Good morning and welcome to the Hall of Fame Resort & Entertainment Company’s First Quarter 2021 Earnings Conference Call. This conference call is being recorded and all participants are in a listen-only mode. We will open the conference up for question-and-answer following the prepared remarks.

I would now like to turn the conference over to Anne Graffice, Executive Vice President of Public Affairs. Please proceed..

Good morning and thank you for joining us for our first quarter 2021 earnings conference call. Our latest press release, supplemental slides, and 10-Q were posted Friday evening after market hours. These documents can be found in the Investor Relations section of our website at hofreco.com..

Thank you, Anne. Good morning everybody. Great to be with you today. I thought I'd start by speaking to just some broader business indicators we've experienced throughout Q1 and into Q2 that really continue to allow me to have a very positive outlook on the future of our company.

Firstly, in Q1 and Q2, we're seeing significant improvement in leisure travel, which we had hoped would be the case. The US travel Association is reporting nine out of 10 people surveyed plan on taking a trip over the next six months.

Hotel operators are reporting improving trends in RevPAR, occupancy, advance bookings for leisure travel and some business travel as well. Live entertainment and events are coming back strong; bookings are happening. They're being sold out in locations that are now allowing max capacity.

I was very pleased last week to hear Governor Mike DeWine; the Governor of Ohio talk about eliminating all of the COVID-19 health restrictions -- related restrictions, the mask mandates, the reductions of capacity on indoor and outdoor events. This is all very positive for a couple of reasons.

One for our business, we're clearly wanting to welcome back and engage with guests and in social environments and so seeing the COVID cases being reduced, watching vaccines being rolled out, and frankly, getting excited about people having the opportunity to protect their health is something that we're thrilled to see and excited to welcome those types of fans and activities back to our property..

All right. Thank you, Mike, and hello, everyone. I do just want to comment that I understand, some of our web participants have lost audio communication for a few minutes. We apologize for that. And we thank everyone for your patience.

The replay will be available on our website soon after the call concludes that will help you catch up on any comments you may have missed. So, with that done, back to our regularly scheduled program here. We filed our first quarter fiscal 2021 Form 10-Q post-market on Friday, May 14.

That document can be found on the SEC website as well as our Investor Relations site. Please note, based on a late reclassified items, there is a difference in a few buckets on the cash flow statement between our 10-Q and press release. Please rely on the file 10-Q for the most updated line item detail.

To avoid any confusion, we will reissue the press release later today. Now, moving on to our financial results. First quarter total revenue of $1.9 million was comparable to the prior year, with hotel revenue from our DoubleTree Hotel that opened in Q4 2020, being offset by reduced events due to the COVID-19 global health pandemic.

First Quarter adjusted EBITDA was a loss of $5.1 million, which is also comparable to the prior year. The EBITDA loss was driven by property operating and hotel operating expenses, as we continue to invest in building the groundwork for success across all three of our business verticals.

As Mike already noted, we were affected by the recent sec statement for the accounting treatment of warrants. Our financial statements reclassified the warrants as liabilities at fair market value in each reporting period, both with the amended 10-K that was filed last week, as well as the 10-Q filed on Friday.

The company will remain in compliance with all of its financial covenants under its credit facilities, even after giving effect to the restatement. Due to this accounting change, we will show increased liabilities and expense is the company's stock price increases.

While the line items on the financial statements will vary based on the company's stock price. I want to reiterate that it does not impact our cash flow from operations, our cash and cash equivalents are our liquidity for all prior and future periods.

On balance sheet, we finished the quarter with a cash balance of approximately $69 million compared to approximately $40 million at the end of 2020, both of these values are inclusive of our restricted cash balances.

The increase in cash was primarily driven by the follow on offering of common stock in February, plus warrants from the November offering being exercised during the quarter. We have been and will continue to work diligently to optimize our capital structure.

Our net debt balance was $102 million in the first quarter, as reflected in our notes payable, compared to about $99 million at the end of 2020. Now transitioning more specifically to construction. As we discussed last quarter, we expect investment in Phase 2 development to exceed $300 million.

The targeted capital funding sources continue to include both public and private financing. As we also talked about on our last call, we're taking a very disciplined approach to the financing process. With our equity raise completed, our focus continues to be on construction financing.

Consequently, there are still no immediate plans to raise additional common equity. We will provide an update when the terms of the construction loan are finalized and are still targeting assigned construction loan by the end of the second quarter.

We may -- we remain really excited about 2021 and the potential for the developments that we have announced so far this year. In terms of the financials, we are still not providing specific financial guidance for 2021, given the uncertainties that remain with COVID.

I will reinforce though that our expectations have not materially changed from our last earnings call. We still expect revenue 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 of 2022.

Second, revenue coming from the incremental events that have been booked at Tom Benson Hall of Fame Stadium, our sports complex, and the Doubletree.

While COVID is expected to impact our event schedule and attendance in the short term as we act in accordance with all state and local health regulations, we're hopeful for a return of fans representing a substantial percent of our capacity. While we host sporting events, concerts and festivals in the second half of this year.

We're seeing positive data points in recent months with both the hotel and our events. And third, we also expect the media vertical to contribute to revenue with the launch of NFL's here in the second quarter as well as later in the year from partnership agreements that we have already announced.

In terms of our EBITDA, we expect profitability to be marginally better than 2020, but 2021 will continue to be an investment year.

I want to reiterate again, that our longer-term goal posts still have not moved and by the time construction on Phase 2 is fully complete and operational, we continue to target $150 million of annual run rate revenue and approximately 5 - 0, $50 million of annual run rate adjusted EBITDA across our three key pillars, which again are; destination based assets, our media platforms and our gaming vertical.

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

Great. Thanks, Jason. Let me just say in conclusion, I have a great deal of optimism and hope for where we're headed as a company. I was just off the phone with our primary construction lender this morning. We have line of sight on how to conclude and have a term sheet in place in the very near-term.

They feel good about where we are as a company and how we're continuing to produce results and grow. But we haven't stopped there. We've added new consultants that are helping us look at private and public financing to round out our capital stack.

Our goal is to have everything that we need in place, including our equity that we've raised over the last year to really ensure the long-term success of our company not only building assets, but creating new experiences and product for our guests to enjoy. It's exciting to see how the world is evolving.

We're focused on the business opportunities that are now presenting themselves across our entire company. The world is traveling, live events are being booked and being sold out. Consumers are looking for one-of-a-kind product to engage with and purchase.

I think we're well-positioned in the near, mid and long-term to drive great value for our shareholders.

I hope what you're seeing is a team that is dedicated, is focused and has the ability to deliver results, while we're investing in assets, creating new media content, lodging gaming, and we're still looking for those revenue opportunities that are going to drive value for our company. And it's also a team that I'm incredibly proud of.

They have done this in the time of the worst health pandemic to ever hit the world. They've stayed positive. And we continue to add great team members that are helping execute against our strategy, and being very nimble and opportunistic to drive new business development along the way.

We look forward to keeping everyone informed about the great progress, we expect to achieve in the coming months. And now I'll just stop and open it up for questions. Thank you..

Thank you. At this time, we will conduct a question-and-answer session. Our first question comes from Jack Vander Aarde with Maxim Group. Please proceed..

Great. Hi, Michael. Hi, Jason..

Hi, Jack..

Hi. Congrats on continued momentum. It's great to see. Thanks for taking my questions. So maybe a first question for Michael. Follow-up on your hotel business update that you provided. Revenues clearly are picking up sequentially in the first quarter from the fourth quarter.

I know, it's still early stage, kind of, business and then plus on top of the fact that there's COVID and -- there's a lot of things going on the world that makes us not a normalized environment. But revenue is picking up which is good to see.

Why don't you just talk a bit more about hotel occupancy and bookings levels, kind of, how they've trended in the fourth quarter, first quarter? And then kind of how you see that playing out through the second quarter and throughout the remaining balance of this year, just in terms of occupancy? And how -- are all the rooms ready and open for business? And how do you expect those rooms to be filled?.

Yes, hopefully everybody can still hear us. I just want to make sure technical difficulty-wise. I'm not sure if we still have Mike on the line. Jack in terms of --.

Jason, sorry. Sorry, I was doing the thing that most people are doing during COVID. I was talking while I was on mute. So, I apologize..

No….

And Jack, I gave a fantastic answer. So, I hope you like that. Now, let me go back. I'll be specific here. Fourth quarter, we had a soft opening of this asset, right? We didn't open all the rooms. We wanted to make sure their service levels were where they needed to be, incomparable for Hilton Doubletree product and frankly, comparable for our product.

As we entered into Q1, we really did start to see the pickup of leisure travel, believe it or not, weekend stays; some small event bookings. But remember, this hotel is uniquely positioned in Canton, Ohio; it has the largest ballroom and meeting facilities of any hotel in the region.

And it was a hotel that was very beloved, it's the only downtown Hotel in Canton that had been let go degradated pretty severely. We have brought this back to being a world-class downtown hotel, the best product in my opinion in the region and very comparable with city hotel product as well.

What we're seeing now is business travel is slowly coming back. Leisure travel is coming back stronger, but events you know, weddings, birthdays, meeting events, et cetera are starting to book strongly and now with no capacity restrictions, we anticipate those to come on even more strong.

We have multiple millions of dollars on the books for the remainder of this year in the event booking business for the hotel that drives room nights, Monday -- Sunday through Thursday, right. And that's usually where you need the most in terms of incremental capacity and filling that capacity.

Weekend's trending very strong, launching great new food product. So, I feel very good about where the hotel is trending. And by the way, as we continue to build events on-site, on-campus, music, concerts and enshrinement event, college football games, kickoff to the NFL season, et cetera.

We're booking that hotel and selling it out well in advance for multiple weeks, throughout this entire year. So, we're encouraged about the trend line there.

And frankly, we're encouraged about building a new hotel on site as well, because we think that we'll be able to host the remainder of the capacity that's going to the other hotels and market and we'll be able to create those experiences for our guests on site too..

Awesome. Well, as you said, a fantastic answer. I hope that's as good as your first one. I appreciate the color there. Maybe the next topic, just to dig into, there's a lot to chew on here. So I'll try to test too many questions.

So the first one I'll talk about next is on the NFT offerings, which is the latest and greatest craze going on in the marketplace, the demand for it has been absolutely astonishing. And you guys are really -- it's good to see you guys actually taking advantage and leveraging the opportunity.

So you have two products announced so far, I think you tease that there may be a third on the way.

But just maybe if we back up, I'd like to get your perspective more and just general thoughts and planning process behind the scenes? How did you determine the slight open seas as the exchange that you chose? And any initial expectations you may have regarding just buyer interest in general for these first NFT product offerings?.

Sure. I'll start with that last question first. We believe that buyer interest is fueled by the popularity of whatever the subject is that you're putting out, right. And professional football in the greatest to ever play professional football, certainly has a large pool of buyers out there.

When you talk about someone like Tim Brown, who played at a very elite college like Notre Dame with a huge fan base, played with the Raiders, huge fan base. You have to believe that there are a lot of people out there that would love to own a piece of that history of that digital memorabilia.

And so, we started with we believe we have access to exclusive content, and content referencing not only the Pro Football Hall of Fame archives, where we can mine that content and create digital NFTs from that. But athletes, in the athletes are telling their stories and the moments that were the most meaningful in their careers.

When you look at the product that we have put out in partnership with Dolphin, which is, by the way, why we partnered with Dolphin, one of the best in the business at what they do, sourcing some of the greatest artistic talent out there. I got to tell you, for me and some of the companies I worked for in the past, it starts with great product.

When you provide great product people will want to own and they'll want to have a piece of that. I think what you're seeing in the NFT space today is everyone is rushing, everyone is rushing to get something out, every day there's a new picture of -- a digital picture of a playing card or an old time card and people put it out as an NFT.

What we've created is a digital experience, immersive experience that takes you through the career of a player listening to their voice depict how they felt while they were playing. No one else is doing that. And so these player cards, more affordable, more of a volume opportunity for people to own a piece of that digital non-fungible token world.

And then this one of a kind piece created by Shane Griffin, who has really done some phenomenal things with the celebrity world in the NFT space. I think it's just going to be fantastic. So we think this is going to be a great new revenue source for us. We're not an NFT company.

We're a content company that has the ability to leverage that content across multiple business verticals. And we've added this into our media division. And it's been -- it's been a process and we've learned a lot open sea we feel like is the safest.

It allows tracking and connecting digitally to the piece, so that you can trust your piece cannot be replicated or if it is, it won't be done in a way that you know, it can't be done in a way that reflects the token being attached to the piece, which is the safeguard around all of this.

It also frankly allows the piece if the buyer chooses to sell it downstream, it allows a platform for that to happen. And as many of these deals are structured, every sale of that piece and the resale of that piece, our company gets a percentage of. So this is a really unique model. It's a very different way to express content.

And I think we've -- frankly, I think, we've hit to two -- we've thrown for two touchdowns here with the first two products we put out. And we've got more to come. Earl Campbell is right on the heels of this. And we've got many, many more athletes signed up.

And our goal is, as I said, to put out a couple of these a month and continue to evolve and create new products as well, so for our guests and fans to enjoy..

Great. I appreciate the color there. And let me just ask one more question then I'll hop back in the queue. And the next topic I just want to touch on is the Hall of Fantasy League.

Can you just remind us maybe what the next steps are of things to be announced? Such as I think you mentioned, the front office personnel is something that still needs to be decided, but fast forward to the NFL season and your Fantasy League goes live in the fall.

From a high level, can maybe also talk about the business model and the monetization kind of aspect of this Fantasy League or anything you can share at this moment?.

Sure.

So the activations that are forthcoming some in the near term and some over the summer, and as the week starts, obviously, as I talked about the staking of teams and teams being staked out, we found that to be a sort of a reinforcement of our belief that this is going to be a really unique experience where fans want to back and support a team, a geographic based team with a fun brand and a logo and really get behind and cheer for their virtual teams versus the individual Fantasy sports that most people play.

So we're -- we will be announcing our front offices. We're in contract with many of those professional Fantasy players that will lead our teams, and then complement those with NFL players that will offer subject matter expertise. We look to announce those in the next month. Then we look to launch our mobile application.

This is really the way in which fans will be able to engage through our community, give input to draft, give thoughts, your thoughts from the experts on why things are being done. That should launch in June. We'll continue to enhance our website.

And then in August, we'll conduct our draft and we're still debating if that's going to need to be virtual or that can be during our enshrinement events and have some of the excitement around that helped launch the draft of the individual teams.

And then a podcast that will allow our fans to on a regular basis, get updates on their team's performance and the league itself. In terms of monetization, clearly, we will have a percentage of all the backing for each of the teams. We’ll have a percentage of the online merchandise store sales, which continued to go as we speak.

There are sponsorship opportunities for this week that we're exploring, media opportunities for this league, a podcast, et cetera that we're exploring. And one that is still out there for me as sports betting is legalized, again, where teams can play each other virtually. You can imagine fans wanting to place wagers on those games.

And so we think there are several different points of monetization for this first year, moving forward on-site events at the Hall of Fame Village powered by Johnson Controls, generating room nights, food and beverage, et cetera.

There's a lot of ways in which we'll continue to look to monetize our Hall Of Fantasy League across all of our business verticals. But we're feeling good about the fact that they're -- we're building our communities. The popularity of this is growing. Frankly, we got some really fun, cool marketing videos out there on our website, on YouTube.

So if you haven't seen those, there's a league video that describes how to play and then each individual team has their own promo videos, there will be more of that type of paid marketing going on. And as we bring on our front offices will expect them to do sales and marketing effort for us as well. So it's exciting.

I couldn't think of a better way to launch our gaming division and we'll continue to build off of that..

Fantastic. I’m a Fantasy football lover myself and as I look forward to keeping in touch there and seeing what -- how this thing plays out. But that's it for me. I'll hop back in the queue again. Solid momentum. Congrats on that. Thanks..

Great. Thanks, Jack. Appreciate it..

Thanks,.

At this time, I would like to turn the call over to Anne Graffice. Please proceed..

Again, I want to thank everyone for joining us today and apologize for the technical difficulties with audio that we've had. We will have replay on our website to share all, but in light of that, I'd like to ask a few questions that have come in that you may have not heard, Mike addressed during his original comments.

The first being there have been several high profile deals signed within the media vertical at Hall of Fame Resort & Entertainment Company.

What is the timing of these projects? And the revenue projections associated with?.

I would say the timing is all project dependent. As you heard this morning, the world chase tag project will be producing with Tupelo Honey and ESPN will be aired in Q3 of this year. So it will start to generate revenue in the very near-term. We are in production of the Perfect Ten.

This is the docu series that we've talked about depicting the 10 gentleman who won a Heisman Trophy and also going on to be inducted into the Pro Football Hall-of-Fame. We think that that will sell and be aired in 2022.

So there really is -- our goal is to continue to fill our pipeline with projects that become near-term revenue, mid-term and long-term.

And every single year replenish that pipeline with new and exciting product and experiences for our guests who enjoy remembering that the -- the non-fungible tokens, the NFT's are a part of our media division, albeit, not traditional media, but digital media that we will be selling today.

Tim's NFT's will go on sale later this afternoon on the OpenSea Network. You can see more about that on our website or our Hall of Fame Resort & Entertainment Company website. There will be more media pushed out. Tim will be on ESPN talking about it. So very excited about creating new revenue opportunities in our media division.

And frankly, we've got a world class team and Scott Langerman and Olivia Steier, we're adding in terms of leadership, and we're adding new players, they're almost on regular basis to drive business development opportunities We relaunched or I should say, we launched our brand Hall of Fame Village Media, just over the past week.

And we're partnering with companies like NFL films and ESPN and Sports Illustrated and others. And so we feel very confident about the direction we're heading and filling our pipeline with great product for our guests and fans to enjoy..

Great. This is our last question and it is related to the sports betting legislation that's currently being entertained within the State of Ohio.

Can you expand a bit more on your thoughts about the legislation? And how big an impact that legislation passing could have within our company?.

Well, from what we're seeing, the legislation is very fair. It's very balanced. I think the legislators have done a good job creating what they refer to as a free market approach. We think we have a unique position and a unique location, if you will to offer a sports betting partner. We have access to content, the best players to ever play the game.

We are a sports and entertainment company. And so there's an ability to create value for a sports betting partner, in our media division or gaming division. And with a physical asset, in our destination, our Hall of Fame Village powered by Johnson Controls destination in Canton, Ohio. So, we keep close eye.

We have employed consultants and working with lobbyists to keep us fully engaged and informed. I know the bill came out a week or two ago, and there is some work being done on that. And I know that there is hope that that bill will be passed, in the late June timeframe. And what I'm being told is, then to be implemented in January of 22.

And just in time for the Super bowl and the playoffs and other things, which we're excited about. But I do think, because I've always said, you know sports betting is not this, this ugly thing that people used to have to do. And, and frankly some still do on the in the gray market where it's not legal.

And so, what we believe is, with technology advancements, micro betting opportunities, it really does enhance the way in which fans and guests engage with sport in general. And it's our responsibility to create those opportunities for our fans and our guests.

We have planned a destination that we think is spectacular, as part of our property in Canton, Ohio, our destination there. And we have planned multiple other ways to engage with a sports betting company. Our goal, as I said, on our last earnings call, is to have a sports betting partnership in play. Ways prior to the bill being passed. But we'll see.

We continue to push forward on that. And we have a lot of interest. And I think there are partners out there that have a lot of interest in us. And so it's exciting that that Ohio will be having an opportunity, given that every surrounding area state, touching Ohio has legalized betting for our citizens.

And particularly the fan sports fans to engage with sports betting in that way. So, more to come, but we maintain a very close eye on this. And this is a key priority for us as a company, in terms of new business development..

Great. Thank you, Mike. With that, that concludes our call for today. I want to thank all for your continued interest in the company and for taking the time to learn more. Have a great afternoon..

Thank you. Ladies and gentlemen, you may now disconnect your lines. And have a great day..