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

Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) Q4 2023 Earnings Call Transcript March 21, 2024

Hall of Fame Resort & Entertainment Company isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning and welcome to the Hall of Fame Resort & Entertainment Company’s Fourth Quarter 2023 Earnings Conference Call. This conference call is being recorded. [Operator Instructions] I will now turn the call over to Anne Graffice, Executive Vice President, Global Marketing and Public Affairs.

Anne Graffice: Thank you, and good morning. Welcome to our fourth quarter 2023 earnings conference call. Our latest press release, supplemental slides were posted last evening after market hours. These documents can be found on 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 strategy and outlook. John Van Buiten, our Vice President and Corporate Controller, will then provide analysis of the quarter’s financial results and 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 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 : Thank you, Anne. Good morning, everybody. It is another sunny morning here in Canton, Ohio, which every time I think we have these calls the sun is out, so that always encourages me. I thought I’d just start by thanking our team. We had a really tremendous 2023, as you probably saw in our Q4 earnings release last evening. We’ve had so many individuals that have stayed with our company, that have endured difficult times, and they’ve really helped us grow. And they continue to execute at the highest level and their dedication is really what’s inspiring us to do great things for our guests and for our shareholders. Let me talk about some key highlights from 2023, and I’ll start with the Village. Amazingly enough, we hit our 2024 attendance targets in 2023.

We welcomed over 3.1 million visitors, and we track this data scientifically. We have AI data that tracks this for us, and it’s through cell phone coverage. And so you can imagine not everyone has a cell phone or has notifications turned on. So that number of 3.1 million could be slightly under what it was actually, but it’s impressive that through the organic growth of assets, experiences and just other programming at the destination that our team was able to hit its 2024 attendance target in 2023. Second, we really started to see guests coming for single things to do here, meaning they’re coming for a sporting event or coming for a dinner. They’re starting to transform those into multiple experiences each time they come to the destination.

And that’s great for us. This eat, play, stay concept is starting to take hold, and you’ll hear that that’s going to be a big focus of ours in 2024 as well, giving access to guests to do multiple things when they come to our campus and really enjoy and extend the length of stay while they’re here. We diversified our revenue streams. As you saw, we opened several new tenants at our destination. Our center for excellence is now almost fully tenanted as well. So we’re getting revenue from lease and base rents. We’re getting revenue from revenue share in some instances with those tenants. We actually own the Don Shula’s location, so we’re generating revenue through our P&L there. Lots of sponsorship activity, new events, creating a very diversified portfolio of revenue, not to mention gaming and our media divisions as well.

It’s important to note, though, that as I look at 2023, in all honesty, this was our first full year of operation. It’s the first full year that we’ve had our fan engagement zone, our Play Action Plaza, our Center for Performance. All of the different assets here fully functional. And frankly, we’re not even tenanted 100% in some of these locations. And as you well know, and I’ll talk about this in a moment, our Gameday Bay Water Park and our Tapestry Hotel are not open, but our DoubleTree hotel continues to perform at a high level as well. ’23 was also a year that we focused on operational efficiency and actually improving our expense base. And this is something that’s hard to do in the early years of opening a destination. You have to learn the seasonality, you have to learn how new events impact other areas of the campus, new tenants opening, et cetera.

But as an example, we had a very dedicated and purposeful focus on procurement. That focus led to hundreds of thousands of dollars of savings for us as a company in one year. And so we’ll continue to look for ways to stabilize expenses while growing revenue. And I think that sort of came through in our earnings release last night, growing revenue by almost 100% or a little over 100% quarter-over-quarter from ’22 to ’23 while actually lowering our expense base. That’s a very, very high watermark for a company in its early stages of growth. The other thing we did was focus on key partnerships and sponsorships, and I’ll talk about sponsorships in a moment. But I was very proud of the fact that we were able to sign a deal with Josh David Blitzer for our sports complex partnership.

Now I know there’s been some confusion on what that deal actually was. So let me be clear. They purchased an 80% ownership stake of the Sports Complex, the P&L of that asset. But because they are world class at doing what they do, sports programming. And we felt like that they could really bring new, exciting and very engaging programming to us as a destination and strategically drive new visitation that would induce visits to our restaurants, to our hotels, et cetera, this sponsorship or this partnership was really important to us. And so we extended the rights for them to also program sports inside our center for performance or dome. They don’t have an ownership stake in that center for performance, only the rights to do sports. We continue to build concert programming, festival programming, other business programming in that ourselves.

But it’s a world-class operator that is already bringing great opportunities for us on campus, and I’m excited about what they’re going to do for us in 2024 and beyond. Another thing we did was increase our events. In 2022, we hosted about 80 events. In 2023, we hosted about 120 events. This year, we’re expecting to grow that double digits again as well. And you can already see the roster that we’ve announced our calendar, and we’re getting better at putting things out further in advance. So our marketing team has a better opportunity to speak to those events. Guests have a better opportunity to plan their calendars around those events. And we think there’s really going to be an uptick on that front as well. And then lastly, sponsorships. And let me say this about sponsorships.

I said this earlier on a couple of earnings calls. We were not rushing to sign new sponsors in certain categories. Why? Because we knew that strategically, as we open new assets, as we brought in additional attendance, as we had more events that the value to those sponsors and those partners was going to increase. And that very well has been the case. In 2023, we signed 24 new sponsors, 4 in the fourth quarter alone, and we increased or upsized some of the sponsors that had already been here. And so in the carbonated beverage category, as an example, we took a sponsor that was a 1-year deal and extended into a 3-year deal and the size of that sponsorship considerably grew. And that’s been our strategy all along. And so I think what the takeaway for this is, that strategy is now working.

And we’re showing the value to partners, the value is being recognized by those partners, and they’re committing to a one-of-a-kind destination that was nationally televised 18 times last year that continues to have unique programming, unique assets that they can really showcase their product or service at. And so a lot of really great progress, and I want to congratulate the sponsorship team on all the efforts on their front. Turning to media. The media vertical continues to grow. Last year, we had 5 shows airing across multiple platforms, national platforms, by the way. Just in the fourth quarter alone, we had the Next Man Up inside the NFL Alumni Academy airing on Amazon. We had 6 new episodes of the GOAT Code on Brink’s television. These are all really unique, and it shows our access to unique IP, hall of famers and how we can build great content and storytelling that is going to be appealing to national streaming services to national broadcast services like Box, like Amazon, like Brink’s.

I’m really encouraged about the pipeline, and I’m looking forward to making some key announcements here in 2024 that I think are going to up the game for us at an even different level and start generating meaningful revenue out of the Media division. On the gaming front. As you all know, last year, we were able to obtain 2 different sports betting licenses. And let me talk about both. The first is our mobile betting license and our partner there. And as you may recall, we took an ownership stake in better as a company because we believe so deeply in their model. And I think they’re proving that out that they have a unique way to engage guests. And that’s what we’re all about, creating unique experiences. We continue to refine what we do with them, we continue to focus on how to activate them, not only on campus but off-campus.

And so this year, we’re going to try to continue to push that mobile gaming partnership to an even higher level. What they just completed a round a valuation and they valued at $375 million. Why is that important? Again, our ownership stake in their company continues to increase in value as well. And so that’s an important note to make here, not only are they providing revenue to us directly from the gaming that they’re doing and our percentages of bad and guaranteed revenue coming from that and sponsorship, but they’re also providing additional value through our ownership stake. On-site sports betting or as it’s referred to retail sports betting. We do have a retail sports betting license. But let me be clear. 97% of all bets that are occurring in the state of Ohio — and by the way, in the state of Ohio, sports betting is prolific, setting records on multiple days this year in Ohio for sports betting not only for the state but for the country.

And so Ohio is a sports state. And the people that are engaging really are enjoying their opportunity to have access to sports betting, but they’re doing it more through mobile. And so what we’ve seen as we studied this industry is you’ve actually seen retail sports books closing in some cases or licenses not being fulfilled in other cases by partners because the value from the retail sports book is not quite what we originally had imagined it to be. And it’s generating only 3% of the revenue out of all sports betting that is occurring. Does that mean we’ve given up and we’re not going to have a sports betting partner here on campus? No. We’re actively engaged with multiple partners. We have a dedicated focus on this. Can I promise that in the end, we will have one?

Not at this point in time. What I would say is, we think very strongly that this is going to enhance the guest experience, that we want to have a sports book here. We think it’s a unique property. We’re a sports and entertainment destination. I think year round, there will be activity here, and we have a chance to be different than other sports books, but we want the right partner and we want the partner that finds the value in what we do and couples it with what they do. And so we’ll continue to look for that sports partner, and we’ll keep you informed along the way as we make progress there. Last couple of things in gaming. You saw last year, we started to have several e-gaming and general gaming opportunities. And the point of those was to continue to gain credibility in the space.

And so even recently, we’ve announced partnerships with high schools and collegiate levels for new tournaments. But gaming starts to go broader. And I say this not as somebody who has enjoyed the opportunity to play beer pong maybe in my earlier days or when my daughter was in college, but beer pong is a gaming opportunity. And we just have that here on campus. It was very well received. We’re going to be having again this year one of the largest corn hold championships in the country, nationally televised on ESPN. So we’re continuing to look to strategically advance our gaming division and try and make it meaningful from a guest experience point of view and also from a revenue point of view. I talked about sponsorships a moment ago, but the last thing I will say about sponsorships, the more we have a synergistic model where media and gaming and the village comes to life, the more we can create broader opportunities for sponsored partners.

And I think that’s creating value for them, but it’s also creating opportunity for us to continue to grow those partnerships in a meaningful way. Let me turn to 2024. 2024, we have several key priorities, the first of which is continue to grow revenue. I think we’ve shown our ability to do that. I think we’ve done it in difficult times. So I think this team has executed. I think we’ve shown our ability to diversify where revenue is coming from. But as an example, I talked about this earlier, we launched our calendar of events. We think that by giving guest advanced notice on everything that we’re doing, and by the way, we’ll continue to add more events throughout this year, they can be more planful, they can anticipate earlier. We can market and sell these events in a more advanced way.

And so we are excited about the fact that we’re getting ahead of things, and we’re starting to get a more stable view of our event calendar. It also, by the way, allows us to engage with sponsors much earlier on as well. Not only though are we focusing on revenue, but we’re focusing on closing the gap towards profitability. As you saw, loss quarter-over-quarter narrowed. And that narrowed because of our team’s focus on this, stabilization around the company, early stage company, typically takes 3 to 5 years. We’re advancing that, I think, much quicker. If you look at our DoubleTree asset within 2, 2.5 years, stabilized profitable. I think the same thing is going to be the case for the center for excellence. I think the same thing is going to be the case for the Sports Complex.

So the guidance I would give is we are continuing to look asset by asset, but we’re doing this in a very integrated way, uplift through anything we’re doing in one particular business vertical, creating uplift in the other 2 as well. We’ll be focusing on that synergistic model in a much more significant way, but how we’re going to do that is we’re going to implement a campus-wide operating system. Technology is the key. Many of you book vacations or you book experiences, the more we give guests to advance book when they’re coming here, a meal or a stay, rides, parking, taking it and making it a very efficient process, and we can do this through a new campus-wide operating system, the higher the guest engagement survey score should be and the higher the opportunity for us to grow revenue.

And so we’re excited about launching that later this year. I want to also talk a little bit about our hotel. We continue to focus on how do we grow our hotel in different ways with group bookings, with the things that we’re doing there, I think we’re very uniquely positioned in the market and this asset, I’m proud of the team there and what they’ve been able to accomplish, but I also believe that there’s a lot of room to grow, and I know they’re incredibly focused on that. Bundling. So packaging experiences, and again, that campus-wide operating system allows ease of doing that. But we want people coming here not for 1 visit to a Shula’s restaurant, we want them coming for a Shula’s restaurant, a bourbon bar experience, going to a water park maybe not in that order, but having multiple experiences while they’re here to give them a full day.

And part of the metrics that we use this year and last year to gauge success: attendance growth, new and repeat visitation, but also length of stay. And so as we bundle packages as technology allows us to engage with guests more, we can increase link this day. As they stay longer, they have a better experience and they spend more. We have greater access to their wallet. We’re going to focus on attendance growth. We are giving guidance that we project to get to about 3.5 million to 3.7 million in attendance this year. I think we can achieve that. We are focused on bringing people here for new events, new experiences. And as we open more and program more, I think repeat visitation will continue to grow. Other key priorities for us: restructuring our balance sheet.

I’ve talked about this in the past. As times were difficult through COVID and then the inflationary environment that we’ve all had to face supply chain issues we’ve had to face, we’re coming through this. But what that forced us to do was finance all assets individually. And my focus and our company’s focus now is to take those particular individual asset financing instruments and see if we can realign those. Much of the debt we have in the company is very good long-term debt. Some of that is not. And so we’ve already engaged in extending some of the debt that was coming due this year. We’ve taken advantage of extensions and we’ll be extending those at least for another year. But the primary goal is to restructure the balance sheet to have more equity in the company and then also the debt restructuring to make it longer term and more user-friendly for an early-stage company.

We want to continue to focus on developing our phase 2 assets, Gameday Water Park and the Tapestry Hotel. So let me sort of put some rumors to rest here. Construction has not stopped on the Gameday water park. We’ve released images just as recent as last week and today showing a lot of progress on the inside of the water park, but it has slowed. And why has it slowed? Because as we’ve always said, we will not overextend ourselves as we complete financial capital stack raise, we will continue to more aggressively pursue construction. We finished the foundation and the site work for the hotel. There is a lot of work progressing still. The parking lot beside the water park is full of equipment that is getting ready to be installed into the water park, but our opening has been impacted by the slowing of our construction there.

And so now we’re projecting a 2025 and I’m hopeful early 2025 opening of the water park because our goal is to finalize the capital stock for both the hotel and the water park in the next month or 2 months. And we’ve had a ton of support from our community, both at the city, the county and the state level. We have all of the instruments aligned. The trick is everything has to close at the same time, and that’s fairly complicated. And so while disappointing that I don’t believe we’ll have it open by the end of this year, a few months later, in ’25, we hope to have this asset open and ready to roll and having a great experience for our guests. Speaking of experience. Always our goal is to focus on creating unique experiences and content. And I think you’re seeing that and you’re seeing that in our results, right?

You’re seeing that in revenue. You’re seeing that in attendance. You’re seeing that in media views, social media views. Every metric that we’re using grew in 2023 and we expect to have those things grow in 2024 as well. Lastly, I’ll say we’re examining off-site asset development. We have a plan to leverage access to the brand of the Pro Football Hall of Fame that we have and potentially create much smaller assets, restaurant bar, cafe-type restaurants that have programming, that have memorabilia, that have opportunities for our guests to engage with the teams in the cities that these types of locations would exist. We’ve hired somebody who is an absolute pro at doing this. We have a plan, and we have a business plan. This is not something that we intend to invest in as a company.

We’re not there yet. But taking on partners or maybe spinning that off and having a separate opportunity is something that we’re exploring. I said lastly, but I will say one other thing. Partnerships are very important to us. So we’re continuing to look at how we grow our partnership with the NFL. I was in New York 2 months ago, I had the opportunity to meet with the commissioner and his team. We then shortly after that, announced one of the largest flag football tournaments that the NFL host every single year. we’ll be moving to Canton, Ohio, and it will be this year, bringing literally thousands of guests to our campus for multiple days. The number of hotel rooms, the number of food, meals that have to be served, rides, special event areas, meeting space, these are the types of partnerships with the NFL that we want to continue to grow.

And I think as we continue to grow our capabilities and our ability to execute, it gives them confidence that we can do more and more with them. We’ve been working with them very closely on media with the NFL Films division. We’ve produced several pieces of content with them, Perfect 10 being a good example of that. I think we’re going to have an opportunity because the NFL flag event is nationally televised to really showcase yet again the campus and everything that we have to offer. These are very unique things that a lot of companies our size don’t have the opportunity to do. Our partnership with the Pro Football Hall of Fame, they announced a significant expansion and renovation over the next 3 years — 3 to 5 years, I should say, almost $80 million worth of new expansion.

I think it complements what we’re doing very well. We are building new exciting experiences here. That is the jewel that we’re building around. And I think them becoming more modern, more engaging, more personalized. I know Jim Porter and his team are doing a really good job focusing on a plan there, and we’re excited about how we can continue to build that partnership in a much more meaningful way. And with that renovation, we hope new and exciting guests come stay longer and give an opportunity to showcase our campus as well. The same weekend that we’re hosting or the same week that we’re hosting the NFL flag event, we’re also hosting the American Corn Holding League Championships again, second year in a row, nationally totalized on ESPN, very busy week out here.

We are now seeing, as you saw Q4 last year, our plan and our strategy of flattening seasonality and pushing revenue through all 4 quarters come to life. But we will have incredibly busy weekends over the course of the summer. Set aside black college hall of fame kickoff classic. All of those events, we are now adding more festivals, we’re now adding more organically built festivals. Our team is excited to have those opportunities to continue to engage and grow our roster of events for our guests to enjoy. I’ll just close by saying this. I think we’ve shown that executing our strategy is delivering results, and in some cases, delivering them on a much more expedited calendar than what we originally expected it to be. And I hope that what people are seeing is that while I know there’s a lot of traders out there, there’s a lot of opportunity to convert those into investors.

This is a stock that I think is undervalued. I’ve said that before. I think the company has a great opportunity to grow. The fundamentals are there. We have the right focus and we have the right team. So I’m very appreciative of everybody who takes the time to understand who we are and really values the experience, the content we create, the gaming environments, but I think this company will continue to grow this year in a very meaningful way just as it did last year. So an exciting ’24 ahead of us. I’ll come back in just a few moments, but let me turn it over to John Van Buiten, our Principal Accounting Officer, and he will provide us the financial results for Q4 of last year.

John Van Buiten : Thanks, Mike, and good morning, everyone. Moving on to our financial results. Our fourth quarter total revenue was $6.1 million, which represents an increase of 101% from the same period last year. Revenue growth in the quarter was primarily driven by event and rental revenue at the Hall of Fame Village. Fiscal year 2023 revenue as a whole was $24.1 million, which was an increase of 51% from the prior year. For the full year, revenue growth was primarily driven by increased event and rental revenue at the Hall of Fame Village as well as higher operating revenue at our DoubleTree Hotel. The company’s revenue mix continues to become more diversified as we have completed construction of our — of many of our phase 2 assets and have realized revenue from our media and gaming verticals.

This change in revenue mix highlights the synergies and that have diverse revenue streams that we are creating within the company, from event revenue, tenanting and rentals, hotel and restaurant revenue, media and gaming. We expect that the revenue streams will continue to grow and broaden in future years as we reach stabilization. Fourth quarter adjusted EBITDA was minus $1.9 million compared to minus $5.5 million in the same quarter last year. For the full year, adjusted EBITDA was minus $25.5 million compared to minus $26 million for 2022. 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 fiscal year.

The company posted a net loss of $20.2 million in the quarter. Included in this net loss, the company recognized an $8.8 million impairment expense, of which $7.7 million was related to the anticipated sale of our Forever Lawn Sports Complex. Interest expense increased to $4.7 million, resulting from both higher debt balances as well as lower capitalized interest as assets are placed into service. This was partially offset by $4.1 million in other income representing the gain on the outcome of the arbitration with Johnson Controls. Moving to the balance sheet. We finished the quarter with a cash and liquid investment balance of approximately $12 million, which was largely unchanged from the balance at the end of the third quarter. The company’s usage of cash was attributed to operating activities as well as construction expenditures, which totaled approximately $15 million during the fourth quarter.

Our net debt balance increased to $219 million compared to $202 million at the end of the prior quarter. The increase in notes payable during the quarter was primarily due to new drawdowns under our fan engagement zone senior loan, which was previously reassigned to CH Capital Lending as well as accruals of paid-in-kind interest. Regarding upcoming debt maturities this year, we have already provided notice to IRG and its affiliate lenders to exercise the 1-year extension for the approximately $49 million in debt coming due at the end of this month. As we have noted in prior quarters, we are working to restructure and optimize our overall capital structure in a way that provides the company the best opportunity to move efficiently towards continued stabilization of all facets of our stated business model.

Recent macro trends and credit conditions have resulted in significant tightening in the lending markets and higher borrowing costs. 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 Onsite Tapestry Hotel. To reiterate, we are in a very challenging and restrictive credit environment, but we are working diligently towards closing the remaining construction financing needed to fund these critical assets. Moving to our 2024 financial guidance. We are expecting revenue to be in the range of $27 million to $30 million based on current water park construction time line. We are guiding to an adjusted EBITDA loss in the mid-teens millions range.

As we have highlighted, the company in our Hall of Fame Village are in the very early growth stages. Following the sale of 80% of our ownership of the Forever Long Sports Complex, we will not be recognizing future revenue or adjusted EBITDA from the asset due to accounting rules. The resulting income will instead be shown as income from our investment going forward. The company is intensely focused on expense management and staying lean where possible, while at the same time balancing the need to invest in order to support our continued growth. We expect increased diversification of revenue and EBITDA across multiple streams, with each one driving synergies to support the ecosystem that we are working to build. In closing, the company is mindful of the current economic environment and will remain intensely focused on driving profitability through diverse revenue streams and disciplined cost management while making strategic investments to support our continued growth.

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

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Q&A Session

Operator: [Operator Instructions] And our first question is from the line of David Marsh with Singular Research. Please proceed with your question.

David Marsh: Congrats on the quarter. Top line growth is really impressive.

Michael Crawford : Thank you.

David Marsh: First I wanted to ask about the arbitration outcome. I saw there was something running through the P&L there. Maybe you could just give us a little bit more detail around that? Seems as though you guys did get some — perhaps got some cash inflow there. And I just wanted to make sure that, that is a binding and nonappealable outcome.

Michael Crawford : Yes. Let me — I’m going to turn it over to John, but let me address the last part first. So I anticipated this question, but I wanted to have John go through it from a financial point of view. And in my closing remarks, I was planning on addressing this. I know this was very hotly watched over the course of last year, and I don’t blame everyone because this was a significant sponsorship for our company. We went through the process just as we committed that we would because we felt like what we had done was right, and that’s what we do with all of our partners. We treat them respectfully, we treat them according to our contracts; more importantly, we treat them as partners, and we want to be engaged with them the entire time.

I think Johnson Controls didn’t feel like that was the case. And so we went through the original process of trying to come to resolution with mediation; that didn’t work. So we went to binding arbitration. In binding arbitration, I think our team did a very good job laying out our case, so much so that the verdict came our way. And while the financial outcome that was provided to us from the arbitral panel was less than what we had hoped for, I think what it really suggested was we were right. And as you’re right, you have to stand up for yourself, whether you’re a small company or a big company. And I think the — we were appreciative of the panel’s findings and then how that impacted us financially was not as great as what we wanted to, and John will talk about that in just a moment.

But let me say this. It eliminated a significant burden for the company in the hundreds of millions of dollars from an ongoing maintenance and upkeep point of view with Johnson Controls. That was a big win for us. And it also opened up categories now that we are actively pursuing for additional sponsored partners. And I think that we’ve now cleared the way for that, there is no appeal process. There was, it was not followed. Both sides chose to honor the finding of the arbitral panel, so the proceeding is officially closed. But I’m excited now about what our opportunities are in the context of new sponsor partners, and we’re already getting partnership opportunities from this. And so I’ll let John explain more of the financial outcome. But I just wanted to make that very clear that some vindication around the verdict and also eliminating a significant burden that we had in that contract was a big, big win for us.

John Van Buiten: Yes. Thanks, Mike. As we noted in our earnings release and in my remarks this morning, we did have a gain on our P&L for the quarter of $4.1 million. That represents — we did receive a $2.87 million award. However, all of that award goes to cover the fees and the cost of the arbitration. So the gain primarily represents the fact that we were able to write off our liabilities that represented the amounts that we had accrued under the technology-as-a-service agreement, the amounts that we had accrued for the naming rights agreement and any deferred revenue that we had under the naming rights agreement, which was net of any amounts that we had on our books that were due from Johnson Controls under the naming rights agreement.

Michael Crawford : And just one other thing that is probably worth noting, if you may recall, if you read through the original filings, the claim was default from Johnson Controls towards us could have resulted in them receiving several millions of dollars worth of an award, that didn’t happen. And so again, appreciative of the arbitral panel’s view of this. I thought our team did an excellent job representing this case. And in the end, we won and it frees up a lot of opportunity for us going forward and eliminates a lot of obligation.

David Marsh: That’s very comprehensive and very helpful. I appreciate that. Next question I have is just around the USL, it looks like, unfortunately, you guys are going to be able to host any USL events this year with the merger of the 2 leagues. Just wondered what — from — just from — unfortunately, we all have to build financial model. So from a first quarter perspective, what was the impact of the USL or well, the old USFL in kind of first and second quarter last year? And how do you make up for that lost revenue this year?

Michael Crawford : Yes. Thank you for the question. I mean it’s an important question. But the good news is we had already anticipated that, and we have significant programming being built already in the first and second quarter of this year that will hopefully not only fill that gap, but also extend revenue growth. Listen, we have a great relationship with Fox, Barrick Shank, Dan Carey, all high-quality guys that I consider friends. We have communicated with them the entire way. The merger offered them an opportunity to play in existing markets. I don’t blame them for that. Frankly, it’s more cost efficient where the XFL and the USFL were already playing to play in those markets. You don’t have to have as much travel, the expense is set up, et cetera.