Q2 2023 Hall of Fame Resort & Entertainment Company Earnings Call
Good morning, welcome to the Hall of Fame resort in Entertainment Company's second quarter 2023 earnings Conference call.
Conference call is being recorded and all participants are in listen only mode.
We will open up the conference for questions and answers following the prepared remarks.
I will now turn the conference over to Alan Graf Executive Vice President Global marketing and public Affairs.
Good morning, and thank you for joining us for our second quarter 2023 earnings Conference call. Our latest press release supplemental slides and Form 10-Q were posted yesterday evening. After market hours. These documents can be found in the Investor Relations section of our website at H O F. R E C O dot com.
After this brief introduction, Michael Crawford, our president and CEO will give an update on the Companys strategy and outlook Benjamin Lee Chief Financial Officer will then provide analysis of the quarter's financial results and an update on the Companys fiscal year 'twenty three 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 all 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 the press release, we have posted a supplementary slide deck summarizing the quarterly results. These slides can be accessed on our website and will be archived there along with a replay of this call.
It's now my pleasure to turn the call over to our President and CEO , Michael Crawford Michael.
Thank you and good morning, everyone I hope everybody is having a great Fridays are it is a really nice day here in canton, Ohio.
I thought before I would start in on the Q2 highlights and some of the results, which by the way we were very pleased with and encouraged by it.
It would be Oh, I'd be remiss not to talk a little bit about in trying to reach your own.
He was an absolutely spectacular week I think the community did an outstanding job coming together.
We had hundreds of thousands of folks descend upon us over a four or five day period of time, there are multiple things that go on here in the city and in the county from balloon Fest two parades to fashion shows there is just a tremendous amount of support for this event and why not I mean, it's one of the best events in.
The world and one of the best event certainly in professional sports we had over 100, a previous hall of Famers return you you can't imagine the excitement and commitment to seeing that number of individuals. The greatness that returns here to canton every single year to support the new in Chinese and so for US It was.
An opportunity an opportunity to do several things first of all.
An opportunity to showcase and operationalized, our hall of Fame village and we did that very well play action Plaza.
With our three rides a concession area in outdoor amphitheater really was activated a lot of entertainment there are different opportunities for our guests to partake in beverage and food and so it was really fun to see the thousands of guests up they're sort of pre gaming tailgating and just enjoying the environment are we.
We offered a brand new first down first and so the hall of Fame used to do a fan festival, we took that over this year out in our forever long sports complex with so many different partners and sponsorships really bringing that area to life and activating it as well and our fan engagement zone.
We've had over this past quarter and ongoing we've had new tenants opened new experiences and our guests really enjoy the opportunity to have a dinner at schuh as play top golf experience new product that is getting ready to open certainly are our cookie ice cream concept with Isaac Bruce was a smash hit there really.
Lines for these locations all weekend long and you know for me. It was just gratifying seeing a lot of hard work from the team actually being activate didn't come to life. Our partnership with Hall of Fame could not be stronger we continue to do things together I think that's going to help both of us in the long run become even.
Even more.
Important to this board of professional football and the activation around what we can do here in canton, Ohio.
The other thing that was really interesting for me and completely unsolicited you know during the game during and trying to you know nationally televised events you have world class broadcasters like Mike to Rico, and Chris colleagues, where it is and others talking about now how this village is actually coming to life and how it.
Tristan and exciting it was for them to see it become a destination to become a place to vacation and that kind of promotion that kind of brand and in destination acknowledgment for us is invaluable. The other thing that was great for US was the Cleveland Browns, we're playing in the game and growing up in.
Ohio myself it was exciting to see it was a really good game you know we had a few issues in the stadium that were quickly corrected by our team I was very proud of the fact that the reaction was almost immediate.
Sometimes those things happen no maintenance difficulties, just some technical things there, but the fan experience was really one of a kind and during the game specifically the acknowledgment of how our company is growing and the experiences we're creating a really having an impact on people's lives and that's that's the greatest satisfaction for us.
Was a record setting weekend both in terms of attendance and also in terms of revenue across many different events entrainment, our concert for legends and certainly the football games sold out in a matter of 30 minutes and the Browns Victoria. So that made a lot of people who were very very happy.
As you know the brand was one thing, but the marketing opportunity was another and having what I referred to as the Hall of Fame Highway the highway between the rock and Roll Hall of Fame and the professional football Hall of Fame is full of people coming into canton seeing everything that we're doing all of that experience is coming to life and sharing them.
Talking to many of them, saying Wow. This is really especially in our area et cetera.
We now know more about this and we're excited about coming back that is exactly the type of marketing and branding that we were looking to have.
The last thing I'll say is we got to have the ability to be a bit more scientific this weekend as well in terms of really capturing how many people were on campus and again record setting in terms of Geo tracking the number of people at Chamberlain campus here in the village spent time here and also enjoyed experiences.
And spend money here and so.
More of that we can do the more that we can get sophisticated around geo tracking understanding our audience and then targeted marketing towards that audience and better we're going to be common activating and growing here.
Let me turn to Q2, our Q2 highlights if I could.
I would say a lot of different things have happened over this last quarter.
Things that we're very proud of them.
The thing that I'm talking about a lot is just to remain focused on the five key priorities that I highlighted in Q1 on our earnings call at that point in time. The first was balancing expenses with revenue growth and you know for US it's important to recognize that we're still very much unit growth phase of our call.
Every asset every media content every gaming environment. So.
So we're spending money to build these environments and experiences for our guests, but it's also important that we continue to focus on the cost control side of the business. You know, we're one year into operation. It was exactly a year ago. During <unk> week that we are sort of opened up the village if you will.
Not all of the experiences we're ready, but we were able to showcase a lot of assets that were.
There and ready to become operationalized isn't as you've seen we have shown strong revenue growth over that period. In fact, you know over 100 plus percent revenue growth quarter over quarter year over year, and that's attributed to the team and their efforts around activating programming and also ask.
Development as well.
You know the fact is Tom Benson Hall of Fame Stadium is now becoming home to many nationally televised and recognized events. We hosted Usfl regular season here, we hosted playoffs and championships here. We also hosted the the AR at the Forever one.
Sports complex, many large scale youth and adult tournaments, ranging from lacrosse to soccer or football to flag football and that continues to be an important attendance driver for us, but we've also realized how to monetize that China is in a much more synergistic way.
The thing that we were able to do.
I talked about last year flattened seasonality what that really means is instead of all of our attendance coming from may through I'll call. It November with the opening of our center for performance our indoor job, we were able to attract many hundreds of thousands of folks from that non peak period I'll call. It November .
Through April may and that was really important to us. It is important for two reasons, one driving year round attendance and revenue to being able to offer our partners and sponsors the reality.
The reality of a destination is activated.
So we were really happy with the number of leagues the number of events.
We chose to not only sporting events, but non sporting events in there as well we continue to do that and activate that really important asset for us which leads to a lot of great synergies as well play action Plaza, we added our third ride spike it if.
If you have a chance to come out I think the third ride gives us enough critical mass to sell day attendance passes year, along attendance passes and I've talked to many kids and adults out there walking around and they seem to just be thrilled with the amount of activity that we now have in that particular area, we opened multiple new.
Facilities and our fan engagement zone top golf is now opening doing incredibly well Bruce cattle is a fantastic partner there and in fact, you probably would've seen French Fry minute. We can it's still obviously ongoing we worked closely with them to co brand a beer, which I think is a wonderful deere has chosen areas.
That's all great angle.
Sponsors do that was.
Just overwhelmingly positive drag in <unk> and now we are selling that throughout our campus and we hope to take that off campus as well.
Synergy is important to us I talk a lot about synergies it allows us to scale experiences.
It allows us to scale our revenue.
And sort of amortized costs over multiple different things that we do.
We have.
Creating experiences that I think now offer us the opportunity and I'll talk about one is coming up this week. This week and I should say, where if you're bringing in a large scale sports tournament or hotel. This fall our restaurants are now so the Halsey Museum is seeing attendance upticks and so it's really changed.
And one off guest experience that used to be a single thing and changing it and expanding it into multiple things where people are riding and buying concessions.
The parking revenue and all of the different types of things, where we can activate each of these verticals crossing over into the other two verticals allows us to really grow the company. It also allows us to take guests and fans and make them into super fans and that's a big part of what we want to do we wanted to really create.
Stickiness to our environment and I think we're seeing that with repeat visitation.
The last thing I'll say about you know growing revenue we.
We certainly have had a focus on different business opportunities and one of those and we're starting in a very small way is merchandise and branded merchandise toward the Halsey village in particular I think our team has done a really good job at creating unique merchandise that is on brand but also.
Yeah.
What I would call involved with merchandize that people are buying today. So it was gratifying to see people coming and saying Wow, that's really great to see that what that does obviously it gives us another revenue channel, but also it creates brand ambassadors ambassadors that are out there walking around with our logos, creating opportunities to engage with others.
Looks around what is that where did you get that what kind of experience did you have.
And so I thought that was really fun to see over the last week and that's a business that we've had ongoing for quite some time now.
Working hard to expedite the stabilization of our company, but here's what I would say having done this for a lot of years of my career stabilization typically.
Three to five years to any sort of company growth for asset at all it takes time for people to understand what are your experiences. It takes time for that to be part of their vacation planning cycle and then it takes time for that to really stabilize and stabilize means not only the revenue side of the sheet, but the cost side of the sheet as well.
Come more efficient you learn how to operate the destination more efficiently I can tell you that our team of leaders has meetings about this every single week, we talk about where our opportunities are to become more efficient and I think we are becoming more efficient, but we're still a young company.
And you know we're a company as I said earlier that is investing in our growth. We're an early stage company that has to invest in the growth of new asset development, new content development, new environment develop and I think we're doing that really successfully we're managing our expenses. We're also against the outflows, but we're also managing.
The growth of experiences that our company is able to offer enabled to offer in a very unique way.
The second thing that I talked about in Q1 is our balance sheet.
There's no question that a good portion of our balance sheet is very stable and we've been very creative.
Both public and private partners as to the type of debt that we've taken in longer term very reasonable interest rate in an.
The environment where inflationary.
Conditions are taking hold lending is actually stopping and some of the areas in which we are still able to obtain financing and.
So I'm encouraged by that side of the balance sheet.
There is still work to do we do.
Do have and we did have to change.
Many shorter term debt is higher interest rate type of debt and Ben will talk more about that in his highlights in our remarks, but I would just say it is it does remain top focus for us we want a balance sheet that allows our company to grow and sustain over the long term and so that has been a focus for us.
It is more complicated by the fact that when you have several different vehicles issue. We're working with him. Every time you go into you think about restructuring one touch pieces and parts of others. So.
This is work that we will be talking about and we will continue to talk about over the remaining couple of months.
In the near future and provide updates to you at this point in time.
The third point is identifying what I.
I was referring to as strategic deal with business partners I think we've shown that as we have grown we have been very thoughtful around the types of partnerships and types of events.
Leveraging of our assets and how we do that to grow and really showcase the capabilities of our team and of our company.
You know, we try new things if you're here for the U S Hotel Championships, we hosted a country concert and our fan engagement first time, we'd ever done it was absolutely spectacular thousands of guests there activating that part of the account as we opened up our stadium. So you can traverse vacuum fourth it was really seamless for our guests.
And it was very productive for us and the guest experience was you know incredible from what we were able to discern people feedback was you need to do more of this but.
But it extends past what we're doing here on campus at the village I mean, we've signed multiple new media deals as I said filling our media pipeline is really important.
We have taken on our relationships with Brink's T V. We've taken on relationships inside.
Deals and other areas with reach television producing multiple shows with them. These are partners that allow us to use our access to intellectual property that no one else has.
And distribute to hundreds of thousands if not millions of eyes, all across America, and hotels and airports.
Streaming et cetera, and so this.
The go code, we were advertising during an SRAM at weekend talking about how the greatest got to be great. The tech in this show is fantastic.
The storyline is fantastic, it's short form content that I think everyone is going to enjoy its in production right now it'll be in distribution in the very near term and then the multiple other shows that we've continued to sign up I think are going to be really really wonderful for our guests and bring our brand and our product to life, we've had our Nf.
She Paula village your pass holder out there I think it's been interesting to see that our highest level of annual pass is sold out and there is a demand for more of that level, we've really activated that program with unique and special access to content.
Two events to merchandise and I think the feedback has been quite positive on that front. This is really an annual pass for our company. It's not just an annual pass for the village and so you know media premiers and gaming Activations. These pass holders get special access to things.
That others do not and so we're going to continue to look at how we.
Evolve and restructured those to meet and even greater demand as we continue to grow our company.
In our gaming Division.
Obviously, we continue with the esports vertical we've hosted multiple tournaments in Q2.
Is fun and interesting for me to meet a lot of a senior executive from E gaming companies here during <unk> week and their reaction to what we've done on campus and how we've continued to activate the campus in that space.
Fantasy sports remains a priority for us this weekend, we have a very large fantasy football Expo.
That is sponsored by NBC sports edge also live streamed with Sirius XM radio their fantasy channel and it really does again showcase the synergy when you bring an event that is.
Fantasy based or esports based staying in hotels media coverage.
Space rental concessions rides all of the things that we do now can be monetized through these types of events and so it's one of those things where gaming starts to become an important part of what we do our partner at better you'll recall that we have taken a shareholding interest.
There.
Percentage of handle in Ohio continues to grow so we're encouraged by that but more importantly.
The profile of the company continues to grow as well and Joey Levy and and his team are doing a great job and they've now been able to extend better as reach into multiple other states and that benefit us it benefits us through our shareholding percentage.
The fourth point that we talked about is just continuing to develop our phase two assets and so I posted yesterday on my social channels are the exciting news that our Waterpark is finally going vertical we've been doing a lot of the underground work a lot of the work that sort of sets up the structure of the water Park. We expect this to be fully enclosed by the end.
This year and so steel will start to go up next week more of those pre fab panels that create the shell of the building continue to go up today and beyond and so the Waterpark really is a phenomenal asset I continue to review the drawings and the designs, it's going to surprise and delight our guests beyond their wire.
The streams and by the way, we're looking at some tuck in there thats going to really enhance the guest experience as well.
We're growing our onsite hotel presence with the Hilton tapestry a hotel that we've talked about we're anticipating this hotel to open right at around the timing of the water Park, we want with those two assets are connected to help mitigate some of the weather considerations here in Ohio, and again reviewing those designs in la.
Looking at what that hotel is going to represent to us, giving us an onsite presence.
It was really important for the stay and play kind of environment that we're looking to create.
Lastly.
The fifth thing that we focus on is just creating unique experiences for our guests and I talk about this all the time.
We are putting the right team in place in all of our business verticals.
To really drive experiences to be thoughtful about how we use our intellectual property, how we attach ourselves to professional football and other sport, how we leverage our license agreement with the pro Football Hall of Fame to access Hall of Famers, who can leverage their brand for our growth and we are on track right now for record attendance in <unk>.
23, and I'm really happy to report that because with record attendance at the village leads to record growth in revenue leads to record growth and experiences marketing branding and so that's the whole goal here to continue to open assets to continue to create environments, where our guests just keep coming back to over and over and make them sticky so that they want.
To be a part of our ecosystem. The other thing that we're very proud of is the experience itself and the quality of the experience I'll reference the Doubletree hotel, our downtown Hotel, which we've now had opened for nearly three years in the top three of double trees U S customer service and that is absolutely fantastic when.
Do you think of the breadth of the Hilton portfolio for us to achieve that year over year. The team. There is so committed they put on a great show the hall of Famers stayed there all week last week. The feedback we got was unbelievable can't wait to come back to the asset itself is great, but the team is what puts the.
Life into that asset and as we all know when you go to a place and you feel welcome and you feel like you're taking care of you go to that place again and again, we're seeing business travelers to tick up there, we're seeing meeting and convention business tick up there obviously that is probably one of the best cases for synergy for our company every time, we're doing programming our own hotel us.
And so you know it's.
It's really encouraging to hear the feedback not only that we're opening in creating new things, but the things that we're building the environment.
Or are the highest quality you create quality people will calm people will pay people.
I'll, just close by saying before I turn it over to Ben our long term strategy is to deliver results. That's what we've committed to that's what we've stayed steadfast on focusing on and it's working you know when you look at the revenue growth. When you look at the attendance when you look at the environment and the quality of the product we're absolutely headed in the right direction.
And I have confidence that we will continue to make the right decisions to grow this company and to add shareholder value.
Realize that people out there on the stock of your $100 I realize people have had concerns about some choices that we've had to make in our <unk>.
Past to preserve our ability to drive long term success, but I think what we've tried to prove and demonstrate as transparency is critical we've been transparent about what we've done when we've done it and why we've done it and we will continue.
And we've highlighted the growing interest in our companies and the many leaders from different spaces that are now coming in wanting to talk to us about an opportunity to partner with us be it in the media space, the gaming space or even taking up residency here creating spaces.
Our events and things of that nature here at campus at the village. We've got a great Q3, and Q4 ahead of US I'll talk a little bit more about that in just a few minutes, but I'll wrap by saying I viewed Q2 is a fantastic success for us and it continued to highlight what we can do if we stay focused on our long term strategy turned.
Over to Beth.
Thanks, Mike and good morning, everyone moving on to financial results and as Anne mentioned earlier, we filed our second quarter fiscal 2023 Form 10-Q post market yesterday, the filing press release and supplemental slides are available on our Investor Relations site.
Second quarter total revenue was $6 1 million, which represents an increase of 128% from the same period in the prior year.
Quarter revenue growth was primarily driven by higher event and rental revenue as our Holophane village increased operating revenue at our Doubletree hotel and sponsorships.
Second quarter, adjusted EBITDA was minus $6 2 million compared to minus $5 9 million in the same period last year the.
The change is primarily driven by increased operating expenses related to higher personnel and related benefits cost the recognition of certain.
It gives me a recognition of timing for certain compensation related expenses and an increase in production fees for our events and media productions.
You would expect our expense base has increased as we brought new assets online increased event programming.
And work to hiring training staff needed to manage and operate a world class destination.
Hardness, we remain focused on prudent cost management and driving improvements in operating efficiency to enhance future profitability.
The company posted a net loss of $13 6 million in the quarter, which included an increase in the fair value of securities available for sale of $1 7 million and higher interest expense as a result of higher debt balances and lower capitalized interest as assets are placed into service.
Moving to the balance sheet.
We finished the quarter with a cash and liquid investment balance of approximately $29 million compared to $47 million at the end of the prior quarter.
Both values are inclusive of our restricted cash balances and investments held to maturity.
We've continued to invest excess funds in short term treasuries due to attractive yields and to better match the timing of cash outflows.
Company's usage of cash was attributed to operating activities already highlighted and construction expenditures, which totaled approximately $10 million during the second quarter.
Our net debt balance increased to $195 million compared to $192 million at the end of the prior quarter.
The increase in notes payable during the quarter was primarily due to accruals of paid in kind interest. We've also received proceeds related to our series a preferred or <unk> five program that was reinstated in late 2022 and will continue throughout the remainder of this year.
Recent macro trends in credit conditions have resulted in significant tightening in the lending markets and higher borrowing costs. However.
<unk> from our largest shareholder industrial Realty group and our ability to source capital at the support of local municipal and state funding programs has provided us the opportunity to raise funding and investment as investment and operating needs arise.
To work towards closing all of the necessary financing required for phase two construction, including multiple financing transactions related to the Waterpark and onsite hotel.
Additionally, we expect to close transactions necessary to refinance and optimize the capital stack for the Doubletree Hotel later this quarter.
As we've done in the past it's important to reiterate two key points first the company's ability to execute you raised capital in an ever changing in very difficult macro environment and second our intense focus on taking on the right kind of financing at the right time, while optimizing the capital stack for each asset we will.
You need to restructure and optimize our overall capital structure in a way that positions the company for future growth.
Moving to guidance at this time, we are updating our forecast of 2023 revenue with expected growth in excess of 50% when compared to 2022.
We are revising our adjusted EBIT estimate as we now expect this loss to come in the low to mid $20 million range.
As we've highlighted with the company and village in the very early growth stages, we expect revenue growth to accelerate and profitability to improve as we move towards stabilization.
Longer term, we continue to target $150 million of annual run rate revenue and approximately $50 million of annual run rate adjusted EBITDA across the key pillars. Once stabilization is achieved.
Those key pillars again, our destination based assets, our media platform and our gaming vertical.
The revenue and EBIT generation will be diversified across across multiple screens with each one driving synergies to support the ecosystem, we're working so hard to build.
In closing the company is mindful of the current economic environment, and we will remain intensely focused on driving profitability diversified revenue streams and disciplined cost management, while making strategic investments to support continued growth.
We continue to analyze and optimize our capital structure to defer to them.
Liver long term value to all of our 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.
Thank you.
At this time, we'll be conducting a question and answer session.
Like to ask a question. Please press star one for your telephone keypad and a confirmation tone will indicate your line is in the question queue.
You May press Star two if he likes you move your question from the queue.
For participants are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please pull for questions once again Thats star one thank you.
Thank you and our first question comes from the line of Jack <unk> with Maxim Group. Please proceed with your question.
Okay, great. Good morning, guys, great great to see the strong topline growth both year over year sequentially in.
We reiterate our guidance for 75% revenue growth in 2023.
So Michael it looks like events revenue really picked up and you saw growth from your existing hotel operations as well and I see the sports complex attendance looks like it's on track to more than double this year as well.
I have kind of a loaded question for you with hotels I think Youre Doubletree Hotel has like 164 rooms is this is the growth in hotels being driven by just higher occupancy levels, which would be a good sign or is it pricing increases anything there and then just as we look at it and trying to week for that.
Third quarter, how do we think about your hotels in your events activity and the associated revenue momentum in the third quarter versus second quarter. Thanks.
Yes, Thanks Jack.
Appreciate the question.
The hotel is actually entering into that more stabilized phase that we talked about and we've actually been able to accelerate that.
Largely because we put a lot of our own programming into our own hotel REIT and so every event. We have every football game gets played every concert this year.
Large scale sports tournaments.
Our absolutely marketing our hotel as a package opportunity now to your question. The great thing about what we're seeing this year is there has been a return of the business traveler.
We have a unique asset here in canton, where D. Ballroom is the largest in the county, there are considerable amount of meeting rooms.
Configured bar and restaurant is really pretty special for groups and so occupancy has definitely gone up versus our original projections, but the other piece of this is the rate.
We've been able to the team there has done a good job at increasing range, while not sacrificing occupancy and I think it's just attribute to the asset quality of the experience quality and uniqueness.
Its position in the market.
As far as what's driving.
I think look the pro football Hall of Fame posted multiple events there.
Our scale generally.
Certainly the whole team are staying there which was great for us.
The.
Food and beverage room rate across the county goes astronomically higher during large scale events like <unk>, we benefit from that as well we were a 100% occupied effectively the full week and so it was gratifying to see that that hotel really does test out well with the highest.
Profiled guests it was fun to see guys like Peyton Manning Theyre, just having a great time all of the other hall of Famers.
Really talking about the asset.
Wonderfully performed and the team there has to be.
They just did a fantastic job maximizing and you have to also recognize when you have a different audience.
Profile.
From a food and beverage standpoint, what is going to allow you to have the best experience for them, but also have the best revenue opportunity as well and so I think the team has done a good job of executing on that front.
Okay, great lot of helpful color, there, Michael and then maybe on the gaming side.
It looks like you actually have planned a lot of cool new activities. If I look at the slide deck here a couple of things that caught my eye.
With onsite and virtual events, it sounds like you're hosting and producing tournament events I see determined prizes and video game titles like Super Smash Brothers and Madden.
Are you actively hosting these tournaments now.
And then also just.
When you think about the hall of Fame Kenneth you mean, well I just want to get your thoughts there. It looks like you also introduced new formats in cash prizes. So it sounds like you're really ramping up tournament in cash prizes.
And then attempt to just capture more of a pause in demand. So just an update on your activities in gaming.
And kind of the brand awareness and demand and traction you're getting there.
Sure well first I'll give a lot of credit to Rob <unk>, our head of gaming. He has really got to focus on this great background.
Our assets are really unique in the gaming space.
So it was fun to see some of these turns being hosted in our stadium upon our giant boards.
We choose and others that are playing this was so phenomenal for them they have their families or friends or others coming out and seeing it and of course as I.
Pete myself here those types of alternatives aren't just about entry fees, there about food and beverage thereabout rides, thereby stays there about everything else that we do in giving those participants not just the gaming experience, but in overall destination experience. So we intend to do more of those I know there is a focus to crew.
More and bigger we're also focused on how do we get into the college gaming space, maybe hosting national tournaments.
Certainly there is a focus on how do we partner with some of the biggest gamer gaming developers to host things here that are on brand for us.
Go a lot further than that but to say that gaming I think as and a driver for us.
It's part of how we enhance the guest experience and being a company that's in the sports and entertainment business, it's our responsibility to be in that space as well and so we're we'll get we're going to continue to look at how we grow these how we activate fees and how we position ourselves in that space with the unique assets that we have to deal with on a fantasy.
Side, Yes, I mean, we've done things that were different.
Allowing guests to access to a really critical fantasy information that helps them make better selections would be better fast food players. The Expo that we're hosting this week is a very large expo and growing.
<unk> has an opportunity to really expose our destination too many of those types of fantasy players. Our goal I think it should be here in the first place a professional football why there would be multiple different fantasy opportunities here every single year from.
From small scale events to campus vitamins I can see those things growing and becoming an important part of.
A destination driver for us at this time of the year so fast.
He is an important space, we're going to continue to explore the right model there and how we leverage access to our IP and our brand to take full advantage of it.
Got it okay.
Helpful color there good to see the continued momentum build I'll hop back in the queue. Thanks.
Thanks, Jeff.
The next question is from the line of David Marsh with singular research. Please proceed with your questions.
Hey, good morning, guys and thanks for taking the questions.
And I would echo I would echo previous comments congrats on the revenue.
So that's very impressive good job.
Thank you.
Yes.
So first for me.
Yes.
I'll start on the very top line here.
The sponsorship.
It's 91, it's still about.
It's still a little less than half where it was a couple of years ago.
Obviously the ongoing.
Dialog, we'll call it with Johnson controls probably continuing.
Hamstring you guys from new sponsorship opportunities and growing that meaningfully.
Could we just get an update on that.
And since all situations as it stands today.
Sure well, let me let me take the is it hamstringing as part of Q2, we signed about 16 new sponsors.
Leading into Q3.
For us and that team I think was great performance. What we're seeing is the more we can activate the campus to more events that we can host the more media that we can produce.
Watch for more than a few sponsors are really starting to come around to the fact that we have special and unique IP, we have a one of a kind destination.
The number of times and we hosted a lot of our sponsor partners here and potential new sponsor partners here. The number of times I heard Wow, what we can do here and how we can showcase our brand our products. Our service is really exciting and so the challenge in the world that we're living in.
Today.
With your.
In the marketing division of our company and Youre facing inflationary environment. Some of that some of those dollars get cut and companies aren't as aggressive and spending on sponsorship deals. While they are trying to preserve cash and ensure that for these economically challenging times that we're.
In right now.
Ability to sustain and grow themselves and yet.
We haven't had many new partners come and realize a long term advantage of being associated with us not just visibility, but in many of our different business verticals. So proud of the team and the growth there.
I think the tenure and the amount of deals right now we're being very careful that we don't want to sign really long term sponsor deals until we can fully stabilized and activate all of our business verticals. Because we think we can maximize value by doing so we're signing a lot of one to three year deals.
And we're growing deals that we've had in place.
Year over year, and our team has been successful in growing the dollar value of those deals and so I think we're being very strategic around not committing ourselves for too long period of time and not able to access the value that and create the value of these deals are always two way create the value for our partners that we can.
Create six months a year 18 months plus from now so that's one explanation that I think is important to have out there. The second piece of your question Johnson controls.
We are still in.
Active pursuit of resolution around the Johnson controls.
<unk>.
We are heading towards Q3 arbitration, we are preparing for that as we speak.
Went through the mediation process. There was some discussion around how we can resolve it it wasn't satisfactory for us it wasn't satisfactory for them and so we continue now with the process I will say that I have every expectation that we have.
A positive resolution on this and that we can move forward.
I'll call it sort of Q3 Q4 timeframe.
I mean, we have the opportunity to explain to the arbiter of how why we feel like.
Johnson controls.
Is it the wrong here and what we've done over time in terms of our financing and building the commitment we made to them and they were really strong partner for us and one that we wanted to have here.
I think we will be able to demonstrate why that is the case and why.
We have done is exactly what we committed to do.
I think they have a different view and so that will leave that for the panel to opine upon and then give us a decision one way or another.
Anticipating a decision before me.
Yes.
Solution that will certainly will certainly help but I can't imagine it being detrimental.
You got to get that number year over year.
Just shifting gears, if a kid you.
Do you have any anything new to tell us with regards to.
Online.
<unk> sports book and potential partner there and.
Potential build out.
Yeah. So we have worked very carefully since we decided not to partner with Rush Street interactive to ensure that whatever partner, we bring in our goals are completely aligned and the first goal is to recognize where adjusted each were not individual experience.
And so.
Sports betting component of that I think is an important experience part of what we want to offer here to our guests.
Three different partners that were speaking with right now.
Cited all three of them for different reasons.
We're being very pragmatic in our analysis and our discussion with them about how the partnership would work.
The tenure of the partnership the components of the partnership but what's been interesting is that as Ohio has launched in January and continued to progress in sports betting.
Obviously mobile is the lion's share of where people make their sports bets.
We've been very focused on activating with our partner at better.
Each environment, there and making sure that it is a top quality experience that they have enhanced and grown that experience and so we feel very good about where they're at.
Our position there.
I do still think that retail is important I think retail will play.
Part of the experience.
Sure.
A significant revenue driver for us, but it is part of the revenue driving experience that I think our guests want us to have and so our goal.
Our license where retail is through the end of this year. Our goal is to find a partner and activating prior to the end of this year, but if we don't we want to find the right partner and we will continue to look for that partner and activation at the appropriate time, so still a priority.
Prospects out there and we're focused on.
And.
And they're.
In terms of the better business I presume, it's going reasonably well, but still not meaningful enough to to.
To move the needle on your right in terms of your income and so forth is that a fair statement.
Yes, I think we're a little over a quarter of $1 million that we reported this year that sort of vertical for them better.
It will continue to grow our deal structure with them is one it allows them as I said earlier, we invested in our partners we want them to be successful they were brand new in the space. So we weren't interested in trying to take a significant part of the debate or profit upfront.
A lot more back loaded.
We are comfortable that the escalation and contribution financial contribution will be.
These will be at the time that those start to continue to grow.
But it is good to see.
Value of our investment and that continues to grow it's good to see them get licenses in Massachusetts, Virginia and beyond and also just good to see that to be recognized as an innovator in this space and that's the kind of partner that would be one of your associates as well.
That's helpful commentary.
And then just the last you know.
Yes.
Hey, I wanted to hit on really is.
Could you talk about.
Obviously, we're in infancy of construction here with regard to the Waterpark hotel, but can you just remind us of the timeline and when you might hope to.
Open the doors on those new assets.
Yes, we've really benefited here in Ohio from whether or not we had a mile.
Mild winter, which if you understand what happens in the winter the ground freezes really hard sometimes when you have to wait for that thought to break ground in some of these assets. We didn't have to do that so that allowed us to advance our schedule.
We're right on schedule right now Theres vertical construction is starting as of yesterday steel starts to go up next week will be fully enclosed in the waterpark before the end of the year. So I'm excited about what we're building and the quality of what we're building I have been told by Waterpark experts at this.
It is a very high quality asset in fact higher quality than many that they see.
And so with the football gaming and the quality of what we're building. We're looking at a Q3 into Q3 opening next year soft opening and we would say the same thing.
In that time frame for the hotels, while the hotel is just not as long a build cycle at.
Once you and we're doing a lot of.
Site formation underground work right now as a part of what we've had to do to establish the structures and the waterpark so that benefits us.
Lately.
And a part of the property that is fairly self contained and so we can move pretty aggressively there versus something that may be centered more where you have to watch for the guest experience closing down things closing down roads et cetera.
So Q3 Q4 next year is the timing.
That's really helpful. I appreciate it good.
Good luck guys I appreciate it appreciate.
Appreciate the opportunity to ask questions. Thanks, very much appreciate the questions.
Thank you at this time I will turn the floor back to management for closing remarks.
We have a few more questions that have come in front of the queue and I will share those and the first step.
Can you explain why your fiscal year 'twenty, three revenue and EBITA financial guidance is reduced and additionally, provide an update on our cash position.
Sure I'll take that one thanks Ann.
First we always debate on guidance, we're a very young company. This is a challenging area for us to provide guidance, we're learning sort of as we go.
Nonetheless, we always when we talk about this every time on each call is going to be as transparent as possible. So.
The majority of the assets that we have only been operational for a year. So we're always working to improve those synergies and efficiencies really as we look at this year, we're reducing guidance.
Revenue down versus what we originally projected also from an operating expense standpoint higher than let's say, what we expected and then think about we're putting as an example, very large shows very large events on the increased production costs. That's one example, where we're seeing higher costs.
But again, we will continue to be as transparent with our investors as possible and provide guidance on the best information we have.
Second question on cash position.
Obviously, managing cash and near term liquidity is always our top priority as it is for any company.
We're managing all outflows very focused on cost and expense management and of course focused very focused on closing the next tranche of construction financing.
Of course other levers we can always pull to manage cash include slowing construction, we don't expect to do that right now or entering really into some form of bridge financing until we close on all of the construction financing transactions that that we've talked about and really line of sight into that as we're looking forward to Q3 Q4.
<unk> on all of those transactions, which really closes out everything that we need for phase II construction financing.
I'll just add if I may just two things from an operational point of view.
One has been said early stage company and so every day there are new business opportunities that we're evaluating and so.
Are constantly updating our forecasts ourselves because there are new business.
There is new opportunities for growth.
Our pros and save cost.
Is that still be the supply chain issues are causing delayed openings. So that in fact, our revenue as well.
There was a question about Johnson controls I mean, we're working incredibly hard to replace that revenue right.
Mark as I alluded to is challenging.
Companies aren't spending as much on marketing dollars. So.
Those were meaningful dollars in those $67 million a year range.
Moving to try it in place.
And that is meaningful when it comes to forecasting because while we're trying it takes time to sign these types of sponsorship deals and sponsors again.
Yes.
Languages, we're not activating longer term because it's just where the market is and the challenges. So there's just things that are early stage company made forecasting the credit dynamics.
The transparency is important so every time, we thought wow.
Sure.
Positive.
Got it.
Would you address the going concern language in the 10-Q.
Yes, sure I'll take that one so we added that language back in the first quarter and of course, we included it again here in Q2.
Yes. This is this is really accounting guidance, meaning what is the accounting literature say, we need to disclose and of course, we do that it considers our current cash balance expected operating cash needs and then of course construction expenditures and timelines and it's really a 12 months looking forward view.
We've stated we're working towards closing the cap stack for both the water Park hotel.
And of course, we're able to expand we can extend most of the debt thats maturing in March of 2024 for another year, which gives us some more bandwidth there.
Again, I'll just say we've proven in the past that we can accomplish the necessary financing for construction.
And then we'll just adjust accordingly to meet our goals, but it's an important disclosure that our investors need to be aware of again, we've put it in there in the fourth first quarter of this year and we've reiterated it in the second quarter as well and we've always talked about just in time financing and just in time financing means you take the financing when you need it and in some instances that creates.
Accounting issue from how do you get the financing to ensure a long term.
Running of the company, but also long term building of the assets we've been in this situation before we come out of this situation.
Our expectation is that we can be successful on that front again with the many levers that Ben has talked about.
Ensuring that we're doing things pragmatically embracing the funds we have the line of sight on the fund's closing those funds over the next couple of months is the important part.
Can you give an update on the construction financing you touched on the timeline do you have any additional color about.
I'll touch on it yes, it's similar to what we've done in the past being extremely creative about sources. So.
We have various not just bank sources of municipal sources as well we've talked about the fact that we're in a tourism development district.
The source for revenue for us to bond against for construction financing.
So really looking at all channels as Mike mentioned line of sight, we have.
Term sheets signed ready to close on an all sources of financing it will round out everything that we need for construction for phase II. So an extreme positive there.
No surprises are very complicated transactions. It just takes time to get through them at closing cyc cycle due diligence cycle and where there is just you know within the next couple of months, we expect to have all this closed.
Next question is about Pds would you please discuss timing of the pipeline and when the company can expect to see results from.
Hum.
Yes, so we've always talked about the immediate pipeline.
About a three year cycle.
You create content.
Commercial property.
Partnerships you have to.
Sure.
Tuesday content Mr.
Distribute that content amazingly enough. If you look at the history of our company in a very short window of time, we've already done three or four of those types of shows and distributed them.
Well before that three year timeframe as I talked about reach television brings.
<unk> new shows there in production being distributed in.
Barry due course, and what that does it leads to producer fees sponsorship. It leads to acknowledgment that we have intellectual property that partners out there want and we have a great team that Ivy it's around how do we leverage stories, so I get excited when I see.
A lot of the new store opportunities that come across my desk, and we're signing new content opportunities and rights to new content.
Weekly almost now and looking for ways to build the production and distribution partnerships, but we've been effective at doing that.
<unk> that brings the reach Tvs, the gray Television's NFL films, and so I have every expectation that as we stabilize that vertical in our company, but it will start to produce revenue in a more meaningful way.
I would say halfway down the path and already we started to produce things and distribute things which are great.
That's the last of the questions I'll turn it back over to Michael quickly remark, yes.
I'll, just close by saying a few things.
Over 17 nationally televised events. This year. Thanks, a lot about that why is that important.
It is frac sponsors and attracts new content allows us to drive activation.
Sure.
And increase brand awareness.
We have to continue to grow our brand as a brand of excellence as a brand in the sports and entertainment space.
To create environments, where a virtue.
Virtual and physical that are different and so I jokingly say, if you're a professional football team.
Beyond National borders.
On a year unless you make the playoffs Super Bowl.
My expectation.
Continue to add to that.
Really unique for a company our size to have that strategic profile.
For people to one up here and talk about that.
Large scale festivals that are coming we've announced those bill Burke one of the top comedians coming Black College football Hall of Fame kickoff classic coming.
This was really fun and unique northeast, Ohio versus America showcase.
High School football showcase at some of the best High school teams in the country coming here again nationally televised our highest high school football Championships, our winter Blitz that we're excited about being even bigger and better this year and leveraging all of the assets as they continue to take shape and grow here at the village more media content ourselves.
It's coming out again I think in fantasy this week and the Big Fantasy football tournament or Expo that we're hosting here I should say media as a part of that radio broadcast and then all of the different Activations on campus.
Our forecasting record attendance this year record attendance translates into revenue revenue attendance or revenue growth is what we need as an early stage company. We are going to continue to be very cost focused but investment oriented as well the.
The most important thing for us, creating those unique experiences that only we can develop and I keep emphasizing that to our team and our team keeps delivering over and over again, because if we are unique and different and we are excellent in what we do other brands other companies want to be associated with us and excellence begets more excellence and Thats really exciting.
Our model of synergy you can start to see us chasing hole. That's how we are growing revenue, it's not by a one off experiences as one off business is through monetizing those one offices through our multiple different business verticals. We're building a world class Board, we've added Jerome Bettis to onboard the first meeting out of engage.
AUM is offering ideas and suggestions he's got a great media background. He is a great rolodex just as Marcus Allen just as the rest of our board to.
Our board gives us on a daily basis I consider our new World class I would put that obligation any board out there for a company of our size their commitment their passion on our product.
This year, we're excited to do everything they can to support is also the same thing.
Our team is just growing pains fantastic I'm looking forward to adding team, where we needed to help from a cost control point of view actual revenue.
I think we're now at a stage, where we can do both finished added close to his team that helps.
The.
Sure.
From a cost side.
People that will help us both revenues as well and then lastly, we got to continue to be focused on our financial structure.
Financial structure long term growth.
Talking about that.
Every day is worth doing is worth it takes time and I look forward.
Davidson.
But rest assured this company as a company.
Our focus on executing long term support.
Structures.
I just wanted to thank everybody.
Great second quarter towards Q3 and updated.
Thank you Michael I will echo my thanks and say.
We very much appreciate on behalf of our entire company. Thank you for your continued support of all things happening within the housing start and entertainment company and I wish you all a wonderful weekend.
This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.