Hall of Fame Resort & Entertainment Company

Welcome to Hall of Fame Resort and Entertainment Company's first quarter 2024 earnings conference call. This conference call is being recorded and all participants are in a listen-only mode. We will open up the conference for questions and answers following the prepared remarks. I would now like to turn the conference over to Anne Griffiths, Executive Vice President, Global Marketing and Public Affairs.

Good morning and thank you for joining us for our first quarter 2024 earnings conference call. Our latest press release and supplemental slides were posted yesterday evening after market hours. These documents can be found in the investor relations section of our website at hofreco.com. After our brief introduction, Michael Crawford, our president and CEO, will give an update on the company's strategy and outlook. John Van Buten, vice president and corporate controller, will then provide analysis of the quarter's financial results and an update on the company's fiscal 2024 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 issued last night. Additionally, please note that the company uses non-GAAP results to evaluate performance internally as detailed in the press release. Now, my pleasure to turn the call over to our president, Michael Crawford.

Michael? Thank you, Anne. Good morning, everyone. I hope you could see by our Q1 earnings release, we continue to make meaningful progress on many of our stated goals. Two specific that I want to call out, revenue growth. And I think you could tell, you know, Q1 this year, probably our best Q1 since going public. really highlights the diversification of revenue and our strategy along that line and also flattening seasonality. And what I mean by that is taking business that is traditionally in the peak months of summer and early fall and moving them into winter and early spring. And so I think our team has done a really good job of that. We continue to add new tenants. So that's lease revenue. We continue to add new experiences, big meetings, big conventions in Q1. Shula's restaurant obviously was open, DoubleTree. We continue to see synergy in the way in which we book events, book stays, enjoy that revenue going into our restaurants, into our gaming facilities like Topgolf and staying in our hotels. Obviously also as you grow more events and you grow more assets, sponsorship revenue grows as well. And so we had our best quarter in revenue for sponsorships since Q1 of 2021. And you'll recall at that point in time, Johnson Controls was our largest sponsor. So we're doing a good job at replacing revenue and growing that. Expense management was obviously a second big goal that we had, and hopefully that came through loud and clear in our results. From quarter over quarter, from 23 to 24, we are narrowing the gap towards profitability. Our team has done a great job through creating more operational efficiencies, and we're investing more into process management and human resources to become really efficient at leveraging every dollar we spend and ensuring that there is a return requirement attached to that, a guest experience requirement, so that we're being most effective with the dollars we have to spend and reinvesting into the company. Some additional highlights from Q1. You would have seen we signed eight-time Grammy Award winner Carrie Underwood to headline the Concert for Legends. We're really pleased with that, our first female headliner. The game with the Chicago Bears and Houston Texans promises to be great, and of course the class of New England Chinese, and so it should be a fantastic weekend here in Canton, Ohio. We opened new experiences on property. Donald Driver, former Green Bay Packer, open two experiences, the Driven Elite training experience and our boutique training experience here, which is already selling out quite a bit. And I think our guests are seeing the uniqueness of his style and his offering, and we're really pleased to have him as a part of the offering here at The Village. Heggies, a true staple here in Canton, Ohio, a great product with a variety of nuts and candy and They've really themed and tailored the experience to being here at the campus, a campus focused on sports and entertainment. We talked about our first Hall of Fame Village gaming, a branded gaming event, Gridiron Gateway Gaming Tournament that will be in July. This will be our largest gaming event yet, and so you can see our gaming division is growing. I'll talk about that in just a few moments. We're getting ready this weekend to host our first carnival here at the village, and we look to add more of that type of family entertainment, leveraging the assets that we have already in place, our rides, our concession stands, obviously the expanse of the village itself. Bert Kreischer and our fully loaded comedy festival featuring a lot of different comics, and in fact, we just announced, too, this lineup is going to be fantastic in June. at Tom Benson Hall Stadium, and it's selling really well, and so we're pleased with that. Our relationship with the NFL continues to grow. They announced the largest NFL flag championships will be hosted right here at the Village in July 19th through the 21st. We're excited about that. It will be covered on ESPN, but that's not all that weekend. We're also hosting the American Cornel League championships here as well, and that's covered on ESPN. So two really large nationally televised events. What you should be seeing is us creating tentpole events throughout the year, moving away from just one big weekend to creating several large weekends with several different types of offerings. I'd like to just talk quickly about our priorities for 24 and the stated priorities that we've talked about in the past. Obviously revenue growth, and when you look at Q1, 23, 24, you see that coming to play. We're anticipating growth for 24. And we're expecting significant increase in the growth rates related to water park synergies. Even though the water park won't open until 25, we will start pre-selling packages, hotel stays, et cetera, in 24 for that experience as it opens. Our Q1 numbers also highlight the work that we're doing on our pipeline. We launched a, you know, we're trying to get ahead of informing our guests of all the wonderful happenings and events out at the property. And so now every year, We're starting with a roster of events, and we continue to add to those throughout the year, as you see. We'll do the same exact thing this year. We're creating more events and more programming. As you create more events and more programming, it creates opportunity for synergy at our restaurants, our rides, concessions, hotel stays. And so that is obviously achieved, and we're continuing to see this stay-and-play mentality grow. We'll be focusing on strategies across all our business verticals though. As an example, we had a large-scale gaming tournament here just a few months ago. That gaming tournament generated concession revenue, it generated hotel stays, generated media content for us as well that we leveraged to garner more events like that in the future. Media is something that I'm proud of. We've done a lot of work over the last few years at sort of filling the pipeline with great new content. And as you would have seen in our Q1ers release, we have more content now in distribution across multiple different channels than we ever have. That's a significant step forward for us. We had to build the profile of our media company and our capabilities on creating great media content. And so the team has done a good job there. Largest amount of content and distribution across multiple channels in the company's history. We're also adding more gaming opportunities, and we're diversifying the type of gaming opportunities. When I think about gaming, I think everyone wants to traditionally go to fantasy sports, esports, and obviously sports betting. Sports betting is clearly the revenue from that, and especially our mobile partner is increasing. I'll talk in a moment about our retail opportunity. But Topgolf, that experience is increasing in terms of its profile and revenue generation, and also enhancing the guest experience. American Cornhole Championships, bringing in more visitors to the village, creating more sponsorship opportunities, more stay and play, beer pong tournaments. So non-traditional gaming experiences that we're continuing to look for and hopefully will continue to drive opportunity for us to have synergy across all of our business units. Our DoubleTree has done a fantastic job. The quarter was slightly lower than last year, but continues to win great awards and recognition there. We are one of the top service hotels, one of the top generating DoubleTree hotels in the Crestline portfolio and the Hilton portfolio. The team there is just world class, and they create great experiences for our guests to stay. It is an extension of the experience that they have at the Village or with our media or gaming content. And they live with us there. And so we want to make sure that that is a really high performing asset and it continues to be. I talked about packaging as a way in which we can enhance the guest experience. That is something that we are very focused on. And in fact, we'll be implementing a new campus wide operating system to help do things like pre-selling guest experiences and packaging. The more convenient we can make guest awareness around all the offerings and the types of experiences that we have, the more the guest experience gets enhanced and the more that we can drive revenue to our company as well. Attendance is something that we've spoken about in the past and last year we had a record year for attendance. We're expecting another record year this year. We're seeing attendance growth already in the early part of this year, as indicated by revenue performance in Q1. With attendance growth comes revenue growth and opportunity to do that synergy model that I spoke about. I'd reiterate the guidance that we had in the 3.5 to 3.7 million this year. But we're doing more than just monitoring attendance. We're getting smarter at understanding arrival patterns and departure patterns, understanding movement throughout the property, and so that we can market and monetize for our guest opportunities that they may or may not be aware of pre, post event or during their visit here at the campus. Operational synergies is also something that we've talked a lot about. We've made investments in labor and process management. This has allowed us to drop more revenue from top line to bottom line. As you would have seen, we are narrowing the gap on profitability over Q1 from 23 to 24. The team has worked incredibly hard at this. We've paid attention to every detail. We'll continue to do that. And, you know, look, as we do more, we learn more and we stabilize. And so the goal with experienced team is they know what to watch for but more importantly they're learning from everything that we're doing here and stabilization is key and stabilization leads to profitability it also leads to greater customer satisfaction you know I talk this a lot when you create great product and create great guest experiences people will continue to come and they'll want more of those experiences and we're seeing that as well the bottom line we're focusing on is all aspects shifting from more of that development mindset into the operating and efficiency mindset that drives revenue, expense management, creates those great guest experiences, and it engages our guests in all of our business verticals. And when we do that, we have great opportunity to grow something else, which is sponsorship. The interesting thing for me, as I said earlier, sponsorship in Q1 of this year, highest since it's been since Q1 of 21, which would be less than a year after going public. And you'll recall Johnson Controls is our largest sponsor at that time. Not only are we replacing Johnson Controls, we're growing sponsorship in the team. We're adding the right individuals to that team and the right support. to continue to tell our story. But more importantly, we've been strategic around the timing of sponsorship engagement. I've said before that we want to be strategic in terms of the categories that we're bringing in and the partners that we're bringing in in those categories. We want to make sure that we're fully leveraging the roster of events, the number of experiences, the breadth of campus, the media content development, gaming opportunities, so that we can maximize in each of those categories the sponsorship. And so I'm proud to say that not only have we grown sponsorship revenue in general, we've also grown in each category the amount those categories represent for us. So we're taking smaller amounts in categories like carbonated beverage or alcoholic beverage and we're growing those by category by being strategic around the time that we're engaging. I've also talked a little bit about restructuring our balance sheet. And the focus that we have on that is very simple. Create a long-term success plan, a balance sheet that is balanced, no pun intended, that has the right equity and the right debt. Now, the good news for us as a company, a significant portion of our debt is the right debt. It's long-term, low-interest rate debt. But we do have some that is shorter term and higher interest rates. So you would have seen that we did extend a considerable amount of that debt, almost $50 million in maturity from this year to March of 25. And we're in the process of working with our largest shareholder that holds a considerable portion of that debt to continue to look at how do we restructure that for that long-term success I talked about. I've been very pleased and actually very moved by the support in our community. Anne Grafis, who heads up our community relations department, our public affairs, and obviously Mark Yang and I worked closely together with multiple senior leaders in our community, our mayor, our county commissioners, our head of our port authority, head of multiple community foundations. And that work, I think, is going to pay significant dividends for our shareholders. This is a community that understands the economic benefit of this destination, the village specifically. We have about $21 million worth of debt that isn't bad debt, but it is short-term debt that we're working with them to restructure to become much longer term that gives us the right runway and the right debt profile for our company to be successful. It's great to be partners with a community that really values what you're doing and also appreciates the fact that they can support it. in a way that returns to them the type of return that helps the rest of the city grow. And that's always been our goal, having an economic impact on our community is something that we are proud of and are already having that type of impact and we look forward to doing more of in the future. And then lastly, continuing to develop our phase two assets. You'll know that we still have two significant assets that are in development, our Game Day Bay water park and our Hilton Tapestry Hotel. I've talked about the fact that we're in the final stages of closing the capital stack. There's been a lot of, I think, irresponsible reporting around where we're at in that process. I just set the record straight. We have identified all pieces of the capital stack. We're working with all of the different constituent groups to close the capital stack. Everybody wants a simultaneous close. And so you'll recall we have PACE, we have TIF bonding, we have TDD bonding, and multiple other, including equity, tranches of capital to build these assets. We've already brought in $65 million of capital to fund the construction so far for our Game Day Bay water park. We have not started our hotel because we don't have the capital stack in place. but I'm hopeful and optimistic that we'll be closing on both of these in the very near term. And as we do that, we continue then with our construction on those assets to the northern end of the property and look forward to an opening of those mid-25 to Q3 of 25 next year. Our media pipeline I talked a little bit about, but we continue to grow the number of new projects there. I'm excited to talk and share with you in the next earnings call We've got a couple of shows in production and actually filming this week that are really, I'll just say, super cool. I'll be a fanboy. They're really awesome. I think you're going to be pleased with these shows. I think the performers, the folks involved with the show, the production companies, again, partnerships with some of our previous partners to produce and distribute. So we're excited about what those shows can represent to us from a media point of view. And then gaming, you know, on-site asset development, on-site continued to grow. Our largest, as I said earlier, our largest event coming in the next couple of months. It's a branded event and one that we'll be partnering with others on. But, you know, the team there is looking for more non-traditional ways to grow that e-gaming sports opportunity. We did sign the largest fantasy football draft in Q1 of this past 24 years. That will again happen here on campus in August. We're excited to bring that back. It just continues to grow. No better place to hold your fantasy draft than where the place of professional football and where we have the one and only Pro Football Hall of Fame. There's a lot of packaging, unique opportunities we can do for fantasy drafts. And so I encourage people to consider posting their drafts here at the Village Campus. Let me talk a little bit about retail sportsbooks. I know that many of you have questioned why we haven't opened a retail sportsbook yet. And as I said in our last earnings call, the reality of retail sportsbooks is that they represent a fraction of the actual sports betting that happens. In fact, 2.5% of the market share of sports betting in Ohio is done through retail sportsbooks. What that does is it makes it much less compelling for those sportsbook operators to invest in retail sportsbooks. They have to fit out a location. They have to staff a location. And the requirements, the regulatory requirements are pretty stringent. And so while we haven't given up hope, we're more focused on this becoming part of a guest experience versus a significant revenue driver for us as a company, which we once thought it could be. We do have an issue that we're dealing with in terms of our retail sports betting license. Our general counsel, Tara Carnes, is working with the Ohio Casino Control Commission. There can't be a promise of an outcome there, but we're hoping to be able to get an extension or to be able to continue with the existing license that we have and have the ability to, at some point in time, attract a retail sportsbook operator. But there is work being done around that. Nothing I can report on yet. and yet we're still hopeful that we can have this guest experience on property for our guests to enjoy in the near future. I want to talk lastly just about creating unique experiences for our guests. You know, I think that revenue growth in Q1 is a great example of that. Flattening seasonality, bringing in new leadership, faith-based content, new convention, along with sport activity, cheerleading competitions, soccer leagues, all the things that we're continuing to ramp up on, very, very important. The same with media and content development and gaming and content development there as well. There is a model that we continue to talk about, which is synergy. Where we have the opportunity to build in one business vertical, we always ask how can we take that and create opportunity in the other two. And we're doing a much better job of that. But we also want to create off-site asset development experiences as well. And so we've continued to work on that plan. We're refining it. We're scaling it. We're looking at the timing of that. I'm looking forward to that being a next wave of growth potentially for our company in off-site asset locations around the country, expanding our brand, expanding the brand of the Pro Football Hall of Fame and offering guests the opportunity to engage with our product, getting them excited about coming to the destination here in Canton, Ohio, getting them excited about viewing our media and experiencing our gaming opportunities as well. Executing long-term strategy drives results. I'm proud of the team. You see the results out of our Q1 earnings release. I couldn't be more proud. Stabilization is critical. Profitability is critical. Spending effectively and efficiently is the goal, but investing in tools, experiences that are going to help with that is really important for an early-stage company as well. Again, I want to thank our community and I think our shareholders for the support. It's not an easy environment. It hasn't been an easy environment. And our company, quarter after quarter, continues to show positive results. And so I'm proud of that fact. I'm proud of the team. Turn it over now to John Van Buten to give us a financial recap of Q1.