Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) Q1 2024 Earnings Call Transcript

Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) Q1 2024 Earnings Call Transcript May 14, 2024

Operator: Good morning, and welcome to the Hall of Fame Resort & 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 up for questions-and-answers following the prepared remarks. I will now turn the call over to Anne Graffice, Executive Vice President, Global Marketing and Public Affairs.

Anne Graffice: 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 on 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 Buiten, Vice President and Corporate Controller, will then provide analysis of the quarter’s financial results and 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 the company uses non-GAAP results to evaluate performance internally as detailed in the press release. It’s now my pleasure to turn the call over to Michael Crawford. Michael?

Michael Crawford: 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. Too specific that I want to call out, revenue growth and I think you could tell 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. So, I think our team has done really good job of that. We continue to adding 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-end 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 are being most effective with the dollars we have to spend in 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 are 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 and 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, opened 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 are really pleased to have him as a part of the offering here at the Village. Heggie is 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, 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 will talk about that in just a few moments. We are 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 of Fame 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 21st.

We are excited about that, it will be covered on ESPN, but that’s not all that weekend. We are also hosting the American Quarterly Championship here as well, so two, and that’s covered on ESPN, so two really large nationally televised events. And 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 Waterpark synergies.

Even though the Waterpark won’t open until ’25, we will start pre-selling packages, hostel 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, 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 the stay and play mentality grow.

We’ll be focusing on synergies 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 Q1 earnings 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 are also adding more gaming opportunities and we are 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 game 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 will 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 are expecting another record year this year. We are 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 million 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 guests 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 and we’ll continue to do that. And look, as we do more, we learn more and we stabilize. And so the goal with an 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. I talk about this a lot. When you create great product and you 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 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. And 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 individual 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 times 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 are 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 Graffice, who heads up our community relations department, our public affairs, and obviously Mark Heng [ph] 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. And 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 2 assets. You’ll know that we still have two significant assets that are in development, our Gameday 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 will 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 GameDay Waterpark. 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 say, super cool. I’ll be a fan boy. 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, 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 the team there is looking for more nontraditional ways to grow that e-gaming sports opportunity. We did sign the largest fantasy football draft in Q1 of this past ’24 that will again happen here on campus in August. We’re excited to bring that back. It just continues grow. I think 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 this actual sports betting that happens and in fact 2.5% of the market share of betting, 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 Charnes 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. I think that revenue growth in Q1 is a great example of that. Flattening seasonality, bringing in new leadership, faith-based content, new conventions along with sports activity, cheerleading competition, soccer leagues, all the things that we are 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 thank our shareholders for their support. It’s not an easy environment. It hasn’t been an easy environment and that our company quarter after quarter continues to show positive results. And so I’m proud of that fact and proud of the team. I’ll turn it over now to John Van Buiten to give us a financial recap of Q1.

John Van Buiten: Thanks, Mike, and good morning, everyone. Moving on to our financial results. First quarter total revenue was $4.2 million, which represents an increase of 34% from the same period in the prior year. Revenue growth in the quarter was primarily driven by event and rental revenue at Hall of Fame Village, which also includes revenue from the tenanting of our Constellation Center for Excellence and fan engagement zone in addition to revenue from our Shula’s restaurant. The company’s first-quarter revenue mix continues to become more diversified and highlights the synergies and the diverse revenue streams that we are creating within the company from event revenue, tenanting and rentals, hotel and restaurant revenue, media, and gaming.

We expect that our revenue streams will grow and broaden in future years as we reach stabilization. First quarter adjusted EBITDA was minus $2.9 million compared to minus $10.9 million in the same period last year. The change was driven by decreased operating expenses related to reduce compensation-related expenses and third-party services. In addition, last year included several nonrecurring expense items. The company posted a net loss of $14.9 million in the quarter. Interest expense increased to $6.5 million resulting from 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 $7 million. The company’s usage of cash during the quarter was attributable to operating activities and construction expenditures, which totaled approximately $14 million during the quarter.

Our net notes payable balance slightly increased to $222 million compared to $220 million at the end of the prior quarter. This increase in notes payable during the quarter was primarily due to accruals of paid-in-kind interest. During the quarter, we exercised the one-year extension of the approximately $49 million of debt to IRG and its affiliate lenders, which was due in March. We are also currently working to restructure over $20 million of debt from the City of Canton, the county, and our local community foundations. As we have noted in prior quarters, we are working to restructure and optimize our overall capital structure in a way that provides the company the best opportunity to move efficiently towards stabilization of all aspects of our stated business model.

We continue to work towards closing all of the necessary financing required for the remaining Phase 2 construction, including multiple financing transactions related to our Gameday Bay Waterpark and Onsite Tapestry Hotel. We are in a very challenging and restrictive credit environment, but we are working diligently towards closing the remaining construction financing needed to fund these critical assets. Moving to 2024 financial guidance. We are revising our revenue expectations to be in the range of $24 million to $27 million and we are reiterating our previously provided expectations for adjusted EBITDA loss in the mid-teens millions range. As we have highlighted, the company and our Hall of Fame Village are in the early growth stages. The company is intensely focused on revenue growth and expense management, staying lean where possible while at the same time balancing the need to invest in order to support our growth.

We expect increased diversification of revenue and EBITDA across multiple streams with each one driving synergies to support the ecosystem that we are working to build. In closing, the company is mindful of the current economic environment and will remain intensely focused on driving profitability through diverse revenue streams and disciplined cost management, while making strategic investments to support our growth. Finally, as you’ve come to expect, we will continue to provide transparent and timely updates to our shareholders as we move ahead. Operator, we would like now to open the line for any questions.

Q&A Session

Operator: [Operator Instructions] Our first question is from Jack Vander Aarde with Maxim Group.

Jack Vander Aarde: I appreciate the update guys and thanks for taking my questions. Michael, first on the Q1 results, it’s good to see the sponsorship revenue tick up, but the operating expenses were far lower than I expected, particularly the property OpEx is about $6 million, that was down over $7 million year-over-year. Just how do we think about your operating expenses going forward? And how did you shave off around $7 million year-over-year of property expenses? Thanks.

Michael Crawford: Yeah, thanks, Jack. Look, I’d say a couple of things. One, we had an extreme focus last year on ensuring all of our processes were established, right? The full bidding of any contract from an operating point of view and we have multiple ensuring that we were looking at every single aspect of our business from utility expense to insurance. Certainly having gone three years from de-spacing, some of our insurance costs for D&O went down. So there were several factors that contributed to it. I would just say this, I mean we had a quarter that was great in revenue, but we’re really honed in on the expense management side. We looked at compensation. There were some reductions there. We’ve looked at headcount, making sure that we were efficient versus our needs.

My experience with these businesses is it typically takes three to five years to really stabilize and get efficient at understanding the seasonality of the business, weekday weekend and so we’re learning, right? The team is learning as we go and we’re trying not to replicate any mistakes, and, in fact, with the experience that some of us has had, we know what to look out for and how to proactively address it. I would say this though, remembering we are an early-stage company in any particular quarter, there could be ups and there could be downs. And as we add more programming, new different types of programming, as we add more assets, predominantly a water park or a hotel, we’re going to have that learning curve start all over again. So while I’d like to say that this is a reliable trend that gets us to profitability much quicker, we’re not a property in terms of the village that’s fully open yet and we’re also not a company in terms of media and gaming that’s firing on all cylinders.

We’re seeing great growth and we’re seeing attention in both of those other business verticals to the growth that we need and we’re being responsible around the dollars we’re spending. But at the end of the day, it just takes time to learn the business, become more efficient, and match expenses to dollars. And then the last thing I’d say is, look, we’re getting much more diligent around if a dollar is being spent at what is it supposed to return and having return thresholds and making sure that we have in place a process to evaluate as a company projects, new assets, new events that are being proposed so that we’re not spending in larger scale than what we’re returning. So, pleased with the team, pleased with the effort. We’re early stage and we’ve got a long way to go, but listen, we’re trending in the right direction.

Jack Vander Aarde: And I caught your comments earlier. Appreciate you’re working through kind of the capital stack funding. It sounds like it’s pretty fluid and you have some announcements coming up. I’ll switch gears into the water park. Just in general, maybe what’s the latest target opening date? I think I caught maybe mid or third quarter of ’25. And then with the waterpark, you mentioned potential synergies ahead of the waterpark being built and opened, so maybe pre-selling potential packages. What might you expect maybe to have some would you expect to have some like tangible presale orders for the water park, a few months, a year in advance? Just what are you thinking there? That was interesting in these comments.

Michael Crawford: Yeah, I think two things. One, just to address the timing, we’re looking at the water park in the first half of next year. The water park is 44% complete. We have all of the equipment. I should say we’ve procured a lot of the equipment that is ready for install. As you know from the last earnings call, we have slowed down that construction considerably waiting for the final piece of the capital stack to close. Listen, I just want to make mention of again when you have four or five different components to the capital stack that all require an integrated close or simultaneous close, it’s not an easy team and you are threading a needle, it’s a pretty thin needle to thread, but we’re getting there and we’re making progress on it.

And so I feel comfortable that if we can close the capital stack in the next couple of months, we’ll be in a position to open the water park mid-next year. The hotel, the same thing, if we can close the capital stack in the next couple of months. We haven’t started the hotel yet, but I think a hotel build is slightly more efficient than a water park build, we will probably be in Q3 of next year for that asset. The question around how do you sort of think about selling before the assets open? You’re pre-selling season passes, you’re pre-selling stay-in-play packages, you’re pre-selling food-in-play packages. So there’s a lot of different opportunities to bundle the waterpark experience with other things, pre-selling waterpark with the Pro Football Hall of Fame ticket.

And so that revenue starts to come in typically, I’ll say, three to six months prior to the waterpark opening.

Operator: Our next question is from David Marsh with Singular Research.

David Marsh: Hi, good morning. Thanks for taking the questions and congrats on the quarter. I mean, this is really a tremendous accomplishment.

Michael Crawford: Thanks, David.

David Marsh: And you guys went from $300,000 of events revenue two years ago to $2 million. That’s pretty awesome. Could you talk about what the different types of events you were able to you know, a little bit more about what kind of some of the tentpole events were in the first quarter that were able to drive this revenue? And, I know you’ve already mentioned some that are coming up, but I just was curious what you were able to put on the calendar in the first quarter that was able to drive this revenue so high.

Michael Crawford: Yes. Well, one of the biggest was our faith-based leadership event with tentpole as the headliner there and bringing in sports and faith and creating an opportunity for those that were partaking of that event to really hear from one of the higher profile guys in the game of how he developed his career and how he developed his faith and how those two merged for him to be successful. I think that’s a good example of where sports and entertainment come together. And so that was a very large-scale event. We’re increasing also though the number of events that frankly when you think about how large scale cheerleading tournaments or large scale wrestling tournaments or even large scale meetings or things like a home and garden show or things like a concrete show or a big large scale company event, those things typically will be booked a couple of years in advance because they have to locate the venue, they have to locate the hotels and so on and so on.

We’ve only had the dome open really for a couple of cycles. And so I think we’re starting to show the unique aspect of that facility and its capabilities, but we’re also starting to show the unique aspect of the destination and how you can create this integrated experience that includes ride packaging and food and beverage and hotels and other things that are unique to us versus a standalone convention center or a standalone sports dome. So increasing the types of events and the scale of those events was really critical in Q1, and I think we were able to do that diversifying events from sport to non-sport and then trying to look for the combination of the two. And that’s how we got there this year.

David Marsh: Well, that’s good. Keep up the good work on that front. If I could just dig into the sponsorship number, it’s a really good progress that you guys have made there. Can you just talk about what that looks like, as we project out for the year? I mean, does that, is this a baseline? Like, is this a low watermark and it would grow throughout the year as you have more events throughout the year and you add new sponsors? Is that the right way to think about it?

Michael Crawford: Yes, I think so. And it’s not just event-related. Obviously, every event we have, concerts and comedic shows, and large-scale sporting events like NFL Flag and Cornhole Championships, et cetera, there are always opportunities for what we call a true sponsor for those events and multiple sponsors in multiple categories. What we prefer to do is look for long-term partner sponsors. And what I mean by that is when you sign a deal with Coke, which is our carbonated beverage partner, you are signing a deal where you can go and showcase the breadth of what your company has to offer. And so egaming as an example was very attractive to Coke and something that helped us land that sponsorship. It was a category from three years ago that was deriving pretty low-level revenue to today, which is driving fairly meaningful revenue.

Why? Because we’ve increased the number of assets available to pour their product, we’ve increased the number of events for them to showcase and pour their product and showcase their brand. And so we stated two years ago, we wanted to be strategic because you can get yourself I’ve seen this trap before, you can get yourself convinced that you need to sign sponsors quickly to help bring revenue in and sponsor revenue is typically bottom line revenue for the most part. We wanted to hold off so that we had the right profile of company gaming, media, destination that would be really appealing. It’s a partnership and so you want to have the most you can offer to the potential partner that you’re bringing in and that creates opportunity for them and then obviously that creates value for you because they’re wanting to provide more dollars and more sponsorship because you have more things for them to sponsor.

So the more assets we open, Gameday Bay Water Park is going to be significant The Dome was significant for us. I think Play Action Plaza has the potential to have a real sponsor presence because of our rides and our concessions, outdoor amphitheater, all of the wonderful things that part of the property has to offer fan engagement zone, the more that we can monetize. But it’s not just about monetizing, it’s also about bringing in partners that help enhance the guest experience. And so we’re very focused on who are the right partners for us in the sports and entertainment world that complement what we’re doing. And I think our team, our partnership team has done a really good job at timing and engaging with the right profile of partners to help sort of not only expedite growth but the right type of growth.

David Marsh: I also did want to offer a compliment on the press release with the complete set of financials. That’s extremely helpful for us as we’re working on modeling. Just a question around the balance sheet quickly. A new line is popping in here, equity method investments of $2.5 million roughly. Could you give me a little bit more insight on that? What is in that?

John Van Buiten: Yes. Hi, David. This is John. So the equity method investments line represents our minority interest in the sports complex. So as you know during the quarter, we sold 80% interest in our sports complex to Sandlot and that represents our remaining investment. So as that company continues to operate the sports complex and has income from that, that investment will grow. And you’ll notice on the P&L, we also have a new line income from that equity method investment, and that’s where that 20% income from that will end up.

David Marsh: And then just lastly, Mike, if you could, I mean, I know you said you guys are continuing to explore alternatives around the retail sportsbook. I mean, is there anything at all, are there any particular operators, that are showing any meaningful interest there, or is it is it really just proving to be a little bit tougher than we had initially maybe hoped?

Michael Crawford: Yes. I think time hasn’t been our friend here, David. I think people have learned more about the business in Ohio. When I say people, I am talking about the retail sports betting operators and the mobile betting operators. Look, 97% of all bets are being placed through the devices that we carry around with us every single day. It’s very convenient. I’ve gone to several large-scale sporting events in the last, I’ll call it, two or three months, and it’s amazing to me to see the number of people staring at their phones. And when you really get close, you see what they’re doing is they’re making a bet on the next player, they’re making a bet on a player and how many they’re going to score. So they don’t want to leave their seats and go to a retail sportsbook in many instances.

Now retail sportsbooks have a presence in a lot of the arenas and stadiums in Ohio. I will say that some have pulled out because of the lack of financial success. For us, we’ve always talked about this enhancing our guest experience. At The Village, we are a sports and entertainment destination. We expect to be able to create a sports, both sports betting opportunity here. We are looking at how we can incentivize a potential partner to come in versus and have a long-term partnership versus having them have to create everything on their own. We’re looking at potential food and beverage partners or potential retail partners that kind of complement the experience. It’s just time and we’ve got wonderful assets. We’ve got a fantastic location for it.

I think the best location in the village, it looks right out into our stadium with all of the events that we’re hosting can create a really magical experience for those guests, but it comes down to economics. So to directly answer your question, Tara Charnes who sort of heads up our business development and is also our General Counsel, is working on a regular basis with two or three different sportsbook operators. We do have an outside consultant that we have had for a couple of years that continues to help support those types of conversations. Just as important working with our the Ohio Casino Control Commission to better understand and create awareness for them that it’s important to us as a destination to have this opportunity and so we’ve asked for the potential extension of our license to give us that chance.

And then we’re looking more creatively at the retail sportsbook itself, something that can be more interactive, something that could potentially leverage more mobile and technology in terms of an experience. So long-winded way of saying, it’s a tough road because the economics are challenging for the operators, but we haven’t given up on it. And I think there still can be an opportunity. We just need to find the right partner and nuance the deal so it’s attractive to both sides.

Operator: Thank you. I would now like to turn the conference back over to Michael Crawford for closing remarks.

Michael Crawford: Well, first, let me say I really appreciated all the questions. They sort of hit on the right point. Secondly, I want to say that if you’re watching our company and you have been over the last several months last years, you’re seeing exactly what we talked about back in June, July of 2020, facing a really difficult environment, putting a team together that is experienced, that understands what to look for, how to look for it, and is committed. And I will say again this team is committed. We have a lot of very talented people that are dedicated to the success of our company. Q1 results, I look at that as a very positive step forward, revenue growth on a non-peak period, expense management, and ensuring efficiency in everything that we do, not only efficient in terms of cost but efficient in terms of packaging, in terms of the experiences we’re creating.

Our media content is growing and it’s growing through distribution now. Our gaming and the way in which we’re approaching gaming, in traditional and nontraditional sort of aspects of gaming. I anticipate that to grow as well. And so, look, I have high hopes and optimism for the future of this company. We’re an early-stage company and so there are going to be bumps and there’s going to continue to be those over the next couple of years as we complete assets like our football-themed water park, our on-site hotel, potentially launching off-site asset development with partners in a very different financial model for that. But this is a company that is committed. It’s continued to grow. I realize stock performance is something that is always looked at as an indicator of positive momentum.

I’m confident that as we continue to build, stabilize, and grow, stock performance will follow as well. So I just want to thank everyone for the results. I want to thank the team for their commitment again and the community for their support and our largest shareholders as well. I think everybody is focused on the long-term success and on all the right things to get us there. So thank you very much.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.