Participants

Anne Graffice; Executive Vice President, Global Marketing and Public Affairs; Hall of Fame Resort & Entertainment Co

Michael Crawford; Chairman of the Board, President, Chief Executive Officer; Hall of Fame Resort & Entertainment Co

John Van Buiten; Vice President and Corporate Controller; Hall of Fame Resort & Entertainment Co

David Marsh; Analyst; Singular Research

Michael Diana; Analyst; Maxim Group

Presentation

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 and all participants are in listen-only mode. We will open the conference up for questions and answers following the prepared remarks. I will now turn the call over to Anne Graffice, Executive Vice President, Global Marketing and Public Affairs.

Anne Graffice

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. These documents can be found on the Investor Relations section of our website at HOFRECO. dot com.
After my brief introduction Michael Crawford, our President and CEO, will give an update on the Company's strategy and outlook. John Van Houten, 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 a new GM in Ohio, which every time we think we have these calls as soon as out to those encourages me firm. 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 then 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 a I doubt it attracts this for us and it's through cellphone coverage. And so you can imagine not everyone has a cellphone or has notifications turned on. So that number at 3.1 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 a 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 place day 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 guest 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 up and base rents. We're getting revenue from revenue share in some instances with those tenants, we actually own the data choose locations or generating revenue through our P&L there. Lots of sponsorship activity, new events, creating a very diversified portfolio of revenue, not to mention gaming in 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 is the first full year that we've had our fan engagement zone. Our play action Plaza at 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 game day 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 out 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 us.
Josh Harris and David Blitzer, David Blitzer for our for lower prevalence 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 Forever London sports complex, the P & L of that asset. But because they are world-class at doing what they do view 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 a 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 use sports inside our Center for Performance or don't they don't have an ownership stake in that center for performance only the rights to do use sports. We continue to build Consera 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 four in the fourth quarter alone, and we increased or upsize 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 one year deal and extended in to a three-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 values, 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 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 five 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 six new episodes of the gold code on Brink's television. These are all really unique and it shows our access to unique IP policy gamers 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 Brinks. 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 two different sports betting licenses. And let me talk about both the first as our mobile betting license and our partner there. And as you may recall, we took an ownership stake and 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 continue to push that mobile gaming partnership to an even higher level, but they just completed a round of 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. 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've studied this industry is you've actually seen retail sportsbooks closing in some cases or licenses not being fulfilled in other cases, by partners because the value from the retail sportsbook 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 partners here on campus now. We're actively engaged with multiple partners and we have a dedicated focus on this. Can I promise that in the end we will have ones not at this point in time. What I would say is we think very strongly that this is going to enhance the guest experience, but we want to have a sports book here. We think it's a unique property with 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 new 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 college levels for new tournaments for gaming starts to go broader than I say, this not as somebody who has enjoyed the opportunity to play Pierrepont, 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 whole championships in the country nationally televised on ESPN. So we're continuing to look to strategically advance our gaming division and trying to make it meaningful from a guest experience point of view and also from a revenue point of view and 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 village comes to life, the more we can create broader opportunities for sponsored partners. 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. 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 guests 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 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 a company, early stage company typically takes three to five years. We're advancing that, I think, much quicker. If you look at our Doubletree asset within two, 2.5 years stabilized profitable. I think the same thing is going to be the case from the Center for Excellence. I think the same thing is going to be the case for the program 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 two 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 booked vacations or you booked experiences, the more we get guests to advance book when they're coming here a meal or tell 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 scores should be and the higher the opportunity for us to grow revenue. And so we're excited about launching that later this year.
And I will 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 and 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 our bundling So packaging experiences and again, that campus-wide operating system allows ease of doing that. But we want people coming here, not for one visit to a shoe as restaurant. We want them coming for a shoe as restaurant of Bourbon bar experience going to a waterpark, 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 used to have 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 length of stay 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. And this year, I think we can achieve that. And 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 on other key priorities for us, restructuring our balance sheet. I 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 had to face and 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 Phase two assets, Gameday waterpark and the Tapestry hotel. So let me sort of put some rumors to rest here. Construction has not stopped on the Gameday waterpark. We've released images just as recent as last week and today showing a lot of progress on the inside of the waterpark, but it has slowed and why has it slowed? Because as we've always said, we will not overextend ourselves as we complete financial our capital stock 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 waterpark is full of equipment that is getting ready to be installed into the waterpark. But our opening has been impacted by the slowing of our construction there. And so now we're projecting 2025. And I'm hopeful early 2025 opening of the waterpark because our goal is to finalize the capital stack for both the hotel and the waterpark in the next month or two 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 well 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 video 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 and attendance, you're seeing that immediate use social media views every metric that we're using through in 2023. And we expect to have those things grow in 2024 as well. And 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 our locations would exist. We have 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. And so we're continuing to look at how we grow our partnership with the NFL. I was in New York two 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 shows every single year we'll be moving in 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 this 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 three years, three to five years sessions. It was $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 Dan becoming more modern, more engaging or 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 gas 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 whole league championships, again, 2nd year in a row nationally, televised on ESPN, very busy week out here. We are now seeing, as you saw in Q4 last year, our plan and our strategy of flattening seasonality and pushing revenue through all four quarters come to life. But we will have incredibly busy weekends over the course of the summer set aside entrainment black College Football Hall of Fame kickoff classic, all of those tentpole events. We are now adding more festivals. We're now adding more organically built custom tools. 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 shall 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 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 Beurden, our Principal Accounting Officer, and he will provide us the financial results for Q4 of last year.