of the quarter's financial results and an update on the company's fiscal year 23 financial guidance. 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 all 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. It is now my pleasure to turn the call over to our President and CEO, Michael Crawford. Michael?

Thank you, Ann. Good morning, everyone. I hope everybody is having a great Friday. It is a really nice day here in Canton, Ohio. I thought before I would start in on the Q2 highlights and some of the results, which, by the way, we were very pleased with and encouraged by. I'd be remiss not to talk a little bit about enshrinement week here in Canton. It was an absolutely spectacular week. I think the community did an outstanding job coming together. We had hundreds of thousands of folks descend upon us over a four or five day period of time. There are multiple things that go on here in the city and in the county from Balloon Fest to parades to fashion shows. There is just a tremendous amount of support for this event. And why not? I mean, it's one of the best events in the world and one of the best events certainly in professional sports. We had over 100 previous Hall of Famers return You can't imagine the excitement and commitment seeing that number of individuals, the greatness that returns here to Canton every single year to support the new enshrinees. And so for us, it was an opportunity, an opportunity to do several things. First of all, an opportunity to showcase an operationalized Hall of Fame village. And we did that very well. Play Action Plaza, with our three rides, a concession area, an outdoor amphitheater, really was activated. A lot of entertainment there, different opportunities for our guests to partake in beverage and food. And so it was really fun to see the thousands of guests up there sort of pre-gaming, tailgating, and just enjoying the environment. We offered a brand new first down fest. And so the Hall of Fame used to do a fan festival. We took that over this year. out in our Forever Lawn Sports Complex with so many different partners and sponsorships, really bringing that area to life and activating it as well. And our fan engagement zone. You know, we've had over this past quarter and ongoing, we've had new tenants open new experiences, and our guests really enjoyed the opportunity to have dinner at Shula's, play Topgolf, experience new product that's getting ready to open. Certainly our cookie ice cream concept with Isaac Bruce was a smash hit. There were lines for these locations all weekend long. And for me, it was just gratifying seeing a lot of hard work from the team actually being activated and come to life. Our partnership with Hall of Fame could not be stronger. We continue to do things together. I think that's going to help both of us in the long run become even more important and to the sport of professional football and the activation around what we can do here in Canton, Ohio. The other thing that was really interesting for me and completely unsolicited during the game, during enshrinement, nationally televised events, you have world-class broadcasters like Mike Tirico and Chris Collinsworth and others talking about now how this village is actually coming to life and how interesting and exciting it was for them to see it become a destination, to become a place to vacation. And that kind of promotion, that kind of brand and destination acknowledgement for us is invaluable. The other thing that was great for us was the Cleveland Browns were playing in the game. And growing up in Ohio myself, it was exciting to see. It was a really good game. You know, we had a few issues in the stadium that were quickly corrected by our team. I was very proud of the fact that the reaction was almost immediate. You know, sometimes those things happen. No maintenance difficulties, just some technical things there. But the fan experience was really one of a kind. And during... The game specifically, the acknowledgement of how our company is growing and the experiences we're creating are really having an impact on people's lives. And that's the greatest satisfaction for us. It was a record-setting weekend, both in terms of attendance and also in terms of revenue across many different events. Enshrinement, our concert for legends, and certainly the football game sold out in a matter of 30 minutes and the Browns were victorious. So that made a lot of people from Cleveland very, very happy. For us, the brand was one thing, but the marketing opportunity was another. And having what I refer to as the Hall of Fame Highway, the highway between the Rock and Roll Hall of Fame and the Professional Football Hall of Fame, just full of people coming to Canton, seeing everything that we're doing, all of the experiences coming to life. And hearing and talking to many of them saying, wow, this is really special, it's in our area, it's in our neck of the woods. We now know more about this and we're excited about coming back. That is exactly the type of marketing and branding that we were looking to have. The last thing I'll say is we got to have the ability to be a bit more scientific this weekend as well in terms of really capturing how many people were on campus. And again, record setting in terms of geotracking, the number of people that came to campus here at the Village, spent time here, and also enjoyed experiences and spent money here. And so the more of that that we can do, the more that we can get sophisticated around geo-tracking, understanding our audience, and then target marketing towards that audience, the better we're going to become at activating and growing our company. Let me turn to Q2 highlights, if I could. I would say a lot of different things have happened over this last quarter. things that we're very proud of. But the thing that I talk about a lot is just remaining focused on the five key priorities that I highlighted in Q1 on our earnings call at that point in time. The first was balancing expenses with revenue growth. And, you know, for us it's important to recognize that we're still very much in the growth phase of our company in every asset, every media content, every gaming environment that we're developing. And so we're spending money to build these environments and experiences for our guests. But it's also important that we continue to focus on the cost control side of the business. You know, we're one year into operation. It was exactly a year ago during enshrinement week that we sort of opened up the village, if you will. Not all of the experiences were ready, but we were able to showcase a lot of assets that were there and ready to become operationalized. And as you've seen, we have shown strong revenue growth over that period. In fact, you know, over 100-plus percent revenue growth quarter over quarter, year over year, and that's attributed to the team and their efforts around activating, programming, and also asset development as well. You know, the fact is Tom Benson Hall of Fame Stadium is now becoming home to many nationally televised and recognized events. We hosted USFL regular season here. We hosted playoff and championships here. We also hosted at the Forever Lawn Sports Complex many large-scale youth and adult tournaments ranging from lacrosse to soccer and to football, to flag football, and that continues to be an important attendance driver for us, but we've also realized how to monetize that attendance in a much more synergistic way. The other thing that we were able to do is, as I talked about last year, flatten seasonality. What that really means is instead of all of our attendance coming from May through, I'll call it November, with the opening of our Center for Performance, our indoor dome, we were able to attract many hundreds of thousands of folks from that non-peak period, I'll call it November through April, May. And that was really important to us. It's important for two reasons. One, driving year-round attendance and revenue. Two, being able to offer partners and sponsors the reality of a destination that is activated year-round. And so we were really happy with the number of leagues, the number of events, We hosted not only sporting events, but non-sporting events in there as well. And we continue to do that and activate that really important asset for us, which leads to a lot of great synergies as well. Play Action Plaza, we added our third ride, Spike It. If you have a chance, come out. I think the third ride gives us enough critical mass to sell day attendance passes, year-long attendance passes. And I've talked to many kids and adults out there walking around and they seem to just be thrilled with the amount of activity that we now have in that particular area. We opened multiple new facilities in our fan engagement zone. Top Golf is now open and doing incredibly well. Brew Kettle is a fantastic partner there and in fact you probably would have seen for Entryment Week and it's still obviously ongoing. We work closely with them to co-brand a beer which I think is a wonderful beer. It's a Pilsner called Grid Iron Gold and the response to that was just overwhelmingly positive during enshrinement week and now we're selling that throughout our campus and we hope to take that off campus as well. Synergy is important to us. I talk a lot about synergy. It allows us to scale experiences. It allows us to scale revenue and, you know, sort of amortize costs over multiple different things that we do. We have created experiences that I think now offer us the opportunity, and I'll talk about one that's coming up this week, this weekend I should say, where if you're bringing in a large-scale sports tournament, our hotel is full, our restaurants are now full, the Hall of Fame Museum is seeing attendance upticks, and so it's really taking the one-off guest experience that used to be a single thing and taking it and expanding it into multiple things where people are riding and buying concessions and the parking revenue and all of the different types of things where we can activate each of these verticals, crossing over into the other two verticals allows us to really grow the company. It also allows us to take guests and fans and make them into super fans. And that's a big part of what we want to do. We want to really create stickiness to our environment. And I think we're seeing that with repeat visitation. The last thing I'll say about, you know, growing revenue, we certainly have had a focus on different business opportunities. And one of those, and we're starting in a very small way, is merchandise and branded merchandise for the Hall of Fame Village in particular. I think our team has done a really good job at creating unique merchandise and that is on brand, but also in what I would call in vogue with the merchandise that people are buying today. And so it was gratifying to see people coming and saying, wow, it's really great to see that. What that does, obviously, it gives us another revenue channel, but also it creates brand ambassadors, ambassadors that are out there walking around with our logos, creating opportunities to engage with other folks around what is that? Where did you get that? What kind of experience did you have? And so I thought that was really fun to see over the last week, and that's a business that we've had ongoing for quite some time now. We're working hard to expedite the stabilization of our company, but here's what I would say, having done this for a lot of years of my career. Stabilization typically comes three to five years in to any sort of company growth or asset development. It takes time for people to understand what the experience is. It takes time for that to be part of their vacation planning cycle. And then it takes time for that to really stabilize. And stabilize means not only the revenue side of the sheet, but the cost side of the sheet as well. You become more efficient. You learn how to operate the destination more efficiently. I can tell you that our team of leaders has meetings about this every single week. We talk about where our opportunities are to become more efficient. And I think we are becoming more efficient. But we're still a young company. And, you know, we're a company, as I said earlier, that is investing in our growth. We're an early stage company that has to invest in the growth of new asset development, new content development, new environment development. And I think we're doing that really successfully. We're managing our expenses, but we're also against the outflows, but we're also managing the growth of experiences that our company is able to offer and able to offer in a very unique way. The second thing that I talked about in Q1 is our balance sheet. There's no question that a good portion of our balance sheet is very stable. And we've been very creative with both public and private partners as to the type of debt that we've taken in, longer term, very reasonable interest rate debt in an environment where inflationary conditions are taking hold. Lending is actually stopping and some of the areas in which we're still able to obtain financing. And so I'm encouraged by that side of the balance sheet. There is, though, work to do. We do have and we did have to take on debt that is shorter term, that is higher interest rate type of debt. And Ben will talk more about that and his highlights and remarks. But I would just say this. You know, it does remain top focus for us. We want a balance sheet that allows our company to grow and sustain over the long term. And so that has been a focus for us. It is more complicated by the fact that when you have several different vehicles that you're working within, every time you go to think about restructuring one, they touch pieces and parts of others. And so this is work that we'll be talking about and we'll continue to talk about over the many couple of months in the near future and provide updates to you at those points in time. The third point is identifying what I would refer to as strategic deal of business partners. I think we've shown that as we have grown, we have been very thoughtful around the types of partnerships, the types of events, the leveraging of our assets and how we do that to grow and really showcase the capabilities of our team and of our company. We tried new things. If you were here for the USFL Championships, we hosted a country concert in our fan engagement zone. First time we'd ever done that. It was absolutely spectacular. Thousands of guests there activating that part of the campus. We opened up our stadium so you could traverse back and forth. It was really seamless for our guests. And it was very productive for us. And the guest experience was incredible from what we were able to discern. People feedback was you need to do more of this but it extends past what we're doing here on campus at the village. I mean we've signed multiple new media deals as I said filling our media pipeline is really important. We have taken on relationships with Brinks TV. We've taken on relationships and signed deals in other areas with Reach TV producing multiple shows with them. These are partners that allow us to use our access to intellectual property that no one else has and distribute to hundreds of thousands, if not millions of eyes all across America in hotels, in airports, streaming, et cetera. And so this, the goat code we were advertising during enshrinement weekend, talking about how the greatest got to be great. The tech in this show is fantastic. The storyline is fantastic. It's short form content that I think everyone is going to enjoy. It's in production right now. It'll be in distribution in the very near term. And then the multiple other shows that we've continued to sign up, I think are going to be really, really wonderful for our guests and bring our brand and our product to life. We've had our NFT Paula Villager pass holder out there. I think it's been interesting to see that our highest level of annual pass has sold out and there is a demand for more of that level, we have really activated that program with unique and special access to content, to events, to merchandise, and I think the feedback has been quite positive on that front. This is really an annual pass for our company. It's not just an annual pass for the Village. And so, you know, media premieres and gaming activations, you know, these pass holders get special access to things that others do not. And so we're going to continue to look at how we evolve and restructure those to meet an even greater demand as we continue to grow our company. In our gaming division, obviously we continue with the eSports vertical. We've hosted multiple tournaments in Q2. It was fun and interesting for me to meet a lot of senior executives from e-gaming companies here during enshrinement week and their reaction to what we've done on campus and how we've continued to activate the campus in that space. Fantasy sports remains a priority for us this weekend. We have a very large fantasy football expo that is sponsored by NBC Sports Edge. also live streamed with Sirius XM Radio, their fantasy channel. And it really does, again, showcase the synergy when you bring an event that is fantasy-based or esports-based, staying in hotels, media coverage, space rental, concessions, rides, all of the things that we do now can be monetized through these types of events. And so it's one of those things where gaming starts to become an important part of what we do. Our partner at Better, you'll recall that we have taken a shareholding interest. Their percentage of handle in Ohio continues to grow. So we're encouraged by that. But more importantly, the profile of their company continues to grow as well. And Joey Levy and his team are doing a great job. And they've now been able to extend Better's reach into multiple other states. And that benefits us through our shareholding percentage. The fourth point that we talk about is just continuing to develop our phase two assets. And so I posted yesterday on my social channels the exciting news that our water park is finally going vertical. We've been doing a lot of the underground work, a lot of the work that sort of sets up the structure of the water park. We expect this to be fully enclosed by the end of this year. And so steel will start to go up next week. More of those prefab panels that create the shell of the building continue to go up today and beyond. And so the water park really is a phenomenal asset. I continue to review the drawings and the designs. It's going to surprise and delight our guests beyond their wildest dreams. And by the way, we're looking at some tech in there that's going to really enhance the guest experience as well. We're growing our on-site hotel presence with the Hilton Tapestry Hotel that we've talked about. We're anticipating this hotel to open right at around the timing of the water park. Those two assets are connected to help mitigate some of the weather considerations here in Ohio. And again, reviewing those designs and looking at what that hotel is going to represent to us, giving us an onsite presence is really important for the stay and play kind of environment that we're looking to create. Lastly, The fifth thing that we focus on is just creating unique experiences for our guests. And I talk about this all the time. We are putting the right team in place in all of our business verticals to really drive experiences, to be thoughtful about how we use our intellectual property, how we attach ourselves to professional football and other sport, how we leverage our license agreement with the Pro Football Hall of Fame to access Hall of Famers and leverage their brand for our growth. And we are on a track right now for record attendance in 23. And I'm really happy to report that because with record attendance at the village leads to record growth and revenue leads to record growth and experiences, marketing, branding. And so that's the whole goal here to continue to open assets, to continue to create environments where our guests just keep coming back to over and over and make them sticky so that they want to be a part of our ecosystem. The other thing that we're very prideful of is the experience itself and the quality of the experience. I'll reference the Doubletree Hotel, our downtown hotel, which we've now had open for nearly three years, in the top three of Doubletree's U.S. customer service. And that is absolutely fantastic when you think of the breadth of the Hilton portfolio. For us to achieve that year over year, the team there is so committed to They put on a great show. The Hall of Famers stayed there all week last week. The feedback we got was unbelievable. Can't wait to come back. The asset itself is great, but the team is what puts the life into that asset. And as we all know, when you go to a place and you feel welcome and you feel like you're taken care of, you go to that place again and again. We're seeing business travelers tick up there. We're seeing meeting and convention business tick up there. Obviously, that is probably one of the best cases for synergy for our company. Every time we're doing programming, our own hotel is full. And so, you know, it's really encouraging to hear the feedback, not only that we're opening and creating new things, but the things that we're building, the environment, are of the highest quality. You create quality, people will come, people will pay, and people will repeat. I'll just close by saying before I turn it over to Ben, you know, our long-term strategy is to deliver results. That's what we've committed to. That's what we've stayed steadfast on focusing on. And it's working. You know, when you look at the revenue growth, when you look at the attendance, when you look at the environments and the quality of the product, we are absolutely headed in the right direction. And I have confidence that we will continue to make the right decisions to grow this company and to add shareholder value. I realize that people out there want the stock to be $100. I realize people have had concerns about some choices that we've had to make in our past to preserve our ability to drive long-term success. But I think what we've tried to prove and demonstrate is transparency is critical. We've been transparent about what we've done, when we've done it, and why we've done it, and we will continue to do that. And we've highlighted the growing interest in our companies and the many leaders from different spaces that are now coming and wanting to talk to us about an opportunity to partner with us, be it in the media space, the gaming space, or even taking up residency here, creating spaces or events and things of that nature here at campus at the Village. We got a great Q3 and Q4 ahead of us. I'll talk a little bit more about that in just a few minutes, but I'll wrap by saying I viewed Q2 as a fantastic success for us. and it continued to highlight what we can do if we stay focused on our long-term strategy. Turn it over to Ben.

Thanks, Mike, and good morning, everyone. Moving on to financial results, and as Anne mentioned earlier, we filed our second quarter fiscal 2023 Form 10Q post-market yesterday. The filing, press release, and supplemental slides are available on our investor relations site. Second quarter total revenue was $6.1 million, which represents an increase of 128% from the same period in the prior year. Second quarter revenue growth was primarily driven by higher event and rental revenue at the Hall of Fame Village, increased operating revenue at our Doubletree Hotel, and sponsorships. Second quarter adjusted EBITDA was minus $6.2 million compared to minus $5.9 million in the same period last year. The change is primarily driven by increased operating expenses related to hire personnel and related benefits costs, the recognition of timing for certain compensation-related expenses, and an increase in production fees for our events and media productions. As you would expect, our expense base has increased as we brought new assets online, increased event programming, and work to hire and train staff needed to manage and operate a world-class destination. Regardless, we remain focused on prudent cost management and driving improvements in operating efficiency to enhance future profitability. The company posted a net loss of $13.6 million in the quarter, which included an increase in the fair value of securities available for sale of $1.7 million and higher interest expense as a result of higher debt balances and lower capitalized interest as assets are placed into service. Moving to the balance sheet. We finished the quarter with a cash and liquid investment balance of approximately $29 million, compared to $47 million at the end of the prior quarter. Both values are inclusive of restricted cash balances and investments held to maturity. We've continued to invest excess funds in short-term treasuries due to attractive yields and a better match timing of cash outflows. The company's usage of cash was attributed to operating activities already highlighted and construction expenditures, which totaled approximately $10 million during the second quarter. Our net debt balance increased to $195 million, compared to $192 million at the end of the prior quarter. The increase in notes payable during the quarter was primarily due to accruals of paid-in-kind interest. We've also received proceeds related to our Series A preferred, our EB-5 program that was reinstated in late 2022 and will continue throughout the remainder of this year. Recent macro trends and credit conditions have resulted in significant tightening in the lending markets and higher borrowing costs. However, the support from our largest shareholder, Industrial Realty Group, and our ability to source capital with the support of local, municipal, and state funding programs has provided us the opportunity to raise funding and investment as investment and operating needs arise. We continue to work towards closing all of the necessary financing required for Phase 2 construction, including multiple financing transactions related to the water park and on-site hotel. Additionally, we expect to close transactions necessary to refinance and optimize the capital stack for the Doubletree Hotel later this quarter. As we've done in the past, it's important to reiterate two key points. First, the company's ability to execute and raise capital in an ever-changing and very difficult macro environment. And second, our intense focus on taking on the right kind of financing at the right time while optimizing the capital stack for each asset. We will continue to restructure and optimize our overall capital structure in a way that positions the company for future growth. Moving to guidance. At this time, we are updating our forecast of 2023 revenue with expected growth in excess of 50% when compared to 2022. We are revising our adjusted EBITDA estimate as we now expect this loss to come in in the low to mid $20 million range. As we've highlighted, with the company and village in the very early growth stages, we expect revenue growth to accelerate and profitability to improve as we move towards stabilization. Longer term, 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 once stabilization is achieved. Those key pillars, again, are destination-based assets, our media platform, and our gaming vertical. The revenue and EBITDA generation will be diversified across multiple streams, with each one driving synergies to support the ecosystem we're working so hard to build. In closing, the company is mindful of the current economic environment and will remain intensely focused on driving profitability through diversified revenue streams and disciplined cost management while making strategic investments to support continued growth. We'll continue to analyze and optimize our capital structure to deliver a long-term value to all of our shareholders. And finally, as you've come to expect, we'll continue to provide transparent and timely updates to all of our shareholders as we move ahead. Operator, we would now like to open the line for any questions.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 for your telephone keypad and a confirmation tone to 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 that are 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.

Once again, that's star one. Thank you. Thank you.

And our first question comes from the line of Jack Vandarte with Maxim Group. Please proceed with your questions.

Okay, great. Good morning, guys. Great to see the strong top line growth, both year over year, sequentially, and reiterated guidance for 75% revenue growth in 2023. So Michael, it looks like events revenue really picked up and you saw growth from your existing hotel operations as well. And I see the sports complex attendance looks like it's on track to more than double this year as well. So great stuff there. I've kind of loaded questions for you. With hotels, I think your Doubletree Hotel has like 164 rooms. Is this, so is the growth in hotels being driven by just higher occupancy levels, which would be a good sign, or is it pricing increases? Anything there? And then just as we look at enshrinement week for the third quarter, how do we think about your hotels and your events activity and the associated revenue momentum in the third quarter versus second quarter? Thanks.

Yeah, thanks, Jack, and appreciate the question. The hotel is actually entering into that more stabilized phase that we talk about, and we've actually been able to accelerate that. largely because we put a lot of our own programming into our own hotel, right? And so every event we have, every football game that gets played, every concert that's here, large-scale sports tournaments, we are absolutely marketing our hotel as a package opportunity. Now, to your question, the great thing about what we're seeing this year is there has been a return of the business traveler and We have a unique asset here in Canton where the ballroom is the largest in the county. There are a considerable amount of meeting rooms. The reconfigured bar and restaurant is really pretty special for groups. And so occupancy has definitely gone up versus our original projections. But the other piece to this is the rate. And we've been able to, the team there has done a good job at increasing rate while not sacrificing occupancy. And I think it's just a tribute to the asset quality, the experience quality, and the uniqueness of its position in the market. As far as enshrinement, yeah, I think, you know, look, the Pro Football Hall of Fame hosted multiple events there, large-scale dinners. Certainly the Hall of Famers stayed there. which was great for us. The food and beverage, the room rate across the county goes astronomically higher during large scale events like enshrinement. We benefit from that as well. We were 100% occupied effectively the full week. And so it was gratifying to see that that hotel really does test out well with the highest profile guests. It was fun to see guys like Peyton Manning there, just having a great time. All of the other Hall of Famers, you know, really talking about the asset and how wonderfully it performed. And the team there is to be commended. They just did a fantastic job at maximizing. And you have to also recognize when you have a different audience, you profile from a food and beverage standpoint what is going to allow you to have the best experience for them, but also have the best revenue opportunity as well. And so I think the team has done a good job at executing on that front.

Okay, great. A lot of helpful color there, Michael. And then maybe on the gaming side, it looks like you actually have planned a lot of cool new activities if I look at the slide decks here. A couple things that caught my eye. With on-site and virtual events, it sounds like you're hosting and producing tournament events. I see tournament prizes and video game titles like Super Smash Brothers, and Madden. So are you actively hosting these tournaments now? And then also just when you think about the Hall of Fame Fantasy League as well, I'd just like to get your thoughts there. It looks like you also introduced new formats and cash prizes. So it sounds like you're really ramping up tournaments and cash prizes in an attempt to just capture more of a buzz and demand. So Just an update on your activities in gaming and kind of the brand awareness and demand and traction you're getting there.

Sure. Well, first I give a lot of credit to Rob Borm. He's our head of gaming. He's really got a focus on this and a great background. Our assets are really unique in the gaming space. And so it was fun to see some of these tournaments being hosted in our stadium, up on our giant boards, I mean, these kids and others that are playing, this was so phenomenal for them. You know, they had their families or friends or others coming out and seeing it. And, of course, as I repeat myself here, those types of tournaments aren't just about entry fees. They're about food and beverage. They're about rides. They're about stays. They're about everything else that we do and giving those participants not just a gaming experience but an overall destination experience. And so... We intend to do more of those. I know there is a focus to create more and bigger. We're also focused on how do we get into the college gaming space, maybe hosting national tournaments. Certainly there is a focus on how do we partner with some of the biggest gaming developers to host things here that are on brand for us. I won't go a lot further than that, but to say that You know, gaming, I think, is a driver for us. It's part of how we enhance the guest experience. And look, being a company that's in the sports and entertainment business, it's our responsibility to be in that space as well. And so we're going to continue to look at how we grow these, how we activate these, and how we position ourselves in that space with the unique assets that we have to do it with. On the fantasy side, yeah, I mean, we've done things that were different. We've, you know, allowed guests access to really critical fantasy information that helps them make better selections and be better fantasy players. The expo that we're hosting this week is a very large expo and growing and has an opportunity to really expose our destination to many of those types of fantasy players. Our goal, I think, should be we are the birthplace of professional football. Why there would be multiple different fantasy opportunities here every single year from small scale events to campus wide events. I can see those things growing and becoming an important part of a destination driver for us at this time of year. is an important space. We're going to continue to explore the right model there and how we leverage access to our IP and our brand to take full advantage of it.

Got it. Okay, Michael. Helpful call there. Good to see the continued momentum build. I'll hop back in the queue. Thanks.

Thanks, John. The next question is from the line of David Marsh with Singular Research. Please receive your questions.

Hey, good morning, guys, and thanks for taking the questions. And I would echo the previous comments. Congrats on the revenue growth. It's very impressive.

Great job. Thank you.

So first, for me, I'll start on the very top line here. Sponsorship is at $6.91. It's still about It's still a little less than half of where it was a couple years ago. Obviously, the ongoing dialogue, we'll call it, with Johnson Controls is probably continuing. Is that hamstringing you guys from new sponsorship opportunities and growing that more meaningfully? And could we just get an update on where the Johnson Controls situation stands today?

Sure. Sure.

Well, let me take the is it hamstringing this part. You know, in Q2, we signed about 16 new sponsors leading into Q3, which for us and that team, I think, was great performance. What we're seeing is the more we can activate the campus, the more events that we can host, the more media that we can produce and launch, the more that these sponsors are really starting to come around to the fact that we have special and unique IP. We have a one-of-a-kind destination. You know, the number of times, and we hosted a lot of our sponsor partners here and potential new sponsor partners here, the number of times I heard, wow, what we could do here and how we could showcase our brand, our product, or our service is really exciting. And so... The challenge in the world that we're living in today, when you're in the marketing division of a company and you're facing inflationary environment, some of those dollars get cut and companies aren't as aggressive in spending on sponsorship deals while they're trying to preserve cash and ensure that for this economically challenging time that we're in right now, they have the ability to sustain and grow themselves. We have had many new partners come and realize the long-term advantage of being associated with us, not just at The Village, but in many of our different business verticals. So proud of the team and the growth there. I think the tenure and the amount of deals right now, we're being very careful about. We don't want to sign really long-term sponsor deals until we can fully stabilize and activate all of our business verticals because we think we can maximize value by doing that. So we're signing a lot of one, two, three-year deals, and we're growing deals that we've had in place year over year, and our team has been successful in growing the dollar value that And so I think we're being very strategic around not committing ourselves for a too long period of time and not able to access the value and create the value. These deals are always two-way. Create the value for our partners that we can create six months, a year, 18 months plus from now. So that's one explanation that I think is important to have out there. The second piece of your question, Johnson Controls. Yeah, we are still in... active pursuit of resolution around the Johnson Controls dispute. We are heading towards Q3 arbitration. We're preparing for that as we speak. We went through the mediation process. There was some discussion around how we could resolve it. It wasn't satisfactory for us. It wasn't satisfactory for them. And so we continue now with the process. I will say that I have every expectation that we have, you know, a positive resolution on this and that we can move forward in the, I'll call it sort of Q3, Q4 timeframe. But look, I mean, we have the opportunity to explain to the Arbiter Panel why we feel like Johnson Controls is in the wrong here and that what we've done over time in terms of our financing and building commitment we made to them and they were a really strong partner for us and one that we wanted to have here I think we will you know be able to demonstrate why that is the case and why you know what we've done is exactly what we committed to do I think they have a different view and so the that will leave that for the panel to opine upon and then give us a decision one way or another we're anticipating a decision before the end

Yeah, I think resolution of that will certainly help. I can't imagine it being detrimental, so it would be good to get that in the rear view. Just shifting gears, if I could, do you have anything new to tell us with regards to the on-site sportsbook and a potential partner there and a potential build-out?

Yeah, so we have worked very carefully since we decided not to partner with Rush Street Interactive to ensure that whatever partner we bring in, our goals are completely aligned. And the first goal is to recognize we're a destination. We're not an individual experience. And so the sports betting component of that, I think, is an important experience part of what we want to offer here to our guests. We have three different partners that we're speaking with right now. I'm excited about all three of them for different reasons. We're being very pragmatic in our analysis and our discussion with them about how the partnership would work, the tenure of the partnership, the components of the partnership. But what's been interesting is that as Ohio has launched in January and continued to progress in sports betting, You know, obviously mobile is the lion's share of where people make their sports bets. And we've been very focused on activating with our partner at Better a unique environment there and making sure that it is a top quality experience. And they've enhanced and grown that experience. And so we feel very good about where they're at and our position there. I do still think that retail is important. I think retail will play a part of the experience. I'm not as sure that it is a significant revenue driver for us, but it is part of a revenue driving experience that I think our guests want us to have. And so, you know, our goal, our license for retail is through the end of this year. Our goal is to find a partner and activate prior to the end of this year. But if we don't, we want to find the right partner and we'll continue to then look for that partner and activate at the appropriate time. So still a priority. prospects out there and we're focused on it.

And in terms of the better business, I presume it's going reasonably well but still not meaningfully enough to move the needle on your in terms of your income and so forth. Is that a fair statement?

Yeah, I think we're a little over a quarter of a million that we reported this year in that sort of vertical from better I think that it will continue to grow. Our deal structure with them is one that allows them, as I said earlier, we invest in our partners. We want them to be successful. They were brand new in the space, so we weren't interested in trying to take a significant part of the bet or profit up front. It's a lot more back-loaded, and I think we are comfortable that the escalation in contribution, financial contribution, will meet the needs of where we'll be at the time that those start to continue to grow. But it is good to see them, you know, our value of our investment in them continues to grow. It's good to see them get licenses in Massachusetts and Virginia and beyond. And also just good to see them be recognized as an innovator in the space. And that's the kind of partner that we want to be associated with as well.

That's helpful commentary. And then just the last, you know, last, thing I wanted to head on really is, could you talk about, you know, obviously we're in infancy of construction here with regard to the water park and the hotel, but could you just remind us of timeline and when you might hope to open the doors on those new assets?

Yeah, we've really benefited here in Ohio from weather. Believe it or not, we had a mild winter, which If you understand what happens in the winter, the ground freezes really hard sometimes and you have to wait for that thaw to break ground on some of these assets. We didn't have to do that. So that allowed us to advance our schedule. We're right on schedule right now. There's vertical construction that's starting as of yesterday. Steel starts to go up next week. We'll be fully enclosed in the water park before the end of the year. So I'm excited about what we're building and the quality of what we're building. I've been told by water park experts that this is a very high quality asset, in fact, higher quality than many that they've seen. And so with the football theming and the quality of what we're building, we're looking at a Q3 into Q3 opening next year, soft opening. And we would say the same thing in that timeframe for the hotel as well. The hotel is just not as long a build. cycling you know once you've and we're doing a lot of the site formation underground work right now as a part of what we've had to do to establish the structure for the water park so that benefits us greatly and you know it's in a part of the property that is fairly self-contained and so we can move pretty aggressively there versus something that may be centered more where you have to watch for the guest experience closing down things closing down roads etc

And so, you know, Q3, Q4 next year is the timing that we'll be able to. That's really helpful. Appreciate it. Good luck, guys.

I appreciate the opportunity to ask some questions.

Thanks very much.

Appreciate the questions.

Thank you. At this time, I will turn the floor back to management for closing remarks.

We have a few more questions that have come in from the queue, and I will... share those. And the first up is, can you explain why your fiscal year 23 revenue and EBITDA financial guidance is reduced and additionally provide an update on cash position?

Sure, I'll take that one. Thanks, Anne. You know, first, we always debate on guidance. We're a very young company. This is a challenging area for us to provide guidance. We're learning sort of as we go. Nonetheless, we always, and we talk about this every time on each call, is we want to be as transparent as possible. The majority of the assets that we have have only been operational for a year, so we're always working to improve those synergies and efficiencies. Really, as we look at this year, we're reducing guidance, revenue down versus what we originally projected. Also, from an operating expense standpoint, higher than, I would say, what we expected. We're putting, as an example, very large shows, very large events on the increased production costs. That's one example of where we're seeing higher costs. But again, we'll continue to be as transparent with our investors as possible and provide guidance on the best information we have. Second question on cash position. Obviously, managing cash in near-term liquidity is always our top priority, as it is for any company. We're managing all outflows, very focused on cost and expense management, and of course, very focused on closing the next tranche of construction financing. Of course, other levers we can always pull to manage cash include slowing construction. We don't expect to do that right now, or entering really into some form of bridge financing until we close on all the construction financing transactions that that we've talked about, and really line of sight into those. We're looking forward to a Q3, Q4 close on all those transactions, which really closes out everything that we need for phase two construction financing.

I'll just add, if I may, just two things from an operational point of view. One has been said, early stage company, and so every day there are new business opportunities that we're evaluating. We are constantly updating our forecasts ourselves because there are new business opportunities. There's new opportunities for growth. Some are pros and some are cons. Sometimes you get news that still the supply chain issues are causing delayed openings, so that can impact our revenue as well. There was a question about Johnson Controls. I mean, we're working incredibly hard to replace that revenue, right? But the market, as I alluded to, market dollars. And so, you know, those were meaningful dollars in the six, seven million dollar a year range that we're having to try and replace. And that is meaningful when it comes to forecasting, because while we're trying, you know, it takes time to sign these types of sponsorship deals and sponsors again. And we're sort of aligned with this. We're not activating longer term because it's just where the market is and the challenges that So there's just things that, for an early-stage company, make forecasting incredibly dynamic, and the transparency is what's important.

So every time we talk, we want to make sure that we give the most updated view, and sometimes it's a positive, and sometimes it's a negative.

Would you address the going concern language in the 10Q?

Yeah, sure. I'll take that one. So we added that language back in the first quarter. And of course, we've included it again here in Q2. You know, this is really accounting guidance, meaning what does the accounting literature say we need to disclose? And of course, we do that. It considers our current cash balance, expected operating cash needs, and then, of course, construction expenditures and timelines. And it's really a 12-month looking forward view. We've stated we're working towards closing the cap stacks for both the water park and the hotel. And of course, we're able to expend, we can extend most of the debt that's maturing in March of 2024 for another year, which gives us some more bandwidth there. Again, I'll just say we've proven in the past that we can accomplish the necessary financing for construction. And then we'll just adjust accordingly to meet our goals. But it's an important disclosure that our investors need to be aware of. Again, we've put it in there in the first quarter this year, and we've reiterated it in the second quarter as well.

And we've always talked about just-in-time financing, and just-in-time financing means you take the financing when you need it. And in some instances, that creates an accounting issue from how do you get the financing to ensure long-term running of the company, but also long-term building of the assets. We've been in this situation before. We've come out of this situation, and our expectation is that we can be successful on that front again with the many levers that Ben has talked about and ensuring that we're doing things pragmatically and raising the funds. We have the line of sight on the funds.

Closing those funds over the next couple of months is the important part.

Can you give an update on the construction financing? You touched on the timeline. Do you have any additional color about financing?

I'll touch on it. Yeah, it's similar to what we've done in the past, being extremely creative about sources. So we have various, not just bank sources, but municipal sources as well. We've talked about the fact that we're in a tourism development district. It's a source for revenue for us to bond against for construction financing. So really looking at all channels, as Mike mentioned, line of sight, we have really term sheets signed, ready to close on all sources of financing. It will round out everything that we need for construction for phase two, so an extreme positive there. No surprise, these are very complicated transactions. It just takes time to get through them, the closing cycle, due diligence cycle. And we're there. It's just within the next couple of months, we expect to have all this closed.

Next question is about media. Would you please discuss timing of the pipeline and when the company can expect to see results from items in the pipeline?

Yeah, so we've always talked about the media pipeline as about a three-year cycle. You have to create content out of it. storyline and narrative around the night, you have to produce that content, you have to distribute that content. Amazingly enough, if you look at the history of our company in a very short window of time, we've already done three or four of those types of shows and distributed them well before that three-year time frame. As I talked about, Reach TV brings three new shows there in production, being distributed in very due course, And what that does is it leads to producer fees, it leads to sponsorship, it leads to acknowledgement that we have intellectual property that partners out there want. And we have a great team that ideates around how do we leverage stories. I get excited when I see a lot of the new story opportunities that come across my desk and we're signing new content opportunities and rights to new content weekly almost now and looking for ways to build the production and distribution partnerships. But we've been effective at doing that with the ESPNs, the Brinks, the Reach TVs, the Grace televisions, the NFL films. And so I have every expectation that as we stabilize that vertical in our company, that it'll start to produce revenue in a more meaningful way. We're just, I would say, halfway down the path, and already we've started to produce things and distribute things, which are great.

That's the last of the questions. I'll turn it back over to Michael for closing, Mark.

Yeah, I'll just close by saying a few things. Over 17 nationally televised events this year. I talk about that a lot. Why is that important? It attracts sponsors. It attracts new content. It allows us to drive activation on the site. And it creates brand awareness. We're a new company. We have to continue to grow our brand as a brand of excellence, as a brand in the sports and entertainment space that has the ability to grow. created environments, both virtual and physical, that are unique and different. And so, you know, I jokingly say if you're a professional football team, you may not be on national television 17 times a year unless you make the playoffs and the Super Bowl. And my expectation is we're just going to continue to add to that. It's really unique for a company our size to have that kind of profile and for people to want to be here and talk about that. We have large scale festivals that are coming. We've announced those. Bill Burr, one of the, you know, top comedians coming. Black College Football Hall of Fame Kickoff Classic coming. This was really fun and unique. Northeast Ohio versus America Showcase, you know, a high school football showcase of some of the best high school teams in the country coming here, again, nationally televised. high school state football championships our winter blitz that we're excited about being even bigger and better this year and leveraging all of the assets as they continue to take shape and grow here at the village more media content ourselves coming out again I think of fantasy this week and the big fantasy football tournament or Expo that we're hosting here I should say media is a part of that radio broadcast and then all of the different activations on campus We are forecasting record attendance this year. Record attendance translates into revenue. Revenue attendance or revenue growth is what we need as an early stage company. We are going to continue to be very cost focused but investment oriented as well. The most important thing for us creating those unique experiences that only we can develop and I keep emphasizing that to our team and our team keeps delivering over and over again because if we are unique and different And we are excellent in what we do. Other brands, other companies want to be associated with us in excellence. It gets more excellence, and that's really exciting. Our model of synergy you can start to see is taking hold. That's how we're growing revenue. It's not by one-off experiences or one-off visits. It's through monetizing those one-off visits through our multiple different business verticals. We're building a world-class team board. You know, we added Jerome Bettis to our board. The first meeting, out of the gate, Jerome is offering ideas and suggestions. He's got a great media background. He has a great Rolodex, just as Marcus Allen does, just as the rest of our board does. The support our board gives us on a daily basis, I consider our board to be world-class. I would put them up against any board out there for any company. And for a company of our size, their commitment, their passion around our product is compelling. They're here, they're excited to do everything that they can to support us. And I would say the same thing about our team. Our team is just growing and it's fantastic. I'm looking forward to adding a team where we need it to help from a cost control point of view and from a revenue point of view. I think we're now at a stage where cost side, I think we can add people that will help us from the revenue side as well. And then lastly, we've got to continue to be focused on our financial structure. We have to have a financial structure that enables long-term growth. I've talked about that. It's work that I wake up thinking about every day. It's work that we're doing. It's work that takes time, and I look forward to providing more updates on that.

I just want to thank everybody for tuning in. Great second quarter, looking forward to Q3 and updating everyone in depth.

Thank you, Michael. I will echo Mike's thanks and say we very much appreciate, on behalf of our entire company, thank you for your continued support of all things happening within the Hall of Fame Resort and Entertainment Company, and I wish you all a wonderful weekend.

This will conclude today's conference. Let me disconnect your lines at this time. Thank you for your participation.