Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) Q2 2024 Earnings Call Transcript

Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) Q2 2024 Earnings Call Transcript August 13, 2024

Operator: Good morning. Welcome to Hall of Fame Resort and Entertainment Company Second 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 will now turn the conference over to Anne Graffice, Executive Vice President, Global Marketing and Public Affairs. Thank you. You may begin.

Anne Graffice: Good morning and thank you for joining us for our second 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 hosreco.com. After my brief introduction, Michael Crawford, our President and CEO, will give an update on the company 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 each of you to read the full disclosure concerning forward-looking statements in the earnings press release. Additionally, please note that the company uses non-GAAP results to evaluate performance internally, as detailed in our press release. It’s now my pleasure to turn the call over to Michael Crawford. Mike?

Michael Crawford: Thanks, Anne. Good morning, everyone. I thought before jumping into Q2 highlights, I just sort of recap a couple of thoughts that we’ve been having over the last few days and then over the last several weeks. As I reflect on who we are as a company, three distinct business verticals, right? Regional, theme destination-based assets, media and gaming and when you look at what’s going on in the market and you look at companies like a Disney reporting and you look at their theme park division, you start to see some pullback in consumer spending and that’s just undeniable right now. The great thing for us is that experiences are still at the top of consumer spending and the preferences that consumers are having are to slow down spending in certain bigger goods or commodities and not sacrifice experiences like going to entertainment venues, dining out, et cetera.

I think we’re well positioned with the Hall of Fame Village as a regional destination to still during difficult macroeconomic environment times, to capture consumers and we become an answer for them in terms of entertainment and being able to relieve themselves of a lot of the burden that they carry with them on a day-to-day basis. We just finished what I would consider to be four really incredible weeks. Our NFL flag football event, our youth event that we hosted week long, 2,800 participants, all of the hotel rooms with fans, communities sold out, and start counting sold out. This was a really large event bringing our relationship with the NFL even closer and our team executed at an incredibly high level. It was a great opportunity for us to also test what we’ve talked about before, our synergy model.

The campus was really activated, cross over from one venue to the next, the experiences. We had record weeks in food and beverage, ride revenue at our play-action plaza. It was really fun to see that come to life and frankly one of the first large-scale events where I think we successfully moved guests from one end of the property to the other, allowing them to experience everything that we had going on. Now, we challenged ourselves not only to host that event during the weekend, we also hosted the American Cornhole League Championships and so in our Center for Performance dome, we had several hundred participants in there all week and long, nationally televised on ESPN playing Cornhole and so a very different type of entertainment/sports opportunity being hosted on our campus at the same exact time we were hosting the large scale NFL flag event.

Intriman (ph), of course, was a huge success. We had a couple of rain issues that we dealt with, but again very successfully the Bears and the Texans, I thought the game was great. The Intriman (ph) event was very well done and then our concert for legends with eight-time Grammy award winner, Carrie Underwood, who I got to meet personally, very lovely lady, really put on an incredible show, sold out, the audience was into it. And so when you look at all of those events, combine that with the Women’s Football Alliance Championship, add on our largest branded gaming tournament, Gridiron Gateway. The diversity of events that we’re now hosting is really growing. The attendance to these events setting record levels, revenue coming out of these events, the synergy model, really at high, high levels.

It gets me very excited when you think about hotel stays, food and beverage, ride revenue, gaming revenue, all functioning now because of the types of events that we are able to garner and host, and by the way, over 70 hours of nationally televised event coverage on ESPN, NBC, ESPN-2. Companies our size can’t buy marketing value like that. This is an incredible opportunity for us as a sports and entertainment company to really showcase who we are from a media point of view and highlight all the great experiences that we can allow guests to have. So again, high execution, very proud of the team, the diversity events continue to grow, and I’m excited about the direction our company is headed. Having said that, it’s important to remember that we’re still an early-stage company.

We literally launched as we built assets in 2022, our capability of hosting these multi-diverse types of events throughout in our dome at our ForeverLawn Sports Complex and Tom Benson Hall of Fame Stadium, at Play Action Plaza to feed guests, to entertain guests. And so there’s still some, what I would call variability in our portfolio of events and we saw that in Q2. Q2 revenue year-over-year was lower than the previous year and in large part because of the mix of events and the types of events that we had at our village destination. We’re getting smarter about these opportunities by the way. And so as an example, in Q2 of ’23, we had a large-scale single comedic act come in and while that was a profitable event, this year we had a large-scale comedic festival that was highlighted by Bert Kreischer come in and we actually made more money off of a model where we were renting our venues and partnering with them versus owning and operating the entire category of the event from the previous year.

And so while revenue was down, I would say due to operational efficiencies and getting smarter at the types of events that we are bringing into our campus, we close the gap towards profitability, and you will have seen that in our results that we reported for Q2. Everything now is being reviewed. We are always looking at operational efficiency. We’re always looking at leveraging the events to their fullest. We’ve started to now package a higher level, you can buy hotel rooms as part of an entertainment package, you can also buy parking as a part of an entertainment package. It does two things. It increases guest satisfaction, and it also increases operational efficiency which leads to greater profitability for our company. So we continue to gain efficiencies, and I think we’re going to see that coming out of Q3 and hopefully as we continue into Q4 of this year.

Our goal is to optimize every event that we do and our goal is to stabilize as a destination. Now, important to note, you’ll think about destinations from an event programming point of view and you’ll think of things like Live Nation and Caesars and other big entertainment programming companies. We are not an owned and operated company by one of those other entertainment programs, and so we’re a standalone facility that we now have, and I view this as a positive, the opportunity to work with everybody. And so as we’re doing that and building up our reputation in the entertainment industry and frankly in the sports industry, there’s still some volatility in timing and types of events that we’re going to be hosting. The good news is we have really sort of thought about in how to balance the events to derive greater risk-reward opportunity.

And what do I mean by that? We have numerous models now where we can own an event, pay for the event, and operate the event. We have a profit-sharing model, we have a rental model where entertainment or sporting events come in and rent our facilities, and we have the opportunity to generate revenue out of concessions or parking or other things, but they take the gate and so our goal is to balance the event strategy to maximize the overall return to the company and I think we’re doing that already, and I think that’s only going to continue to grow. So those two things clearly have been highlights from Q2. The other highlight from Q2 that I think is really worth noting. You’ll remember that I spoke about this in Q1, and as we ended Q4 last year, our balance sheet is something that we’ve been very focused on and we understand that we’ve had to construct a balance sheet over the course of the last three years with a global health pandemic, with a really restricted lending environment, with a new company, early stage company profile that is very complicated and so our goal has been to refine that complicated nature and make it simpler.

And if you look at what we’ve done just in the recent term, we restructured five of our local community loans, community city and county loans totaling $21 million to become much more favorable to the company. They’re no longer short-term debt, they’re much longer-term debt, and it’s much more manageable as we stabilize revenue and grow towards profitability. We also took in an additional $11 million of financing. We were awarded almost a $10 million grant from the state and also a $500,000 grant from the Stark Community Foundation. So the balance sheet has been an extreme focus of ours, and I’ll talk a little bit more about that in just a few moments. I spoke about revenue growth as a priority for 2024. And while quarter-over-quarter in Q2, we were down in revenue, we are clearly experiencing revenue growth in the context of synergy and synergy allows us to create greater guest experience, but also allows our guests greater access to all of the things that we have to offer and I just talked about hotel stays being packaged and food and beverage being packaged, parking rides and gaming also becoming packaged.

Events on campus not only drive revenue directly from the event, but from that synergy model that I spoke about as well. We’re focused on improving bundling, I think we’re getting better. I think we have more work to do. An early-stage company, we have a campus system-wide operating system that we’re putting in place that will allow us to drive greater bundling opportunities for our guests, which then in turn should drive a greater return for us as a company and we’re continuing to build towards stabilization. Again, the predictability of win events, win sponsors, how we open new assets, the impact of those types of things on our modeling, revenue modelling, and on our growth modeling. We’re a multi-use, multi-purpose destination at the village, and that’s something that we take a lot of pride in.

But it also allows us to be very diverse in the types of offerings that we’re going to allow our guests to experience. We’re emerging still as a premier destination, and you can see that in our calendar of events. As an example, we just added a big, what I would refer to as a Bourbon & Beer tasting event that highlights entertainment with Shibuzzi Charlie on a Friday. Great entertainment throughout the night. It’s going to be the biggest party of the fall. We booked that literally a month ago, and so bookings are still very near term and that’s what we’re going to hope to evolve as we entered into 2025, more advanced bookings for entertainment allows us to stabilize and also allows us to generate a much greater marketing and sales effort for each of those types of events, and frankly allows us to partner with other industry experts as well to make those events even bigger and better.

We do anticipate revenue for ’24 to be lower than prior year, but there are still opportunities to gain back against that forecast. We’re looking at other sponsorship opportunities, new event opportunities, but right now from what we see, we’re guiding towards slightly lower and John will talk about that revenue for this year versus last, but slightly more profitable this year versus last as well. And we do — we expect to increase the growth rates of the synergy as we bring on our Gameday Bay Waterpark and our on-site hotel. We’re already gaining those synergies with our off-site hotel. We full well expect to be able to drive greater synergistic revenue with those two remaining assets. Operational efficiency has been a priority for us and I think we’re showing it.

The investments we’ve made previously into equipment, into resources are allowing us to get much better at what we’re doing and to be much more efficient with our cost versus our revenue. We expect that to continue to be optimized as we stabilize and we understand how the destination fully operates at its fully built-out stage. We’re learning from everything we do. If you look at over the last couple of big weekends during enshrinement, we’ve gotten better and better at guest service, we’ve gotten better and better at offering guests greater packaging opportunities, and so we believe that there is an opportunity for this to continue to grow as we grow the number of these large scale events like NFL Flag or we grow large scale events like what we posted over the last month.

We’re doing all of this though with an eye towards customer satisfaction. Everything we have and everything we do has to be generating a great guest experience and so we’re focused more on measurement, we’re focused more on survey work, so that we can continue to refine the offerings that we have. I talked a little bit about expense management. We’re running a much more rigorous procurement process now so the as we buying over contracting, we are truly evaluating not only the capabilities or the product, but the cost of that product against the revenue that we’re going to generate from any asset or any event that we’re going to host. It’s an ROI mindset and we’re getting there, but we’re not fully there yet because our environment continues to evolve and change.

And so, on all aspects, shifting from development to operation, shifting from revenue generation to expense management to profitability, customer satisfaction, and really trying to engage all verticals when we’re fully functioning as a company, media and gaming, and hosting gaming tournaments, allows for hotel stays, allows for ride revenue, food, and beverage gaming revenue, those types of things I think we’re going to be able to continue to increase. Now, let me turn to the Phase 2 development efforts, and I realize that we’ve been talking a lot about finishing the waterpark, Gameday Waterpark, and our on-site hotel and that is priority number one and it has continued to be priority number one. We are very close, words I’ve said before, to finalizing the capital stack for both of those assets.

We’re working closely with the State of Ohio. We’re hopeful that we can complete the capital structure for both of those in the very near term. We have a 51% built Gameday Water Park that is exciting, but we need to complete and then the hotel can break ground. Both of these assets, we still anticipate being completed in ’25, hopefully in mid-’25 to late-’25 as we complete the final financing, we’ll focus on generating the exact timing of those things. Media, this is an area where our company is experiencing great growth and compared to Q2 of ’23, we have about 50% more projects in the pipeline being filmed, being produced, and coming out of post-production and being sold and distributed. As an example, we have Hometown Heroes that is going to premiere in September on Reach Television with Doug Williams as the first episode.

We have the GOAT Code, second season of the GOAT Code featuring in 2024, the first episode featuring Dwight Freeney. We sort of previewed this during (indiscernible). There was a lot of excitement around it. It will also premiere in September on Brings Television and we have a lot of projects in various stages of development and production. And so we’re looking forward to continuing to update you all on how that progress will continue. And frankly, I’m excited about some of our partners in the media space as well, some very high-profile former athletes, some really high-profile production companies, and obviously, companies like NFL Network, Fox, and others. Speaking of Fox, we have ended our first major run of the Perfect 10 with Fox. It was extremely successful, one of their highest all-time-viewed documentaries and we’re now excited about the second window, the second opportunity for the show to be sold and shown on a different platform, could be streaming, could be traditional.

We’re also excited about the chance to take this internationally as well and so we’re working right now on the partnerships that will allow us to do that, but again, a highly successful first documentary that we did with the Perfect 10 and now giving us downstream revenue opportunities as we close out Fox and there is additional revenue coming from the Fox relationship as well that we’ll be recognizing in the very near term. On the gaming front, we have brought in an outside consultant, somebody who is known globally to help sort of accelerate the growth of our gaming vertical. We have a very dedicated team there that really is focused on the right types of events, growing our brand there. I talked about Gridiron Gateway as one of our largest branded events that we’ve hosted.

We’ve hosted college tournaments. We’re looking — we just hosted this past weekend, the largest fantasy football expo in the country. Better, our mobile betting partner continues to grow. Our investment in them still remains the same and so the value of that investment, we anticipate growing as well, which is why we originally took that ownership stake there. And while not giving up on retail sportsbook, we really have realized that the retail sports betting opportunity is much less than what it was originally thought to be, meaning 97% of all people are placing bets mobily and so a regional sportsbook for me is more about creating a guest experience and we’re looking to potentially couple that with a food and beverage experience, a merchandise sales experience, something that generates a multi-use destination and we continue to have conversations with potential partners, but nothing to highlight as of right now.

Sponsorship deals, our strategy is working. We talked a long time ago about delaying certain categories of sponsorship until we grew as a company until the types of product or service that they offered could be utilized more fully and we’re seeing that in the deals, the types of deals are growing, the value of the deals are growing and the good news is several of our previous partners have signed up again because they’re now seeing the growth and the advantage of continuing their partnership with us as a multi-use company in terms of destination media and gaming and so deals are becoming longer term, the size of the deals are growing and again, we’re scratching the surface and I see a lot of growth as we continue to build our destination, our media, and our gaming capabilities.

Just a couple of final things. On the restructuring of the balance sheet, I talked about the $21 million but we also in Q1 extended $49 million of debt maturity to March of 2025. And something to note here, which is really important, that $49 million of debt was held by our largest shareholder Industrial Realty Group, and one of our largest lenders and so their interests aligning with our interest to see the company be successful long-term, we have seen that, we have reported on that, and we certainly feel that on a regular basis. You would have also seen that they filed a Schedule 13D. We talked about that before and what that does is it really notifies our shareholders in conjunction with working with the company leadership and our Board of course that their intention is to explore all opportunities to help make our company successful and from the largest shareholder and one of our largest lenders, that’s a very big statement.

And I can tell you in my conversations with Stuart Lichter, the Head of IRG, he is and they are very committed to this long-term success story. That’s why they have continued to support us with lending, with project completion guarantees, with extending debt, and now with going out on their own looking for other opportunities to help bring in potentially new investors, potentially restructuring debt, and any number of other solutions that will help this company be successful. It is a testament to their belief in our business model. They’ve seen the execution. They’ve seen the growth, and so that’s why they’re willing to go the extra mile on this and help us in the ways that I’ve just spoken about. Also, it’s important to note and say thank you to our city, our county, and our local community.

We went to them with restructuring of several millions, tens of millions of dollars worth of debt. They were very supportive of that. They understood the value, the economic growth that this destination represents to not only Canton, Ohio and Stark County, but Northeast Ohio. The state granting us $10 million as a grant more equity coming into the company shows their faith in what we’re doing as well. The NFL bringing large-scale events. The story here is we’re growing, but we’re early stage. But because of the execution and because of the strategy and because of the team, the key partners that we have out there are continuing to stand behind us and invest. I talked about the development of Phase 2 assets as being, what I’ll refer to as priority 1a and our balance sheet as priority 1b.

The unique experiences that we can derive out of the finishing, the completion of the water park, and the tapestry extend far beyond revenue, they extend into greater guest service, greater guest packaging, and I’m excited about hopefully completing the capital that we need to start the construction on the hotel and complete the construction on the water park in 2025. Look, our long-term strategy has remained the same. We’ve had a lot of challenges, but we’ve been able to be creative and execute at a high level. We’ve continued to overcome very difficult environments when you look at companies our size that are publicly traded, there have been a lot of bankruptcies over the last several years due to the very difficult environments that these companies have faced.

I give a lot of credit to our team, but I give a lot of credit to our partners and our shareholders and our lenders that they understand how we’ve been able to overcome. We’re being smart about the timing of new partnerships. We’re being smart about the value proposition and having this ROI mindset while keeping the guest and the guest experience at the focus of everything that we do and so while our revenue for Q2 is down slightly, we’ve closed the GAAP on profitability. We’re managing costs. We’re looking at this holistically. And I think we’re well positioned for growth even in difficult times. As I mentioned earlier, as a regional destination, as a sports and entertainment company, where people look to sports, people look to entertainment and experiences like we have to offer one of a kind to sort of relieve themselves of the everyday burden that they carry.

So we appreciate everybody’s ongoing support, certainly that of our largest shareholder. We look forward to talking about new events, new tenants, the conversion of the media pipeline, and our gaming vertical adding scale. And I’ll stop there and welcome John Van Buiten to give you our financial overview and then we’ll take questions and I’ll come back for some closing remarks. So turn it over to you, John.

John Van Buiten: Thanks, Mike. And good morning, everyone. Moving on to our financial results, second quarter total revenue was $4.7 million compared to $6.1 million in the second quarter last year. The revenue decline quarter-over-quarter was primarily driven by the mix of events at the Hall of Fame Village. Total company revenue diversification continues to improve from events, rentals and tenanting through our destination in addition to synergistic revenue. For example, our Gold Summit Gaming Vertical hosted the Great Lakes Esports Conference Championships at our Tom Benson Hall of Fame Stadium and generated significant hotel business at our DoubleTree Hotel. We expect the revenue streams will grow and broaden in future years as we approach stabilization.

Second quarter adjusted EBITDA was minus $4.2 million compared to minus $6.2 million in the same period last year. The change was driven by decreased operating expenses related to event-related costs, reduced compensation-related expenses and further expense management. The company posted a net loss of $15.8 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 $6.4 million compared to $6.9 million at the end of the prior quarter. The company’s usage of cash was primarily attributed to our operating activities. During the quarter, we restructured $21 million of debt with the City of Canton, Stark County, and our local community foundations.

Our net notes payable balance slightly increased to $229 million compared to $222 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 and the recapitalization of the restructured loans. 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 for its stabilization of all facets 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 Water Park and on-site Tapestry Hotel.

We’re in a very challenging and restrictive credit environment, but we are working diligently towards closing the remaining construction financing Hall of Fame these clinical assets. Moving to 2024 financial guidance. We are revising our revenue expectations to be in the range of $20 million to $22 million and reiterating our previously stated adjusted EBITDA loss in the mid-teen millions range. As we have highlighted, the company is 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. As stated earlier, we are investing in our sales and marketing efforts to support this 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 we remain intensely focused on driving profitability through diversified revenue streams and disciplined cost management, while making strategic investments to support our growth. And 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: Thank you [Operator Instructions] Our first question is from Jack Vander Aarde with Maxim Group. Please proceed.

Jack Vander Aarde: Okay, great. Good morning. I appreciate the update, including your comments on the Phase 2 construction and recent financing progress. So, Michael, I’ll focus my questions on a couple of other items. You referenced the broader overall macro environment having an impact on consumer spending trends. I’ve seen that in my own coverage and throughout the market as well. So it’s very much true. Has this had a meaningful impact on your campus attendance in foot traffic in 2024 to date? I believe it’s still been up substantially from last year but just how has that impacted kind of how has it or is it impacting your campus traffic and your plans or kind of target for campus attendance going forward? Thanks.

Michael Crawford: Yeah. Thanks, Jack. I think it’s a great question. We didn’t highlight attendance, but here’s what I would tell you, we expect attendance for this year to be year-over-year greater than last year. I think there are a lot of things that we’re doing differently. We’re balancing out the seasonality of events, pushing more into Q1, Q4, but we’re also bringing things in like what we’re doing this weekend. We’re hosting a Division 1 college football team, happens to be my undergrad alma mater, Bowling Green State University for a showcase. It’s free for people to come out, but it generates traffic on campus where they can then experience Topgolf or they can go on rides or they can have a meal or any number of different things.

And so what we’re trying to do is provide value, and we’re trying to provide value across the board, and I reference bundling and packaging, and that’s certainly another way that we provide value to the consumer. Having been in this business a long time, I can tell you that regional destinations where you can get to those within an hour, maybe a two-hour drive radius, allow us for mom and dad date nights, whatever the case may be, to come experience entertainment that they don’t have the money to go to Florida or California or overseas and so we fully expect that the types of events, the types of offerings that we have, food and beverage, rides, entertainment will have a very value-focused target towards the environment that everybody is facing today and the consumer baskets that we’re all spending on are much more expensive and yet we — all research and studies show us that experiences like what we can create here with sports and entertainment are going to be highly valued.

So I do expect attendance to be up year-over-year. We’re seeing it already compared to this time last year. We’re just not reporting on it yet, but expect that to be something that we’ll talk about later in the year.

Jack Vander Aarde: Okay, great. I appreciate the color there. And then Michael, you touched on the media segment. You have 50% more projects in the pipeline. So that’s an obvious positive. But maybe what about from a monetization perspective with these media projects? Are you sort of still testing the waters with new concepts and/or do you see kind of these generating meaningful revenue in the foreseeable future? Thanks.

Michael Crawford: Well, first, I think it’s the opportunity for us to tell great stories and unique opportunities for us to highlight, hall of famer’s, other great athletes and we’re doing that in the content that we’re producing. I think, the GOAT Code is a fantastic show, obviously going into its second season, highlighting what made the greatest ever play the game of professional football, who they are and giving the viewers highlights into their lives and their training and their diets and other things. I think it’s a great show. Hometown Heroes, athletes doing phenomenal things for their communities. This is what athletes do, right? And so our focus on telling great stories is a big part of our identity and creating those stories has been a key part of our mission.

Now, monetization. Look, we’re not a production company. We’re a content company. Can we generate meaningful revenue through production? Yes, I think we can as a partner to the production companies that we’re working with. Can we generate revenue through selling sponsorships for any number of these shows? Yes, I think we can and we’re starting to gain traction on that. Can we generate revenue selling shows? Absolutely. And I think, the Perfect 10 will be another example of that as we enter into another phase of show distribution there. So we look to monetize these on multiple fronts and I think we’re going to start showing profitability in our media division in the very near term. We’ve made it lean and mean, but we’re partnering with highly capable athletes, highly capable production and distribution companies.

And so in the early days, we’re going to sacrifice some revenue in order to get the right profile of partnership in place to then allow us as we continue to push things through the pipeline to generate more meaningful revenue in the categories that I just spoke about. But I do think, look, year-over-year, absolutely the revenue in media has and will continue to grow and we’ll report on that as a vertical towards the end of the year.

Jack Vander Aarde: Got it. I appreciate that. And then maybe just one more I’ll touch on. Just with regard to some of the unique you guys are putting on a lot of unique events. You’ve planned, you’ve already hosted, you have more plans such as the gaming gridiron, gateway gaming tournaments, the flag football tournaments, the fantasy football events, et cetera. How are these or how have these events been kind of shaping up relative to your initial expectations from even a year ago? What’s the feedback then? What are you learning from these experiences to drive further business success in the future? Thanks. That’s it for me.

Michael Crawford: Sure. Yes. Well, the good news here is we have a really unique set of assets, right? There’s not many cities in the world that have a large dome facility, an NFL certified stadium, a major sports complex, outdoor gaming areas, outdoor food and beverage areas, really high profile restaurant, Topgolf. What we’re able to do and the feedback we’re getting from, any I spoke with Carrie Underwood, I spoke with Bert Kreischer. These are high-profile talents and they say, wow, this is a phenomenal venue to perform in. And by the way, thank you for hosting all the extra events that we wanted to do, rooftop parties and dinners, that we can’t do if we’re performing in a standalone arena or football stadium. And so I think our model here is a very integrated model, and what I mean by that is, there’s always direct revenue associated with the event.

There’s the gate, there’s the concessions, there’s the parking, there’s the private events that we do and then there’s the indirect, the sponsorships that it brings in, the meals that it generates, the ride revenue, the gaming revenue, the hotel revenue, all of those things really create the growth for us as a company. Now we got to get better at giving guests the opportunity to prepackage and bundle before they get here, and that was our focus on technology and continues to be and then the opportunity to market and sell those packages and bundles only increases as I referenced as you get an on-site hotel, as you get an on-site waterpark, you can start to really drive length of stay and that’s what we’re already seeing. The feedback that we’re getting through our survey work is, yes, they’re coming earlier for events, they’re staying later after the event is over, they’re coming earlier for big sporting competitions to experience the types of product and entertainment we have, they’re staying longer, and so that’s a huge benefit for us that we’ll continue to be able to monetize over time, but more importantly it just creates great guest experience, and I’m of the belief that if you have great product, whether it’s gaming product, media product, the destination, it will be demanded and guests will come back over and over and spend their hard-earned money in very difficult environments and we’re seeing that with the types of events that we’re offering.

Again, value in some cases, high quality and opportunities to drive greater synergy with other experiences as they come out. So I’m really encouraged by what we’re seeing through the events we’ve already hosted this year. We’ve got more coming, and we’ve got more to announce.

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

David Marsh: Just wanted to start on the guidance on the top line. You guys brought it down pretty significantly. And if you look at the first half year over year, you weren’t you were actually not down much at all despite the fact that you lost the USFL. Can you just talk about why — what’s leading to kind of a year-over-year projected decline in revenue in the back half of the year, please?

Michael Crawford: Sure. Thanks, David. And you referenced USFL, so let me start there. And again, I’m going to go back to the fact that we are still trying to stabilize and create a portfolio of events that year-over-year, we can build off of. Right now, not being an owned and operated live nation venue or being programmed by one of the higher profile Caesars or MGM or whatever the case may be. Some may look at that as a disadvantage. I look at it as an advantage. But what it does is it creates the opportunity, and frankly, the obligation to showcase for all of these different event programmers, the type of experience that we can create and so we’re still very new, right? I mean, two years into this, after creating these assets, we still have event managers, we still have programmers, we still have agents that will come here and be amazed at our destination as to our capabilities and how we can execute and the venues that we have to offer.

And so the guidance is simply, we’re not in a place of being stabilized yet. And so while we’re trying to continue to build and program more events in the second half of the year, we want to be careful not to over promise on this front. And the other piece to this is we really believe that at one point in time, we’d have our water park up and running and we’ve guided lower, given the fact that we’re still trying to complete a very complicated capital structure for that in a difficult time, where lending has been incredibly restrictive into early stage companies like us, almost non-existent and so we’ve had to explore alternative models, public-private financing models that we believe will benefit us. But it’s a close that takes time and I’ve said that over and over again.

We’re close, we’re not done. And so we’re sort of guiding down based on creating more stability in events, creating opportunities to sell longer-term sponsorships, and they just take longer than what you expect in the water park. Not being online at the point in time that we felt like it was going to be there. I will say there is opportunity to go beyond our guidance, but that is something that our team is working hard on right now, but we can’t promise that. And so that’s why we’ve lowered the guidance for this year.

David Marsh: Okay. Thank you. And then just wanted to ask a couple of questions about the financing and just better understand the timing of the inflows and I guess just start with the grant from the state. I mean, have you all received the grant from the state as of the second quarter close, or was that a third quarter activity? Did that come in money, come in the third quarter? And then with regards to the Constellation financing, can you just kind of guide us a little bit on timing of how that comes in or is it more of a credit on purchased equipment? Just kind of talk to us about how that plays out, please.

Michael Crawford: Sure. So from the state grant, it was approved in Q2. We received the money literally this week. So that grant has been received and being leveraged to continue to pay for operating costs, construction costs, et cetera. The efficiency made easy loan from Constellation Energy, which we have by the way leveraged that program two other times and paid off one of those loans that are nearly paid off on the second one. We have started we received the cash and how that works is it’s based on equipment purchases that are energy efficient equipment purchases that we’ve already made, and we made with equity several months ago, and in fact, all of that stuff now is on-site ready for installation. And so that was sort of a backfill of funding that we used previously to purchase that equipment, and Constellation is a great partner, saw that and offered us the opportunity to backfill the cash that we used with the new funding that we brought in from their loan.

So both of those have been recognized and have hit the accounts, and we continue to as has the $500,000 grant from the Star Community Foundation, and we continue to look for other opportunities partnering with the state and the community to ensure that we’re maximizing any available types of funds that would suit our type of development or our type of company. The other thing that I would just note is, from a financing point of view, I think it’s really important that what we’re doing with this short-term debt, while we’re continuing to build and grow revenue and stabilize in moving that out, it really does balance our debt profile in a way where the company can handle the repayment of that debt. And so as we committed earlier in the year, restructuring or rebalancing the balance sheet continues to be a focus of ours.

Again, if you look at the $49 million we moved out and the $21 million that we moved out, that’s significant and working with our largest shareholder to continue to look for ways to balance the balance sheet is a key priority for them and for us. And so while I’m confident that we’ll get there, it’s a very difficult environment right now, and I think everybody will admit to that, and especially for an early-stage company, our shareholders have to, I hope, be patient and understand we are working every lever we can to not only restructure our balance sheet but to bring in the right type of debt and equity to make sure that we’re setting ourselves up for a longer-term success. So that’s kind of where it’s at right now.

David Marsh: And then just as a follow-on to that, Michael, so almost $20 million between those the two financings announced in the quarterly release. Can you just tell us once you look at the stack and what your remaining need is, what’s the incremental capital raise needed to complete construction of the remaining on-site assets?

Michael Crawford: Yeah, I can’t go into the exact amounts, but here’s what I’ll say. The capital stacks are created out of obviously equity, senior lending, and then public-private financing vehicles like bonding, tax increment financing, tourism development revenue bonding, PACE lending. We have the PACE lender, we have the TIF bonding purchaser, we have TDD bonding. We have $15 million of a grant from the state of Ohio in transformational mixed-use development that we believe all of those pieces now are ready to close and the remaining two pieces are the senior loan on the hotel and the bond purchase, the TDD bond purchase for the water park. And when you think about what I just said, the complexity of that, all needing to close at the same time with all the different lawyers, all the different financial folks involved, and all the different public entities and private entities, it’s a negotiation.

It is a very complicated structure to close, but we’re making good progress on it. And it just takes time. As you have one conversation, you have to go back and have multiple others to make sure that everybody else in the capital stock is comfortable with the direction that the new group coming in is asking to go. So it’s — I would say it’s in the tens of millions still to be closed, but we’re getting very close on those remaining two pieces and once those remaining two pieces are in place and we’ve got the final approvals, we will start down the close of everything together and then the funding can come in. Our goal is to have the funding coming in by end of Q3 this year, Q4 earliest.

David Marsh: Sounds good. All right, guys, I wish you the best. Thank you.

Michael Crawford: Thanks, David.

Operator: Thank you. At this time, I would like to turn the call back over to Michael Crawford for closing remarks.

Michael Crawford: Sure, thank you. Look, I won’t repeat a lot of what’s been said, but here’s how I’ll close it. You look at a company that is in an early stage closing the GAAP on profitability, meaning less loss. You look at a company that is really diversifying the types of events that we’re having on campus and the types of partners that we have that are willing to invest and stand behind and restructure and continue to support us as a company. That’s what it takes. As a company, we’re exploring every potential option we can, but we’re being smart about it. We’re looking at how we procure goods. We’re looking at the ROI mindset that we have to have. We have to be responsible with shareholder money and we are, but we continue to build and we’re building in every facet of what we do.

We have to complete our water park hotel on-site. We have to continue to build our event schedule. We have to continue to build our sponsor partners. We have to continue to build our media profile, which I hope you’re seeing we’re doing. We have to continue to build our gaming portfolio, which I hope you’re seeing we’re doing as well. Two years of full operation. I think people should take comfort in the fact that you have a team that is incredibly committed and focused on the right things. We talked about balance sheet restructuring. We’re doing it. We talked about bringing in new money. We’re doing it. This is a company that’s focused on creating great guest experiences. At the same time, structuring itself for long-term success and it’s complicated in today’s world to do that.

These aren’t excuses. They’re just facts. Do I believe our company is undervalued? I absolutely do. $400 plus million of assets in the ground, $20 plus million of revenue, and yet the market cap is the market cap. I can’t comment on that. I would just say that as we restructure balance sheet, as we continue to bring in and build new assets that generate revenue, media content, my expectation is the value of this company needs to go up. The feedback we get from everyone who experiences our product in any of our business verticals is fantastic and if you keep that at the heart of everything you do and stay true to the mission, long-term we will be successful. I just want to thank everybody. I want to thank everybody for their support. Certainly, we get a lot of it.

And I want to thank our shareholders, our Board, and especially our team. And wish everybody a great rest of the week. And we look forward to talking to you again as we report out Q3 earnings. Thank you.

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