Good morning and welcome to the Hall of Fame Resort & Entertainment Company’s Fourth Quarter 2020 Earnings Conference Call. This conference call is being recorded and all participants are in a listen-only mode. I will now turn the conference over to Anne Graffice, Executive Vice President of Public Affairs. Please begin..

Good morning and thank you for joining us for our fourth quarter 2020 earnings conference call. Our latest press release, supplemental slides and 10-K annual report were posted yesterday evening after market hours. These documents can be found in the Investor Relations section of our website at hofreco.com..

Great. Thanks and good morning, everybody. Welcome to our call. We have had a exciting 2020 as you know and a very good Q4, which we are looking forward to updating you on. I just like to start by saying you know, the Super Bowl was fantastic, and really a testimony to the strength of professional football. We had a great virtual draft last year.

I thought the NFL did a fantastic job in pulling that off. And guess what the draft is going to be in Cleveland, Ohio this year. So we are looking forward to having the ability to connect with the draft and maybe create some special events here in Canton, Ohio. You know, 2020 for us was not unlike most other companies, it was a difficult year.

We had to make adjustments in our construction timelines. We had to furlough some of our team. And we certainly had to rethink our balance sheet and we did all of that. And I think we did it very successfully. But in the meantime, we also did some things that we are positioning ourselves in our company for long-term success.

I sort of viewed ‘20 and this year as well as investment years. We were investing in things like our assets here in Canton, Ohio. We are investing in things like creating live events, signing live events to bring to campus media deals.

We are investing in technology to power our Pro Football Hall of Fame Fantasy League that we are going to be launching this year, our Hall of Fantasy League that will be a one of a kind, Pro Football Fantasy experience for our guests to enjoy..

Alright. Thanks Mike and good morning, everyone. We filed our fiscal 2020 Form 10-K yesterday post-market. That document can be found on the SEC website as well as our Investor Relations site. Let’s start with our fourth quarter results.

Our fourth quarter total revenue increased by 4% versus the prior year to $1.75 million, driven primarily by hotel revenue from our DoubleTree Hotel in downtown Canton, which opened in November. This incremental revenue was partially offset by reduced events due to the COVID-19 health pandemic.

Fourth quarter adjusted EBITDA was a loss of $6.5 million driven by property operating and hotel operating expenses as we continue building the groundwork for success across all three of our business verticals.

Looking at the full year, our total revenue declined roughly 10% to $7 million, driven by fewer events resulting from the COVDI-19 health pandemic.

Fiscal 2020 adjusted EBITDA was a loss of $20.5 million compared to a loss of $10 million in fiscal 2019, reflecting the strategic investments we made in 2020 to increase our capabilities across all of our verticals as we invest for the future.

Moving over to the balance sheet, we finished the quarter with a cash balance of about $40 million, which is inclusive of our restricted cash balances. This compares to about $8.6 million at the end of 2019. Our net debt balance was about $98.9 million as reflected in notes payable and this compares to approximately $165 million at the end of 2019.

Within the fourth quarter, we secured a $40 million loan with Aquarian Holdings using a portion of those funds to repay an existing bridge loan that had reached its term.

We are really pleased to have been able to work with Aquarian Holdings on that loan and are now diligently working on our construction loan, which I will provide more details on in a moment.

We have continuously been working to improve the balance sheet with a goal of strengthening our companies financially, providing increased flexibility and creating enhanced operational capabilities.

In November, we completed a follow-on offering of common stock and warrants that raised gross proceeds of over $28 million, including the over-allotment that was finalized in December.

Prior to year end, we also converted the $15 million IRG November note that was to become due in November 2020 to equity and warrants, the ongoing commitment shown by our largest shareholder to convert debt to equity and continue to invest in our company shows belief in the company’s strategy and the team’s ability to execute it.

We thank them for their continued confidence. The evolution of the balance sheet has also continued into 2021, with the announcement in January of a $15 million term sheet with IRG for convertible preferred shares, including 50% warrant coverage. We expect this facility to close by the end of the first quarter.

In February, we completed another follow-on offering of common stock that raised gross proceeds of $34.5 million, including the over-allotment. These equity offerings are consistent with what we have discussed previously and provide capital to continue our development. With these completed, we can now focus on finalizing the construction loan.

Transitioning more specifically to construction, as we discussed last quarter, we expect our costs to be over $300 million for Phase 2 development.

The capital funding sources are consistent with what we highlighted last quarter and they continue to be projected to include about $240 million in new Phase 2 campus construction financing, about $55 million in additional net equity that we have already completed, as well as EB5 financing, and about $65 million in net public financing, which includes TDD or Tourism Development District financing.

As Mike mentioned, we are the only one in Ohio and TIF which stands for Tax Increment Financing. We will continue to refine these assumptions as we finalize the construction loan and will provide an update when the terms of that loan are available.

Conversations continue on this front and we expect to have this financing finalized in the second quarter. We remain excited about 2021 and the potential for the developments that we have announced so far this year.

In terms of the financials, given the continued uncertainty driven by COVID-19, we are not going to be providing specific financial guidance for 2021.

However, I can’t comment regarding revenue that we expected to increase in 2021 driven by a few key factors, which include, but are not limited to first, having the DoubleTree open for a full year after opening the hotel in November 2020.

Second, the completion of the Constellation Center for Excellence, which we expect to begin realizing revenue on towards the end of 2021. Third, revenue coming from the incremental events being booked at the Tom Benson Hall of Fame Stadium, our Sports Complex, and the DoubleTree.

This will be dependent on our ability to have fans at our facilities in accordance with all state and local health regulations, but we are really encouraged by the developments that Mike mentioned earlier, such as improving trends with COVID-19 cases and the continued rollout of the COVID-19 vaccinations.

While COVID is expected to impact our events schedule and attendance through the first half of this year, we are hopeful for a return of fans representing a substantial percent of our capacity while we host sporting events, concerts and festivals throughout the back half of this year.

Fourth, we also expect the media vertical to contribute to revenue late this year. We continue to put the building blocks in place for this line of business through the earlier part of the year. And we have evidenced this by the partnership agreements that we have already announced through the end of 2020 and early here in 2021.

And fifth, the Hall of Fantasy League will begin generating revenue for us as we launch alongside the kickoff of the 2021 NFL season in late third quarter. In terms of EBITDA, we expect profitability to be marginally better than 2020. As we mentioned in our Q3 earnings call, 2021 will continue to be a development and an investment year.

I want to reiterate that our longer term goalposts have not moved.

And by the time construction on Phase 2 is complete and operational, we continue to target $150 million of annual run-rate revenue and $50 million in annual run-rate adjusted EBITDA across our key pillars, which again includes destination-based assets, our media platforms, and our gaming vertical.

We continue to execute on the financial priorities we have communicated over the past few quarters and we are committed to maintaining a balance sheet providing financial flexibility throughout our growth phase to deliver long-term value to all of our shareholders. Now, let me turn it back to Mike who will provide some closing comments..

Great. Thank you, Jason and really appreciate all of the hard work that you and the rest of the team continue to do to execute against our strategy. I will just say a couple of things and then we will open up for questions.

Two words that come to mind for me, excitement and optimism, we are excited about the NFL draft event in Cleveland and our ability to potentially connect to that event. I think that’s going to be fantastic this year. We are excited about the trend lines we are seeing in our industry and adjacent industries.

Even our Pro Football Hall of Fame attendance continues to rise. Our hotel occupancy and rate continue to head in the right direction. As I said airline bookings, leisure tourism destination attendance continues to go up.

This gives us great hope that as we build assets, create world class events, create media and gaming experiences like no other company can do that guests are really going to enjoy participating and being active within our company’s ecosystem.

Again, I’d remind everybody from my perspective, the investment in a great business plan during a really difficult time does not equate to a loss. For me, it increases our capabilities to deliver significant shareholder value.

That’s what I would ask everybody to remember and you have heard me talk about how we are investing pragmatically to grow each of our business verticals. This year is exciting, two Pro Football Hall of Fame enshrines.

The NFL preseason kickoff with the Hall of Fame game here, the Hall of Fame game featuring two of the most storied programs in the history of professional football the Pittsburgh Steelers and the Dallas Cowboys, by the way, 8 players in the enshrinement events this year between the Steelers and the Cowboys would be enshrined, 5 from Pittsburgh and 3 from Dallas.

You think there might be a few back stories going on there and maybe a little competition before the game, I think it’s fantastic that we are able to host an event like that here. The Women’s Football Alliance Championships here again, women in sport, women in football, this is really important to us.

Highway 77 Music Festival, synergy with media, synergy with live events that we are bringing tens of thousands and in some cases hundreds of thousands of people to this campus on an annual basis now that we are excited about.

The launch of our fantasy league, March 30 keep that date in mind, merchandise store, back your favorite team, you are going to get to see the cities, the 10 cities and locations, and the names of these teams. And it’s really exciting to have that season launch. And we will do more activation throughout the year.

And then of course, our NFL Alumni Developmental Academy in its second season, HQ Trivia in its second season, we are really now starting to build a profile of events that will help us build our media capacity as well. Sports betting, is out there. We will continue to update you on that. And I just really want to say thank you to the team.

This is a team that over the last several months has executed at a very high level in the face of adversity. I think, with our release yesterday and some of the things we’ve talked about today, I hope what you are seeing is what we say we do, we do and we are a team that has committed to create value and to drive opportunity for our shareholders.

I will thank everybody. We will look forward to our next call. And now we will open it up for questions..

Thank you. Our first question has come from the line of Michael Diana with Maxim Group. Please proceed with your questions..

Okay, thank you. Good morning.

Mike, could you just repeat first of all what Governor DeWine has said about the – his criteria for reopening? What were those numbers again?.

Yes, thanks. Good morning, Mike. The announcement Governor DeWine made last week and again, I’m giving you this so please, we’ll do some fact checking. But he talked about needing to get to 50 cases of COVID per 100,000 people and sustaining that over a 2 week period. He then went on to say that over the last call it 3 months from December to today.

those cases ranged from 700 plus per 100,000 in early December, now down to about 150 plus a couple of weeks ago. So we are definitely heading in the right direction. He was also very encouraged about the rollout of the vaccines that we’ve actually lowered the age criteria here to 50 just today. And so we vaccinated about 20% of Ohio.

His comment was that by April, we will be allowing 30% occupancy and arenas and stadiums for big events. They have already started to open theaters, restaurants, of course, have been open for a while, but he was encouraged by the trend line. And if we got to that 50 per 100,000 case, he thought by summer, we could be seeing full stadiums and arenas.

Of course, our crystal ball is as good as anyone else’s, but at the end of the day, as long as the vaccines are here and people are doing the right thing, we do believe that all of the exciting events we have planned will be at full capacity..

Alright, great. Thanks. So for me, one of the most interesting things about the company is the potential synergies and I think the best preview that is your NFL Alumni Academy. I mean, you are using the stadium, the hotel, yes, the media deal.

Could you just take us through all the possible revenue touch points once the build out is complete for something like the NFL Alumni Academy?.

Sure. Well, one of the things we weren’t able to do this year was host live events. You can imagine sort of pro day events, where people can come watch these kids train and just as importantly engage with ex-NFL head coaches, player position coaches, Hall of Famers, we had this past year training them. And so there is admission opportunities there.

There is concession revenue. We think there is a merchandise play as well, the NFL Alumni Developmental Academy. Of course, they are staying in our hotel and media. But beyond that sponsorship, every time you have great content that people are really excited about, sponsors want to partake in that and they want to have brands affiliated with that.

I just spoke with our Director of the Academy yesterday and we are excited to think about adding female coaching as part of our coaching development program, minority coaching development program was in place last year.

And so it does attract more audience and it allows for greater synergy between concessions, admissions, hotel stays multiple different revenue touch points. And that’s just one example. I think the Hall of Fantasy League is another great example. There is a media play there. These teams are playing each other virtually on a weekly basis.

We intend to do podcast updates on the games, just as you would do with an NFL game, selling merchandise for the teams, sponsorship of the teams, sponsorship of the prize money, potentially sports betting as I said before.

So everything we do Mike, the first question we ask is one business vertical comes up with new business development opportunities, how do we flow it through the other two business units to derive the greatest value out of it?.

Okay, great. Alright. I am looking forward to an update in the second quarter or conclusion, I guess in the second quarter on your construction loan. Thanks. That’s it for me..

Thank you, Mike..

Thanks Mike..

Thank you so much. I would like to hand the call back over to Anne Graffice for additional questions..

Thank you. We do have a few additional questions that I will pose and share.

So Mike and Jason, would you mind discussing the timing of the construction loan? Are you able to provide any additional details pertaining to that process?.

Yes. Let me just say a couple of words. And then I will turn it over to Jason, because Jason has done a great job at managing this process for us. Anytime you are trying to get a couple of hundred plus million dollar construction loan in an environment like we are facing today, you really have to have a very good business plan.

But you have to do the work prior to that so that the construction lending groups really understand what they are lending for.

We have spent the last, I’ll call it, 3 months, finalizing our designs, finalizing our construction drawings, and then finalizing the pricing, so that we have very clear line of sight on what is this project going to cost? What is the timing of the delivery of those assets and what is the revenue associated with those assets? And Jason and Carol, name is Carol Smith, who runs our project management group, have done an excellent job at doing this.

We have engaged with an outside consultant to help us think through multiple different lender opportunities with different companies. And again, Jason is managing that and we have had lots of discussion with many of them. And we think we have line of sight on at least a term sheet in the very near-term.

Jason, you what to add?.

Yes. Thanks Mike. And yes, I would just reiterate, we are in talks with several lenders, we are encouraged with how those conversations are going. As I mentioned before, we are hoping to have something finalized here in Q2. Once we have those terms, we will make sure we obviously announced them.

The only other callout I’d make is one of the benefits that we had from our February equity offerings was that it really helped provide some capital here to keep construction progressing, while we could review and optimize our construction loan options. So again, hoping to finalize here in Q2 and we will be out with those terms when available..

And Jason fair to say, our ability to raise equity, over $100 million, including the Gordon Pointe merger, of course, in a very difficult time has allowed us to do all that work, I have talked about and continue with construction.

I mean, we are starting infrastructure construction right now with the Center for Excellence, with our partners at Constellation, allowing us access to funds. We finished a hotel. So we are not stopping construction. This is just the next step in the cap stack that allows us to continue to pursue it this year and ‘22 as well..

Okay. Here is a question related to that subject matter. So, the company obviously has made a number of changes to the balance sheet since November with equity preferred offering plus a debt to equity conversion.

Are there any other anticipated changes that you are entertaining as you look to continually improve the balance sheet?.

Yes. So I’d say our balance sheet has been very dynamic over the past year or year plus. We are always looking for the best ways to create shareholder value for all of our shareholders and as I mentioned before provide that financial flexibility for us to achieve our long-term goals.

Right now, to reiterate, our current focus is finalizing that construction loan, but we are pleased with the progress we have made on the balance sheet. And again, we believe it allows us to reach our company’s goals and progress down the fronts that we need over the next weeks, months and years..

And I hope you don’t mind me just sort of adding Jason one other thing. We have great shareholders and partners.

During Q4, we were facing a time where we really were focused on the rebalancing of our balance sheet and we went to many of our partners and shareholders and said, we would much rather convert this debt to equity or we would really prefer to have it just forgiven all together.

And to the tune of millions of dollars, we were able to take that off of our balance sheet, one of those two ways. So that gives me great hope and it shows great commitment from all of our partners and shareholders that they are very vested in the long-term success of this company.

Is that fair to say?.

Absolutely, yes, 100% agree..

So we have had a question posed about the construction loan itself.

We have additionally had a question asked based on your commentary and on the slides provided, can you give any additional details regarding the timeline and how it may potentially have been pushed out the quarter or two?.

Yes, I would say we moved some of our construction timelines just to finish a bit later as we have worked through all the initiatives that we have talked about on today’s call.

We have done that to really optimize revenue, cash flow and really align our building schedules and our construction schedules to allow us to reach our 5-year financial goal and optimize shareholder value. I will reiterate what I mentioned before.

Our long-term goalposts remain exactly what they have been since we have talked this over the past few quarters, $150 million in annual run-rate revenue and $50 million of annual adjusted EBITDA once we are up and operational here with Phase 2..

And just one thing I would add, we worked very closely with our partners at Turner Hunt and our Project Management Group, PMC. We pushed them pretty hard and they responded. So we lost a quarter, but we didn’t quite lose a full quarter. We were always planning on finishing construction on Phase 2 assets sort of late ‘22.

Only one of those assets will finish a little later than that early Q1 in ‘23. So we are still very confident, as Jason said, in the numbers.

And look, as we get into more new business development, that’s not included in $150 million to $50 million and we have had a chance to pivot more in the media and gaming and maybe sports betting we have very opportunistic view of how to drive incremental revenue as well..

You have announced several new sponsorships in Q4, but have not announced any in Q1, how long does it typically take to complete a sponsorship deal and how does the pipeline look for the company related to sponsorship?.

Well, it’s a good question. And my answer is it depends on the deal and the size of the deal. We have, I would say 3 or 4 very close in the pipeline now that we are potentially going to sign in the near-term. But we are – we have been very pragmatic about when to engage with the higher yielding categories.

The more assets you build, the more events you have, the more business you have in the three different business verticals, the more value you add to those sponsors.

And so we have been cautiously approaching certain categories like auto, like banking, like airline to ensure at the point in time where we engage in meaningful conversation with them that they are ready to do the deals that we would want to do to support our company.

Look, the other reality of this is, it’s been in the middle of the worst health pandemic the world has ever seen. And so every company has sort of taken a step back to make sure whatever money they are spending and in whatever way they are spending it is going to add value to their company.

And the good news is we have a lot of sponsors who see that value, who see the programming and the assets and the verticals that we have and how for the long-term it could really help them from a branding point of view..

You talked about sports betting and the outlook for Ohio related to sports betting, how do you feel sports betting when it becomes legalized, how do you anticipate it helping Hall of Fame Resort & Entertainment Company?.

Well, as I said earlier, multiple different ways. I think we have a very compelling story to tell. We have a physical presence here in Canton, Ohio, where people based on sports and entertainment where people are coming to enjoy any number of sporting events. We think that having a sports betting location here would be fantastic.

We think that we are creating virtual environments, where sports betting companies can connect to our virtual environments and vice-versa. So, we can have our guests transported from our environments into theirs allowing them to make bets.

We have a fantasy league that teams can actually play each other virtually and so people will want to bet on that league. And so, sports betting for us, is a priority. We do think that there is a lot to offer a sports betting partnership.

And at the end of the day sports betting is a way I have always said which fans it enhances the way in which fans engage with sport. I can remember back in the days when I was a kid, hey, $5 this guy misses that free throw or that field goal. Now with technology progressing, you can actually make that bet instantaneously.

And I think it’s our responsibility as sports and entertainment company to be where guests want us to be and sports betting is one of those locations..

So related to media, you signed several high profile deals in that vertical, what is the timing of those projects in your revenue projections related to those deals?.

Yes, I can start. So yes, I mean, specific to media, our teams really done a lot, progress that that vertical quite substantially. We have completed a sizzle reel for several of the projects and we are continuing discussions around distribution at this point.

We are really excited about these projects and the other things that teams working on to really complete, as Mike mentioned, synergistic effects that we could have with content that we bring to our fans that are really thirsting for that, especially coming out of the COVID-19 pandemic..

We have positioned ourselves as a content creation company. And so when you think about creating great content, you have to have access to things that no other company has. So, we do. We have brand partnerships with the NFL Alumni Association, with the Pro Football Hall of Fame.

We are creating other brand partnerships that give us access to great content. Then you have to produce the content. Then you have to sell it to a distributor, right. So we are in – the pipeline, we are in various stages of that pipeline with the different projects that we have.

We have multiple other projects that we are just now starting to think about in terms of content creation. It usually takes anywhere from 6 to 12 months by the time you have created to produce to then get out into sale. And so we are hopeful that Q3 and Q4 this year will actually have shows out for people to view and enjoy..

That will conclude our Q&A session for today’s fourth quarter 2020 earnings conference call. As shared at the top of the call, our latest press release and slides, as well as the 10-K Annual Report will be posted on our website hofreco.com.

We want to thank you on behalf of the company for your time this morning and for your continued support and interest in Hall of Fame Resort & Entertainment Company..

Thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines at this time. Have a great day..