Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) is a resort and entertainment company that is leveraging the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (PFHOF). The company has created a diversified set of revenue streams through the development of themed attractions, premier entertainment programming, and sponsorships.
Business Overview
Headquartered in Canton, Ohio, the company owns the Hall of Fame Village, which is a multi-use sports and entertainment destination centered around the PFHOF's campus and the DoubleTree by Hilton located in downtown Canton. The strategic plan for Hall of Fame Village involves three phases: Phase I, Phase II, and Phase III.
Phase I
Phase I of the Hall of Fame Village is operational, consisting of the Tom Benson Hall of Fame Stadium, the ForeverLawn Sports Complex (ownership reduced to 20% as of January 11, 2024), and Hall of Fame Village Media Group, LLC ("Hall of Fame Village Media" or the "Media Company") and gaming ("Gold Summit Gaming"). The Tom Benson Hall of Fame Stadium hosts multiple sports and entertainment events, including the National Football League (NFL) Hall of Fame Game, Enshrinement and Concert for Legends during the annual Pro Football Hall of Fame Enshrinement Week. The ForeverLawn Sports Complex hosts camps and tournaments for football players, as well as athletes from across the country in other sports such as lacrosse, rugby, and soccer.
Hall of Fame Village Media leverages the sport of professional football to produce exclusive programming. Hall of Fame Village Media has created short-form and long-form media entertainment through multiple distribution channels. This includes The Perfect Ten, Inspired, The GOAT Code, and Next Man Up: NFL Alumni Academy. Gold Summit Gaming has procured licenses through the State of Ohio for both a physical sports betting operation and online sports betting platform. The company has entered into an agreement with BETR as its Mobile Management Services Provider.
Financials
In the first quarter of 2024, the company reported total revenue of $4.2 million, representing a 34% increase from the same period in the prior year. This revenue growth was primarily driven by an increase in event and rental revenue, as well as revenue from the company's Shula's restaurant. The company's revenue mix continues to become more diversified, highlighting the synergies and diverse revenue streams being created within the business, including event revenue, tenanting and rentals, hotel and restaurant revenue, media, and gaming.
The company's first quarter adjusted EBITDA was negative $2.9 million, compared to negative $10.9 million in the same period last year. This improvement was driven by decreased operating expenses related to reduced compensation-related expenses and third-party services. The company posted a net loss of $14.9 million in the quarter, with interest expense increasing to $6.5 million resulting from higher debt balances and lower capitalized interest as assets are placed into service.
Liquidity
As of March 31, 2024, the company had a cash and liquid investment balance of approximately $7 million. The company's net notes payable balance slightly increased to $222 million compared to $220 million at the end of the prior quarter, primarily due to accruals of paid-in-kind interest.
During the quarter, the company exercised the 1-year extension of approximately $49 million of debt to IRG and its affiliate lenders, which was due in March. The company is also currently working to restructure over $20 million of debt from the City of Canton, the county, and its local community foundations. This is part of the company's ongoing efforts to restructure and optimize its overall capital structure to provide the best opportunity to move efficiently towards stabilization of its business model.
Outlook
The company continues to work towards closing the necessary financing required for the remaining Phase 2 construction, including multiple financing transactions related to its Gameday Bay Waterpark and on-site Tapestry Hotel. The company is in a challenging and restrictive credit environment, but it is working diligently towards closing the remaining construction financing needed to fund these critical assets.
For the full year 2024, the company is revising its revenue expectations to be in the range of $24 million to $27 million, and it is reiterating its previously provided expectations for adjusted EBITDA loss in the mid-teens millions range. The company is focused on revenue growth and expense management, while also making strategic investments to support its growth.
Recent Developments
The company's sponsorship revenue in the first quarter of 2024 was the highest since the first quarter of 2021, when Johnson Controls was its largest sponsor. The company has been able to replace and grow its sponsorship revenue by being strategic in the categories and partners it brings on, fully leveraging its roster of events, experiences, and media content development.
The company is also focused on creating unique experiences for its guests, including flattening seasonality by bringing in new leadership, faith-based content, new conventions, and a variety of sports and entertainment events. The company's media pipeline continues to grow, with new projects in production and distribution. In the gaming vertical, the company is hosting its largest gaming event yet, the GridIron Gateway Gaming Tournament, in July.
Risks and Challenges
While the company has faced challenges in opening a retail sports betting operation, it remains focused on creating a guest experience around sports betting rather than a significant revenue driver. The company is working with the Ohio Casino Control Commission to address the issues with its retail sports betting license.
Conclusion
Overall, Hall of Fame Resort & Entertainment Company is making progress in diversifying its revenue streams, narrowing the profitability gap, and executing on its long-term strategy. The company's focus on revenue growth, expense management, and strategic investments in its assets and experiences positions it for continued progress in the years ahead.