Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) Q4 2022 Earnings Call Transcript

Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) Q4 2022 Earnings Call Transcript March 28, 2023

Operator: Good morning and welcome to the Hall of Fame Resort and Entertainment Company ‘s Fourth Quarter 2022 Earnings Conference Call. This conference call is being recorded and all participants are in a listen-only mode. We will open the conference up for questions and answers following the prepared remarks. I’ll now turn on the call over to Anne Graffice, Executive Vice President, Global Marketing and Public Affairs.

Anne Graffice: Good morning, and thank you all for joining us for our fourth quarter 2022 earnings conference call. Our latest press release, supplemental slides, and Form 10-K were posted yesterday evening after market hours. These documents can be found in the Investor Relations section of our website at hofreco.com. After my brief introduction, Michael Crawford, our President and CEO will give an update on the company’s outlook and Benjamin Lee, our Chief Financial Officer will provide analysis of the quarter’s financial results, and an update on the company’s fiscal year ’23 financial guidance. During today’s call, we will make forward-looking statements that reflect the company’s current expectations about future plans and performance.

These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties. I encourage you 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. We have posted a supplementary slide deck summarizing the quarterly results as well. These slides can be accessed on our website and will be archived there along with a replay of this call. If you have any additional questions after today’s call, please contact me directly. It’s now my pleasure to turn the call over to Michael Crawford. Mike?

Michael Crawford: Good morning. Thanks, Anne, and good morning, everybody. Thank you for joining our call this morning. Hopefully, you saw our press release yesterday and you got the indication that it was intended to have, which is, we are seeing a very good results based on the execution of the company, specifically in 2022, but also in Q4. I do understand that as a society and as Americans, we like to compare quarter-over-quarter earnings. We like to look at year-over-year results. I also look at that. But I look at for a company like ours the trend line of execution. Because when you look at the trend line, this is what really leads us to the desired results we’ve articulated over the last few years. And I think our trend line has been really in a positive direction.

The execution though that we’ve talked about, it starts with the reality of the environment we face. The supply chain constrained environment and yet construction has still continued on time and on budget as of today. Almost unthinkable in the context of what’s going on and what you face probably even in your daily lives. We continue to book major events. We continue to increase attendance to campus. We sign new tenants that are going to create wonderful new experiences when guests come to visit the village at our Fan Engagement Zone and in our Center for Excellence. Our office complex that really creates a wonderful unique environment for collaboration. We are building new media. Our pipeline is continuing to be filled and you actually saw some of that execution during Super Bowl weekend with the airing of The PERFECT 10.

I’ll talk about that in just a few moments. And we’re supporting the gaming division and the execution in our gaming division. You’re seeing things like Esports come to life on campus versus our Hall of Fantasy League and Sports Betting. Fortunately for us, we were able to procure two of the necessary licenses to have a retail sports book and online sports betting partner. Before I go on though, I do just want to make reference to the fact that we have been strategic and purposeful in the decisions we’ve made for the long-term success of the Hall of Fame Resort and Entertainment Company. Now some of these decisions are not popular. I get that. But I can also tell you that sometimes leadership is not popular. And it’s not a popularity contest when you’re considering the future of a company, the team, its shareholders and frankly the community and all of our fans and guests, we have to make sound long-term business decisions that set our company up for success over and over again.

I’ve talked about the fact that we’ve continued to be on a positive trend line. We’ve also been very transparent about why we’ve made certain decisions. We always talk about we say what we’re going to do and we do what we’re going to say. It’s an incredibly difficult environment. And while many companies have taken, I would consider to be more severe steps to ensure short term successes, I personally and our company leadership team cannot think that way about a company that is literally building from the ground up in every way, a company that is driving growth through synergy, which is what our strategy was all about, from business unit to business unit, a company that’s leadership and board continues to invest in without fail or confidence in our plan.

And yet we’ve continued to be flexible and make dynamic choices to preserve value, spend money wisely and when needed, and drive growth in revenue across all our business units. That’s the takeaway for me from last year and from Q4. Now, before I go on, I want to take a step back. And you know, usually we talk about each particular business unit and we give you an update on all the progress that’s being made. But I think it’s important that we state some of the more fundamental things that our company philosophically is focused on. Of course, as shareholders, you need to expect short-term near-term execution. And I think we’re demonstrating that. We are constantly talking about the plan and the execution against the plan. And you’re starting to see that in every single vertical that we have.

And it’s important that you understand that in the context of the strategy. We are collectively building in every way. It all comes down to the fact that we believe in the strategy, we believe in the potential, but we have to be flexible and dynamic to create shareholder value. And I think that’s what we’re doing. I spoke many times about the executive team and the board increasing ownership in the company through purchases in the open market or even taking part of their compensation, their cash compensation in stock to increase their ownership in the company. Again, I want to reiterate, you know, if the belief is that we’re making short-term decisions that are going to harm our shareholders or the value that they hold in the company, I’m not sure where that belief comes from or where that perception comes from.

No one in our company has sold shares. No one has reduced their ownership position. And in fact, between the board and the management team, we own approximately 35% of the company collectively. We are all in this together. I realize the share price is not where we want it to be. The value of the company, frankly, is woefully undervalued, and I’ll speak to that in just a moment. But we’re utilizing this ownership mindset to make the right decisions for the company for the long-term success. We’re not doing things to just try and make something happen to get a short-term blip in our stock price. That’s what other companies do in this sort of difficult environment. At a recent board meeting, I recommended to our board and our board approved it, but even my own compensation, the stock that would be awarded to me would only be awarded through performance grants, performance stock units, not restricted stock units.

And so my 2023 compensation is going to be based on, as will 2022 performance. And that’s what I think you should expect from me as the President and CEO of this company. I am invested in it. I believe in it so deeply and I believe in the execution of our team. It’s been amazing. Our company is undervalued. That will change. And I want to show my demonstration to that by saying I don’t want shares that I haven’t earned. I want shares based on the performance and aligning my interest with the company has always been my belief in long-term success. Again, ownership, mindset, focus not only on the day to day execution, but makes sure our strategy is continuing to evolve and we make dynamic decisions to put in place the assets, the content and the environments that we need to have in a high quality way for long-term success.

Our largest shareholder, Industrial Realty Group just continues to be amazing for us. The support that they provide, not only in terms of loan support, direct financial support, but indirect financial support by helping us restructure some of the debt. The balance sheet continues to improve. We’re not done there and we continue to have conversations with IRG. They are here in it for the long-term. Again, you will have seen they have not sold a share and in fact for their support they have continued to say we want to take stock in the company because we believe in the management team and the plan so deeply that value is going to continue to grow. Not only is it our largest shareholder, though, the community, the political system in Ohio, in the county, in the city.

We have been very purposeful. Again, I use that word and strategic around where financing comes from. Now, make no mistake, this is a difficult traditional lending environment. You see rates continuing to rise. We are in an inflationary environment and yet the world is with the banking system, sort of unsure about the direction the Fed is going to take. We haven’t just simply sat back and said we’re going to place our eggs in a traditional lending bank, be it large, regional or small. We’ve gone out and gotten loans from public and private financing like TDD bonding, TMUD, Transformational Mixed-Use Development, which is not a loan. We have taken out pace lending this — this clean energy financing. A lot of these things that we’ve done to put in place to support our cap stack are really longer term, higher quality debt.

And while I’ve heard comments from some shareholders that the debt profile of the company continues to be of a concern. For me, I have seen and if you’ve watched over the last two years, the evolution of our capital stack and the debt profile to allow us to get the right runway to be successful for the long-term. The group that I lead and the board that oversees the governance of the company sees a very strong upward trajectory and a long-term success plan that we continue to believe very deeply. That long-term mindset allows us to make those tough decisions that I talked about. Now, one of those obviously was the reverse stock split that we completed in December. Now, many of you probably on this call would say and did say that was going to destroy the value of this company and that management was doing this for selfish gain, that we were only interested in our own well-being.

And again, I’m going to make a pretty a couple of pretty bold statements here. When I just think about a couple of things that I talked about over the last few points that I made. Does this company sound like a company that is interested in only diluting its shareholders for selfish gain? I’m not sure how anyone who really understands what our company has accomplished. All while considering what’s best for our shareholders make these types of assumptions. I’m really not. 35% of the company owned by internal shareholders. Companies have gone out after they’ve done these reverse stock splits and raised capital immediately diluting their shareholders again. We did not do that. And in fact, we haven’t even used the at the market offering since last September.

Why? Because we want to be responsible for how we’re spending money, where we’re bringing money in to ensure that we’re trying to preserve the value of our company and for our shareholders. But yet we saw traders that don’t really understand long-term strategy. Traders that are in this for a day, traders that are trying to make a quick buck sell shares at significant discounts to asset values, pushing our price to book ratio down to 0.2X multiple and a market capitalization to below $40 million. It’s astonishing to me when you look at our numbers and we finished Q4 with roughly $50 million of cash in the bank, roughly $450 million of assets built, many of which are up and operational. Another $170 million of assets being built right now. How anyone could justify that valuation for our company.

We are severely undervalued. And we’re that way because I do believe that there is this narrative, there is the misguided assumptions being made about the action we’ve taken to support our growth and false assertions of doing things to intentionally devalue the company and hurt the shareholders, of which we’re 35%. Again, I make that point to really reemphasize the fact that do not listen to the rhetoric, do not listen to people who are trying to purposely cause damage for their gains. That’s not what this company is about and it’s not what it’s been about. You see execution. You see that we’re planning and we’re building according to our strategy that we’ve articulated. Now that strategy starts with putting together high quality products and experiences and experiences and product that people want and desire, product and experiences that people already are participating in.

The Doubletree Hotel ranks in the top 5% of service of all Doubletree’s nationwide. That’s in Canton, Ohio. It’s a part of our company. We have stressed that we want a high quality asset there with great service, period. Last week we opened Don Shula’s American Kitchen, one of a kind restaurant, one of a kind for our destination. This location has been a wow from the time you walk in to the first — to the first time you taste the food, to the service you receive. And we are getting five star ratings across the board. People are experiencing a level of food product and an environment in our — in our region that I think sets a new standard. We’re booking talent like Dave Chappelle last year that enables great talent like Kevin Hart to come back this year.

Journey to Zac Brown. There are more of these talents that you’re going to be hearing about and I mean in the very near-term. The USFL came last year and said, wow, you guys made it impossible for us not to come back this year. They played their semi-finals and their championship here. What do they do this year? They add two permanent teams from their league to play out of our Tom Benson Hall of Fame Stadium because of the service that they got, because of the visitors that attended those games, because of the inclusive package and the synergy we could offer with meeting rooms and food and beverage and hotel stays. And now they’re seeing all of these other assets come to life with just enhances their ability to create an environment for their guests and our guests to come and enjoy over and over again.

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Everything we’re building fits together in a purposeful way to realize synergies across all our business units. I’m seeing it all come together. I am really pleased with the team and how they’re executing. The story we’ve been discussing with the public is now starting to bear fruit. Our revenue grew significantly year-over-year, even without recognizing revenue from our largest sponsor, Johnson Controls, which contributed roughly $4 million in 2021. We not only didn’t miss that revenue, we exceeded that revenue. Now, some may say, yeah, but if you would have had that revenue, you would have exceeded it even more. I can’t deny that. But the reason why I’m so pleased is we’ve diversified. As we’ve always said, where revenue comes from now. It’s not just about sponsorships.

In the early days of this company, we had partners that believed so deeply in the vision they were willing to invest sponsorship partnership dollars to help us build and grow. Now you’re seeing revenue come from different areas. You’re seeing it come from tenant leases, you’re seeing it come from food and beverage sales. You’re seeing it come from rides, you’re seeing it come from our media and gaming division in a more meaningful way. If you’re looking at our presentation online, you see that thing I call the Wheel of Fortune. Why is it the Wheel of Fortune? Because it’s — it’s sort of like a flywheel. It’s interconnected. Once it starts moving, the inertia continues, it growing and it keeps moving faster and faster. I’m seeing the wheel start to turn on its own.

I’ve discussed the strategy earlier in the call. What synergy does. And from my background, working for a company like the Walt Disney Company, when you have business verticals that you can create an experience, you can create a physical asset in one. Your goal should be to traverse the other two and drive value there. Let me give you an example of that. The USFL again. Two teams playing out of our Tom Benson Hall of Fame Stadium. We receive revenue for the rental of that stadium. We receive concession revenue every time a game is played. We receive hotel revenue. We see rentals for practicing out at our ForeverLawn Sports Complex and in our Center for Performance. These are nationally televised games. So it enhances our ability to attract new sponsors because new sponsors say, wow, you have x number of games being played nationally now.

You have media content that helps drive new sponsors, partners. That’s exciting to me. Fans come out to play to enjoy these games. They also go to Shula’s. They also go to Brew Kettle or Topgolf and play and have fun food and beverage experiences there. Topgolf , Brew Kettle opens end of next month. Again, giving ourselves more ways to monetize people that are visiting was always part of the goal. Having them go over to Play-Action Plaza now with the Red Zone giant wheel open where riders are already riding, paying for those rides, bundling packages together to include a visit to the Pro Football Hall of Fame, a ride on the forward pass, maybe food and beverage. We had the ability to create an even more dynamic environment by having our entire property being set up as a designated outdoor recreation area, which allows guests to go from one facility to another with a cocktail in their hand and really create this immersive environment that I’ve continued to talk about, one that people want to be in.

The execution of the strategy is working and it’s growing and that’s how we continue to drive revenue. I’ll talk about fantasy. Fantasy football is another way in which we drive synergy. We’re hosting a very large scale fantasy football conference at the beginning of the NFL season on campus. That event will be held at the CFP. That’s rental revenue for the CFP. That’s food and beverage revenue. It’s revenue that feeds our strategy model, with guests staying at the Doubletree Hotel, having meetings and meeting rooms there, being entertained in our Fan Engagement Zone and Play-Action Plaza. The point that I’m making is one plus one equals three in a synergy strategy. It’s not about you get one thing, it’s direct revenue. It’s one thing that has direct revenue that equates to multiple areas of indirect revenue.

We achieved record attendance in FY’22 and we will build on — going forward. Our expectation, just as one example, and we don’t report overall attendance numbers. In ’22, we had roughly 300,000 participants playing in any number of different sports out at our ForeverLawn Sports Complex. We expect to increase that to almost 400,000 this year. In addition to the ForeverLawn Sports Complex, we opened the Center for Performance in November. We immediately filled that location every single day, not only with sports. We’re now hosting large scale dinners and conventions. We have a home and garden show coming. We have major events like the fantasy event that I talked about that are going there. It’s a unique asset that allows us to flatten seasonality or to deseasonalize where revenue comes from.

When you live in an environment like Ohio, revenue sometimes can be limited. This is a fact. I’m not creating this to have a narrative. I really enjoy Cedar Point. Cedar Point is something I grew up with. But when you have an outdoor ion ride park that can only operate seven months out of the year, you have a blip in where revenue can come in as a seasonality factor. We’re trying to flatten that seasonality so that we have a more balanced view of where revenue is and we can maximize the assets year round. And the partnerships that are available to us are extended even further as we do have that opportunity to maximize revenue. Look, we’ve proven we can be creative and how we balance growth. When you balance growth, you also balance revenue growth and you reduce that seasonality that I talked about.

We have added partnerships and content and we monetize those in multiple different ways. The media vertical, a good example. Not only are we creating traditional media, but we’re also creating non-traditional media as well. I use the Hall of Fame Village pass, the NFT, the digital collectible that comes with entitlements, that comes with a closer connection to all of the product that we have, gaining access to exclusive things and parties, gaining access to information that around things prior to other guests coming to the village or guests viewing some of our media content or being involved in our — our gaming environments. We sold out of our Diamond passes. Navy passes are now of a very limited quality. We will continue to enhance that type of experience for those that are deeply committed to our company.

THE PERFECT 10 distribution was also something that I thought was incredible for a media company that literally has been stood up for about a year, maybe a year and a half. If you want to argue that, we have now added multiple things to the pipeline, some of which you’ve heard Gone Fishin’ with Jimmy Johnson, Rasheed Wallace, Shannon Sharpe partnerships, PERFECT 10 distribution. These are things that I would say our media team has had significant accomplishments in a very short period of time, and THE PERFECT 10 being distributed over national television on Fox TV the weekend of the Super Bowl, Saturday night before the Super Bowl is unprecedented for a company our size. It shows you the type of content, the stories that we can create are so valuable and so unique that even a company like Fox says, wow, we want that.

We want that to be part of our offering. Sports Betting went live in January. We have put a lot of effort into our mobile betting partner Betr. I think the company is off to a great start. We’re exceeding where we thought we were going to be and where they thought we were going to be. Micro Betting is a very engaging way to place sports bets in that ecosystem. They have enhanced their platform with more traditional betting opportunities as well. I think that’s attracting new guests. But we wanted to make sure we separated ourselves in a new betting environment against other very large competitors, traditional competitors. We wanted to give guests an opportunity for that Micro Betting space to really take hold, and it has. We didn’t just though say we wanted Betr to be our on-site partner.

This is another strategic decision that we made as a company. Instead of taking cash, we took an investment position in Betr. Long term thinking, ownership thinking, that type of mentality allows us to diversify where risk comes in at the company level. It also allows us to diversify where revenue comes in. Betr has now gone on and received betting application or put in betting applications and received approval from the State of Massachusetts and also Virginia. Already our investment, what it’s valued at is going to net greater yield for us simply because we had the vision to say we want you to be successful in Ohio, but your success everywhere else, we want to be a part of as well. And then lastly, we’re continuing to build that gaming division.

You saw we had Esports tournaments. We’ve announced more Esports tournaments, tournaments drive attendance, attendance drives buys, attendance drives stays, attendance drives awareness around all the things that we’re doing. When you look at and package the types of events now that the campus at the Village is hosting between magic shows to football games, the big scale concerts like Kevin Hart, Zac Brown, the fact that we’re creating an immersive environment there for our enshrinement weekend. Black College Football Hall of Fame kick-off classic. The list of events is growing, and we’re giving things to this region that had never been given before. We’re giving them opportunities to experience our product and the quality of our product. I’ll stop by saying and then I’ll come back after our Q&A.

We’re going to do this a little non-traditionally today. I’d like to take Q&A after Ben makes his remarks on the financing front. I’m going to start by saying we’re being responsible with what we do. An example of that is the cash on hand that we had at the end of Q4, roughly $50 million. We’re being responsible as to when we spend that. We’re spending it when needed. You’re going to hear Ben talk about just in time financing. I’ve talked about that for years. There’s no reason to go out and spend cash or take cash in before we need it. The water park is starting to be built very quickly. We’re going to start spending cash there. But in the meantime, we’re not letting that cash set in a non-interest bearing checking account. We’ve put it in short-term interest bearing vehicles to generate revenue to our company, which is what you would expect in a responsible way.

And so it’s another example of how management looks at managing decisions, leading the company in a strategic way that sets up for mid and long-term success versus just focusing on short-term execution to be able to sit here on these calls and say look at what we did this quarter. You should be asking us, what are you doing to ensure our long-term success? The reverse split was a decision we needed to make to ensure compliance with NASDAQ listing rules so that you shareholders had access to your shares and you could trade them freely. The more execution that we do, the more the trend line, the positive continues to grow, the more results that you are going to be able to expect from us, both from a financial point of view, but also from a creation of experiences and assets that are going to drive long-term value for us and for you as shareholders for many, many, many years to come.

Ben let me turn it over to you now.

Benjamin Lee: Yeah. Thanks, Mike, and good morning, everyone. Moving on to financial results. As Anne mentioned earlier, we filed our fiscal 2022 Form 10-K post-market yesterday. That document is available on the SEC website as well as our Investor relations site. Fourth quarter total revenue was $3.1 million, which represents an increase of 2% from the same period in the prior year. Fiscal year 2022 revenue was $16 million, an increase of 48% from the prior year. Full year revenue growth was primarily driven by higher event revenue at the Hall of Fame Village and significant increases in operating revenue at our Doubletree Hotel. While sponsorship revenue was down from the prior year due to the previously disclosed dispute with Johnson Controls, revenue growth and diversification have improved.

The company’s revenue mix has evolved significantly over the past three years as we’ve completed construction of many Phase 2 assets and realized revenue from our media and gaming verticals. For example, in 2020, sponsorship revenue accounted for approximately 90% of total revenue compared to only 17% of total revenue in 2022. This change in revenue mix highlights the synergies and the diverse revenue streams we are creating from event revenue, tenting and rentals, hotel and restaurant revenue, media and gaming. We expect the revenue streams will continue to broaden and grow. Fourth quarter adjusted EBITDA was minus $5.5 million and minus $25.3 million for the full year. The company continued to invest in headcount and other resource needs as we’ve opened destination assets and developed our other business verticals.

We expect to see operating leverage improve throughout the course of this year. The company posted a net loss of $18.5 million in the quarter, partially offset by the change in fair value of our warrant liabilities, which increased by $400,000. Under US GAAP, the fair value of these liabilities will decline and income will improve if the company’s stock price declines. The company would experience the opposite effect when our stock price moves higher. While this line item on the financial statements will vary based on the company’s stock price, it does not impact our cash flow from operations, cash and cash equivalents or liquidity for all prior and future periods. Moving to the balance sheet. We finished the quarter with a cash and liquid investment balance of approximately $51 million compared to $33 million at the end of the third quarter.

Both values are inclusive of our restricted cash balances and investments held to maturity. With a larger cash balance, we’ve been investing excess funds in short-term treasuries due to attractive yields and to better match timing of cash outflows. The company’s primary usage of cash continues to be driven by construction expenditures with approximately 17 million spent during the fourth quarter. This cash usage was offset by proceeds obtained from various financing instruments during the quarter. Our net debt balance increased to $171 million compared to $164 million at the end of the third quarter and $101 million at the end of 2021. The increase in notes payable during the quarter was primarily due to increased principal amounts related to TDD bonds.

In addition, the company finalized two long-term sale leaseback transactions related to the Fan Engagement Zone and Water Park totalling $68.2 million. During 2022, we lengthened maturities considerably while maintaining an average interest rate well below current high yield debt rates. This information is highlighted in the supplemental slides posted on the Investor Relations website. Our ability to complete these transactions at favourable rates shows that our thoughtful and pragmatic approach is allowing us to position the balance sheet for future growth. Likewise, our ability to secure this critical financing is supported by our largest shareholder, Industrial Realty Group and many other active stakeholders, including the City of Canton, Stark County and the State of Ohio.

I’d also like to provide a bit more detail on the company’s current debt profile, as it’s important to highlight two very key points. First, the company’s ability to execute and raise capital in an ever changing credit and macro environment, and two, our intense focus on taking on the right kind of debt and optimizing the capital stack for each asset. We recognize that all debt is not created equal, so we act to take advantage of the most favourable structures available to us. I’ll provide a few examples. First, and as previously noted, the Hall of Fame Village is situated in a tourism development district or TDD that allows for the collection of additional sales taxes in the district to support future development. The company is able to bond against this future tax revenue whereby we receive upfront loan proceeds with future debt service being covered by the ongoing sales tax within the district which we own and manage.

In 2022, we raised $7.5 million through this program, supported by the State of Ohio’s Enterprise Bond Fund. We have also used tax increment financing whereby a portion of future real estate taxes associated with developed assets are used to pay for improvements made. As a final example, the company was awarded $15.8 million in transformational mixed use development tax credits as a result of the positive economic impact our development is expected to have on the region and the state. The key message here is that we’ve been able to restructure debt to align with the company’s growth path. We’ve used numerous types of creating creative financing vehicles and will continue to work towards achieving the best capital structure for the long-term success of the company.

Moving to guidance. Previously, we provided our fiscal 2023 outlook during the third quarter earnings call in November. At this time we are reiterating our forecast for 2023 revenue growth in excess of 75% when compared to 2022. Adjusted EBITDA is expected to improve by approximately 60%, driven by our focus on monetizing existing and newly developed physical and virtual assets. In closing, the company is mindful of the current economic environment and will remain intensely focused on driving profitability through synergistic and diversified revenue streams and disciplined cost management while making strategic investments to support our continued growth. We will continue to analyse and optimize our capital structure to deliver long-term value to all shareholders.

And finally, as you’ve come to expect, we will continue to provide transparent and timely updates to all of our shareholders as we move ahead. Operator, we would now like to open the line for any questions.

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Q&A Session

Operator: Thank you. We will now be conducting a question-and answer-session. Thank you. Our first question is from David Marsh with Singular Research. Please proceed with your question.

David Marsh: Hi. Good morning, guys. A couple of housekeeping questions on financial reporting quickly, if I may. First, with regard to the expense line, you guys had been reporting commission expense as a separate line item throughout the fiscal year, but you’ve not reported it as a standalone item in the fourth quarter. I was just wondering where that move to?

Benjamin Lee: Yeah, David, good question. We just consolidated it up. It’s really just to simplify reporting, really to condense some of the line items that were in the financials. As you can imagine, for a reader, it gets to be complex as we move ahead as a company. So it’s really just simplification of what we’re reporting here. We can certainly follow up with you on our call after this. I know we have some time scheduled to review exactly how that lays out in the financial statements.

David Marsh: Okay. And then next, with regard to the gaming vertical, will you be reporting that as a separate line item going forward once we start realizing revenue and do one?

Benjamin Lee: Yeah, good question. Right away. Probably not likely. However, as we move ahead, as we continue to grow as an organization, you know, that’s something that we’ll consider making sure that we’re reporting by business vertical, more segment type of reporting. We’re just not at a point yet to do that in terms of scale and scope of revenue, but certainly for transparency, for future financial statements, that’s something we’ll look into.

David Marsh: Okay. Then with regard to the investments on the balance sheet, you classified some as held to maturity, which is interesting, something I typically would see in a financial institution type reporting. Are these assets with durations longer than one year in the case of the held to maturity?

Benjamin Lee: No, no, really, everything we’ve been focused on and Mike alluded to this in his opening comments and myself as well in my prepared remarks is that we’re investing everything that we have in terms of cash, very short-term. So very short duration assets, all fully credit secured. So US Treasuries is really where we’ve been focused and everything that we’ve invested to date has been six months or less.

David Marsh: Okay, really helpful. And then just in terms of operational, business operational question, if I may, with regard to the gaming vertical, could you guys provide an update? I mean, we are here at like March 28th, three days left in the quarter. Could you give us some idea or some flavour of what you’re seeing in terms of revenue from Betr? And then could you provide us with an operational update with regard to the physical sports book that’s going to be on campus, please?

Benjamin Lee: Yeah, I can take the first.

Michael Crawford: Oh, go ahead. Go ahead, Ben.

Benjamin Lee: I’ll take the first half on Betr, Mike, and if you want to jump in on Betr, it probably makes sense as well. But you know Mike talked about this in his opening comments. You know Betr is off to a great start. We’ve seen them beat the first couple of months through their results. What we were expecting to see and what they were expecting to see on both handle and gaming revenue. And you know I’ll just follow up by saying it’s been a big focus of ours is staying in tune with them throughout this initial couple of months of start-up and stand-up of that company.

Michael Crawford: Yeah, I’d only add that, you know, when you think about what how we structured the Betr deal, there are several forms of guaranteed revenue and then there’s obviously a percentage of the bet. We get an annual form of guaranteed revenue that increases over the life of the Betr deal, which is a ten-year deal. So there is guaranteed revenue coming in on that front. There is sponsorship revenue that comes in as well. And then there’s a percentage of the bet. Now with mobile betting, one of the things that you have to take a look at is engagement, customer acquisition, and then length of time spent with the app and the types of engagement and betting that occurs. I think on all of those fronts, we are ahead of where the projections we originally thought were going to be.

Recall also we have that shareholding interest that is continuing to be valuable and continuing to grow in value as they are successful in obtaining other licenses in other states. And so we feel very good about where we’re at. I mean, we’re three months into this and we’re really starting to put more effort around activation in a responsible way. We want to make sure that betting is, it’s a very regulated environment. This is not for people under age. We don’t want this to be something that we have to worry about in the context of bringing the wrong types of individuals. We want people to bet responsibly. I’ve talked about this enhancing the way you engage with sport, not necessarily becoming something that creates harm for you or the company or the organization Betr.

I think Joey Levy has done a really good job leading that company and again being thoughtful around how they continue to expand and grow. They’ve recently added more traditional betting where you can parlay and you can have over under and you can have a win lose versus just bet on the next play or bet on the field goal or whatever the case may be. I’ve enjoyed watching this environment continue to grow and our efforts have been solely focused on getting that environment stood up and stood up in a successful way. As it relates to the onsite location, Q4, we completed it, which we were excited about, and we’re in the process now of finalizing the partnership and the way in which we look at the partnership there so that we can continue to build out the inside of that facility and offer a compelling on-site retail sports book.

That’s something that we’ll continue to update everybody on as we make more progress. But I do believe that we wanted to be thoughtful around starting with the mobile and then turn our attention to the retail sports book, which also includes a significant food and beverage component to it as well. And so it’s slightly more complicated versus standing up the online booking and sports betting opportunities through a mobile app.

David Marsh: Do you have any estimate at this time when the physical retail location might be open for business?

Michael Crawford: Well, I think we’re going to take it in two parts. I think the first part would be the structuring of the food and beverage, because I think we have a demand for food and beverage on-site quicker. We’re in conversations with I’ll say we’re in conversations with some pretty high profile food and beverage operators that are incredibly excited. Remember, this location sits at the corner of Main and Main. I mean, you have view sheds into the stadium, you have view sheds to the Center for Performance to Play-Action Plaza. And so it’s a really unique position on our property. And so we’ll focus on that and try to have something like that open by the end of this year. And then the sports betting component will continue to make updates and announcements on as we make progress on that front.

David Marsh: Okay, thanks. Let me turn it over to someone else please. Thanks.

Michael Crawford: Thank you.

Operator: Thank you. Our next question is from Jack Vander Aarde with Maxim Group. Please proceed with your question.

Jack Vander Aarde: Yeah, great. Good morning, guys. I appreciate the update and good to see the construction and momentum continue. So, Michael, I believe the long-term opportunity should remain the bigger focus. But I did just want to touch on 2022 performance because revenue growth was up nearly 50% year-over-year and your 2023 revenue guidance for at least 75% growth. Can you just touch on what drives your confidence in that clearly accelerating growth outlook in 2023 just based on what you expect to roll out in launch at the Village?

Michael Crawford: Yeah. Look, I think it’s a lot about timing. And if you think back to when the company went public in ’20 July of ’20, the first year of the company was simply existence, right? Survival and making sure that we were making decisions, battening down the hatches and making good business decisions to get us through the majority of COVID and allowing ourselves the opportunity to then continue. And we did construction so that as people started to feel comfortable coming back to social environments, stadiums, out restaurants, etcetera, that we were in a position to start to open these assets. But, you know, as I said, Jack, and I think people cannot underestimate this. You probably feel this in your own personal lives.

Go out and order a refrigeration unit, go out and order something that has steel and a petroleum based product. You’re talking about weeks, if not months to get some of this stuff. I give a lot of credit to our team, our construction management team, Carol Smith, project management team. They are being creative and leveraging the channels that they have out there to get access to necessary equipment sooner. I’ll give you an example. There is a permanent power box in Don Shula’s American Kitchen that was supposed to arrive on property in November of last year. We have yet to receive it. Now we’ve done a very good work around and we have the facility open, but that’s an example of it’s hard to drive revenue when you’re facing these types of supply chain constraints and hesitancy.

Remember, other companies are going through this as well. You have slower. You have slower commitments for tenants because they’re dealing with their own financial situations. You have guests that are dealing with inflationary environments in their personal lives, making decisions on how to spend their discretionary income. And yet we’ve continued to build and we’ve continued to open and we’ve continued to see success. And so for me, why I get so excited is, I think about what this team has accomplished in that kind of environment. And as we emerge from that and yeah I think there’s rough bumpy waters ahead of us, but it gives me a lot of hope seeing what I’m seeing from my chair, how rapidly we’re increasing booking of events, how rapidly the perception of what we’re building and opening is changing and evolving.

Shula’s is doing incredibly well as a restaurant concept. The first week the numbers I’ve been really impressed with, but more importantly, the experience itself is of the highest quality adding new rides, adding our media content is filling up, our gaming environment is really starting to take hold. So I think all of that and remember, I’ll just go back and say and then I’ll pause for a moment the synergy that can be driven out of this USFL hosting two teams permanently in our stadium this year for the season, playoffs and then championship again drives room nights, food revenue, meeting revenue facility revenue, tenant revenue, the opportunity for national television and media drives partnerships and sponsorship growth. So we if you look at the performance, I think, you can say year-over-year we’ve grown and we’ve grown exponentially.

I expect the same thing as Ben said our guidance for this year has not changed and we reforecast every single month and we still have very good line of sight on where that growth is going to come from.

Jack Vander Aarde: Great. Fantastic color there. And then, Michael, maybe I believe you mentioned your growing attendance levels in 2022 about 300,000 or so. Just bigger picture with the Phase 2 roadmap with the new hotels and encouraging to hear you broke ground on the Water Park this past quarter. Can you just touch on your overall long-term outlook with the Water Park and the new hotel and just what that means for your overall attendance levels, how that compares? Thanks.

Michael Crawford: Yeah, I think about it in two ways. Well, actually three. You know, in Phase 1, we created a set of assets, high quality that could host events. Phase 2, we’re creating now a destination where people can come and stay and play and enjoy. They can come for a day visit as well. But our ultimate goal is to take that two plus million annual attendance and increase that to five plus million annual attendance. We’re going to increase attendance this year. You’re going to see exponential growth in attendance this year. Center for Performance is adding to that Fan Engagement Zone, new outdoor rides, the ForeverLawn Sports Complex, more events in our stadium. All of that attributes to higher attendance growth and by the way year round with the ability to flatten that seasonality with indoor environments.

Where I see us going over the next couple of years and as we add an asset like the Water Park and the on-site hotel, you take that length of stay, so you take attendance and it grows. But now you also grow the length of stay from maybe a half a day to a day and a half, maybe two days. So now you have an opportunity to service guests and give them more experiences that they can experience over a multi-day period of time. And then the more we’ve added and the more events that sort of pulse through the destination, the more the intent to return increases. So it’s three magic triggers, right? It’s increased attendance, it’s length of stay and its intent to return. We’re already seeing that grow even with the assets we’ve added and the events that we have on a regular basis.

Now, by the way, we’re getting ready to announce you’re going to see in the very near term more announcements for events. I think that’s what separates us from so many other destinations that are out there and really puts us on a different playing field. There has been a need for this in Northeast Ohio. The demand for it regionally is there. We’re seeing it all around us, a 100 plus mile drive radius. People are coming for the experiences. And remember, they have to be high quality. They have to be worth the drive, worth the money and worth the stay. We’re getting the feedback that they are and that’s our commitment to excellence around the types of experiences that we’re creating. So long-term, the Water Park enhances that length of stay. The Water Park enhances that repeat visitation and the Water Park enhances that synergy.

We can now have the ability to package Water Park rides, Pro Football Hall of Fame, a meal and a hotel stay. That’s a pretty compelling package for at least a couple of day length of stay. And frankly this area has been starved for this type of entertainment and experience for many, many years.

Jack Vander Aarde: Okay. Excellent. I really appreciate the color. That’s it for me. Thanks.

Michael Crawford: Thanks, Jack.

Operator: Thank you. There are no further questions at this time. I’d like to hand the floor back over to Michael Crawford for any closing remarks.

Michael Crawford: Yeah. Thank you. So just a couple of things in closing, because I do think it’s important for us to recap. Over this last year, a lot of concern about the debt the company has taken on. I can tell you that if you’ve been watching the moves we’ve made, we have not only flattened the debt profile, but we’ve reduced it as well. Now, in some cases, we’ve had to increase it because we were taking on and building more assets, creating more media, creating more dynamic gaming environments. We are still very much in an investment mode. That’s where we are as a company. But we’re in this transition from investing in assets, investing in environments, investing in media to actually monetizing those and operationalizing those.

So I would just reiterate, don’t be concerned about the debt profile. We will continue to work on that. The balance sheet is a focus for ours, but I think we’ve made significant improvements over the last year and I congratulate Ben and his team and others that have worked on this. Financial performance, if you’re not seeing it, you need to be seeing it. We’re growing quarter-over-quarter, year-over-year. And, yes, while EBITDA has increased in terms of its loss, it’s increased because we’re continually investing in the experiences. At some point in time that investment stops and the growth in what the experience represents starts to be able to be monetized. And so the financial performance increases. Don Shula’s is an example. We invested Don Shula’s is an asset that we as a company own.

We invested in that. It’s our asset. Shula’s management group oversees it and they do a phenomenal job. That asset now opening last week is starting to generate meaningful revenue for us, but it also enables us to have special events in there. So indirect events from USFL, from Kevin Hart, from enshrinement, from the list goes on and on. Now that gives us another asset to monetize against. So I expect financial performance has been reiterated. Our guidance to continue to increase and increase in a exponentially significant way. The more assets we open, the more media we create, the more gaming environments. The other key takeaways that I just want to leave the call and those on it with is this concept of ownership mentality. Do not be fooled by the social media rhetoric that’s out there telling you that management is making decisions for selfish gains.

Management is not sold a single share of this company and in fact management is invested its own money, its own cash. Yes, as part of compensation, management is issued shares. But if you look at the S-4s that are filed, you’ll see they’ve deferred cash compensation to take it. Or in my case, I’ve invested my own cash into the company because I believe this company is going to be successful. People don’t make bad decisions just to make a statement. People make good decisions based on the information they have. That’s the information I have and that’s why I make investments into this company. And our board makes the same investments and our largest shareholder and the state and the city and the county have stood behind this company and have helped it grow and have helped it grow in a way where the cost of the growth has been maintained at a very reasonable level versus what other companies have been doing.

We’re not a biotech company. We’re not biopharma. We’re not going out diluting shareholders, raising, sorry, doing a reverse split, doing another raise, diluting shareholders, driving the stock price down, doing another raise. That’s not a cycle we’ve been in and it’s not a cycle we’re going to be in. We have committed to make sure we’re making the right decisions for us as a company and for you as shareholders because we’re shareholders. We are a significant amount of the shareholding percentage of this company. I think partners are seeing this and we’re attracting new different types of partnerships and sponsor partners to come into our company. Synergy is a key. It’s a strategy we’ve articulated. It’s a strategy now that’s starting to bear fruit.

I talked about these things over and over again. You can see how directly hosting events, directly creating media content or gaming environments leads to multiple revenue streams. And we intend to continue to monetize those. And we will. And we have. Exceptional experiences. It starts with what is great. People will come and they will spend and they will do that over and over again when your commitment to quality and excellence is there. It is undeniable when you step on campus, when you see media we’ve created, when you see the gaming environments, the partnerships that we’ve struck in those environments that we are creating excellence, we’re not doing it on the cheap. We’re creating something that has the ability to sustain itself and grow.

And so that’s a big focus of ours. I talked about revenue strategies. I think that there are things that we will continue to evolve and we will continue to refine. We’re an operating company that has transitioned from construction and investment in certain ways into operations and you’re seeing the growth there. But as we grow, we’re making better decisions. We’re focused on cost efficiency, we’re focused on investing dollars, we’re going to get the highest returns, and we’re focused on creating a critical mass where people say, wow, this is an unbelievable amount of opportunity for us to engage with our products where they’re telling stories, where they’re creating gaming environments, where they’re creating physical assets. By the way, we’re not done with creating physical assets.

We are now in the process and we’ve engaged with the master planner. We’ve hired a master planner to do Phase 3. Phase 3 is now literally being planned. And so look for updates on that in months to come. But as I’ve always said, we say what we’re going to do and we do what we’re going to say. This is what we said we were going to do a year ago. We said we were going to take on more debt a year ago. We are doing the plan. We are implementing the plan that we said we were going to implement. The final thing I’ll say is this. We’re committed to long-term shareholder value. We will be dynamic. We will continue to look for short-term execution, but we want investors that understand this strategy and that are committed to helping our company grow.

We realized the reverse stock split, people sold at a discount, as I said, and they left. I think that was the right decision for them. They were not in a company that was going to day by day, make short-term decisions to try and get a blip in a stock price. That is a poor strategy. It’s not one I subscribe to and it’s not one this company has implemented. We’ve implemented a strategy of execution, quality leads to results. That’s what we’ve been focused on. That’s what we’ll continue to be focused on. And I’ll just say thank you for your belief. Thank you for your continued questions and your thoughtful input and response. We’re open to that. We like to be transparent. And I’ll also just say thank you to our team and our shareholders and to our community.

Their belief and their support is what’s gotten us to this point. This team is high quality. This team executes. This team wakes up thinking every day how we’re going to execute a game plan and how we’re going to evolve a game plan that’s going to yield results. The world is in a difficult place. We will and have continued to manage through that. And on the other side, you’re going to start to see a company that has a $40 million, $50 million market cap with $50 million in cash and $450 million of assets, and another $170 million of physical assets being built in the next two years and a media pipeline and a gaming universe that’s very unique and different, leveraging IP that no one else has access to in many instances grow exponentially. We are undervalued.

This company has the potential for exponential growth in the coming months and years and I’m excited about where we’re at, and I look forward to giving you an update around our performance in Q1 in the very near-term. So thank you all. Thanks everybody. I hope you have a good rest of the week and we really appreciate you tuning in this morning. Thank you.

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