Hall of Fame Resort & Entertainment Co (HOFV) 2020 Q4 法說會逐字稿

Good morning, and welcome to the Hall of Fame Resort & Entertainment company's fourth quarter 2020 earnings conference call. (Operator Instructions) 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 hosreco.com. After this brief introduction Michael Crawford, our President and CEO, will give an overview of this quarter's results and an update on our fiscal year priorities. Jason Krom, our Chief Financial Officer, will then provide detailed analysis of the financial results and our fiscal 2021 outlook.

During today's call, we will make forward-looking statements that reflect the company's current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties. I encourage you 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 for your convenience. If you have additional questions after today's call please don't hesitate to contact me directly. It's now my pleasure to turn the call over to our President and CEO, Michael Crawford.

Great. Thanks, Anne. Good morning, everybody. Welcome to our call. We've had an exciting 2020 as you know, and a very good Q4 which we're looking forward to updating you on. I'd just like to start by saying 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're looking forward to having the ability to connect with the draft and maybe create some special events here in Camden, Ohio.

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're positioning ourselves in our company for long-term success. I viewed 2020 and this year as well as investment years. We are investing in things like our assets here in Camden, Ohio. We're 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 or our Hall of Fame fantasy league that we're going to be launching this year. Our whole fantasy league that will be a one-of-a-kind pro football fantasy experience for our guests to enjoy.

We spent a lot of time building our team and investing in human capital. And interestingly enough, even in a very difficult year with our merger with Gordon Pointe, and since then we've been able to raise over $100 million of new equity. Really positioning our company in a much stronger way to allow us to invest in those assets and our other business verticals, and to have the right human resources in place to further our strategy and execute against our plan.

While it was a difficult year we have continued to make great progress in our three business verticals. It's worth reminding everybody that we are a company that's all 8 of -- 8.5 months old. We went public in July 2020. And like any great football dynasty out there, it takes time to put the pieces in place to really do and have a winning season and to do a great job. I think we're already doing that. We have great talent in place, and we are already starting to execute against our strategy, as I talked about.

Investment for me does not equate to loss. I think that's really important to state. We are investing not for the next quarter, we're investing for the next 10 quarters and multiple years beyond. And so I would encourage everybody to think about this company with a very long fuse attached to it. We've got great growth. But we're also a company that can drive synergy through all of our business verticals.

If you look at 2020 beyond the fundraising that I spoke about and into 2021, we were able to restructure some short term high cost debt into more manageable financing. We were able to convert debt into equity. We were able to eliminate that, rebalancing our balance sheet and making it even stronger.

When you look at our three business verticals, theme destination based assets we [soft] opened a brand new hotel, the Hilton Doubletree in downtown Camden. And while the revenue and occupancy expectations are a little low right now in terms of where the market is, we see the trend lines improving each and every week, and the team there has been able to create a phenomenal product and service, one of which I would really say is best in class, at least in Camden, Ohio, and in this region.

So I want to thank the employees for all their hard work and really looking forward to the continued growth of that asset and the use of that asset synergistically with the programming that we have here on campus. We broke ground on our constellation center for excellence. This was the 75,000 square foot mixed use facility that will host office, and retail, and research and development and incubation companies. Companies that are going to do great things in both sports and non-sports, creating an environment of excellence.

Most importantly, the tenanting work is progressing nicely there. Tenanting of the facility, tenanting of the retail pads. Looking at programming for our Ted talked facility. This is an asset that will start to generate revenue for us, and we are on time and on budget to open late Q3 of this year. We made investments in infrastructure. You have to prepare land. You have to realign roadways. You have to get utilities ready.

Just as if you are building a house, you have to create a design; you have to create drawings of those designs; and then you have to price those to go out to obtain a loan. We've done that work. We are now in position and have line of sight on construction. And we've had many conversations with construction venders who understand and buy into what we're doing. See great value over the long term, not only for Phase 2 but for Phase 3 as well.

And so we're hopeful over the next couple of weeks that we will have a term sheet that really allows us to continue with the construction of all these assets that we've laid out on our master plan. We do have the equity and we've continued construction already, but we're positioning ourselves again for the long term.

The Tom Benson Hall of Fame Stadium, we've made enhancements there, both operationally and from a guest experience point of view. We are increasing our capacity in our east end zone, but we're creating a very social and dynamic environment for guests to enjoy sporting events, non-sporting events, concerts. And we're creating flexibility in the venue so that we can orient those events in any number of directions and maximize attendance there. And so again, flexibility that will allow increased revenue from that asset.

Our media vertical was really about investing in human capital. We hired two great resources to lead the company, Olivia Steier, and Scott Langerman, both with great media experience who are already paying dividends on that front. In Q4, you'll remember that we launched the inaugural NFL Alumni Developmental Academy, and we did that not only to help these young men who weren't able to make it in NFL roster achieve their goal of getting into the NFL.

But we did it to have live events here on campus. We did it to have media opportunity, and we did it certainly to drive synergy with our other assets. Those young men and coaches stayed in our Doubletree Hotel downtown. They ate in our restaurants.

This year Season 2, we're looking forward to an even bigger, better year. We only had three player positions in our camp last year. This year we're looking forward to having all of them. The big thing that came out of it was a media deal and our first media deal in the media division with Sports Illustrated and One on One studios. This is going to be an original docu-series that we are in production of now, looking to sell in air hopefully in Q3 or Q4 of this year.

This is fantastic because it just does go to what we've been saying. Access to original unique exclusive content through relationships that we have will enable us to deliver content that no other company can do. And content, as we all know, is at high demand today, and especially sport and football content. So we're excited to get that deal done. We sent over a dozen players into the NFL from our Academy this past year, which is a fantastic accomplishment.

We also did a partnership with HQ Trivia. This is a trivia app that is played by hundreds of thousands of people during a live broadcast every single night. And we did that to do a couple of things. We wanted to first get access to those people and start talking to them about our gaming division. These are people who love playing games. That's why they're on this trivia app.

And so knowing that we were going to launch our hall of fantasy league. Our one-of-a-kind football league, Fantasy Football League. We wanted to give them the opportunity to understand this league. How it was going to work and it worked. We averaged 30,000 to 50,000 people a night. We took over Thursday nights. We rebranded it the Hall of Trivia to stay on brand.

And we were able to reach out and talk about our company, and talk about our hall of fantasy league, but we were also able to leverage what we call our secret sauce, our Hall of [Famers]. They were on -- they appeared. They read questions. They talked about stories and their backgrounds. And this is something that we intend to continue to leverage and season to an even greater way as we launch our lead.

Moving on to gaming. I've talked about our Hall of Fantasy League. We made investments there as well in Q4. We invested in a technology that was going to power our league. We invested in an online merchandise store. Remember, this league as a franchise model, just like the NFL. We will have teams. We will have team names and brands.

So those teams and the fans and supporters will want to buy merchandise and cheer on their favorite players and their team. And we're creating this community so that the community can interact with the front offices, much like band controlled football. This is a league where the fans can give input to drafting and trades and interact with potential Hall of Famers and professional fantasy football players.

There is no other fantasy league like that this year or anywhere out in the ecosystem. March 30. Mark that date. I'm pleased to announce on this call that is the date we're going to be rolling out the team names, the locations, the brands. The merchandise store will be stood up. Our website will be there to interact with. And the deal that we struck with [state King's] allowing the fans who want to participate in our league to make an investment backing our team, supporting those teams will be ready to go as well.

So it's go time. We're going to launch March 30. The experience will be stood up. We will have a lot of activations and marketing from March 30. Some of the draft for the NFL continuing through the summer and then the league will launch in earnest in conjunction with the NFL season this year. We are excited about that. It's a 10 week season with three weeks of playoffs and championships.

And when you think about those teams now being able to play each other in virtual environments, what does it lead you to? It leads me to thinking about another business in our gaming division called sports betting. And many of you have reached out and said, sports betting is something that the sports and entertainment company should be in. We could not agree more.

Over the last year, and specifically in Q4, we worked with legislators here in Ohio. We've worked with consultants to understand how they're thinking about and the potential for sports betting to become legalized in Ohio. It's not legal today, but we do hope and have line of sight on once it does become legal, our opportunity to participate in that.

And it is a focus of mine and our team. Our team is very focused on those in terms of a growth opportunity. So much so that we've had several conversations with potential sports betting partners. We want to be in a position to show sports betting partners all the great things that we have to offer.

A physical sportsbook location here at our destination in Camden. Virtual environments. Brand partnerships with the Pro Football Hall of Fame and the NFL Alumni Association that are exclusive to us. A Hall of Fantasy League that can be on their platform, that can engage with guests and fans want to make bets on that.

This is a way to help monetize our gaming division, and we're taking this very seriously. We want to be in a position to have a sports betting partner identified and potentially signed before sports betting is legal so that we can immediately launch on the gaming front. Gaming as a way to enhance how fans engage with the sport of football and sport in general, and we need to be in that space, and it's a focus of ours.

Partnerships and sponsorships are also a critical piece of our business. It has stabilized our revenue. We continue to grow those. We signed deals in Q4 with Spectre partnerships. This is a company that's helping us source new sponsorships in multiple different categories, Republic Services, shoes and Top Golf, retail partners, state King's, as I talked about, and many more.

And when you look at how difficult Q4 was from a business environment and the impact COVID was having on the country and the world, the team did an absolutely fantastic job bringing some of these deals home, and there are many, many more in the pipeline that we're looking forward to announcing.

The last thing I'll say before turning it over to Jason is just what we're seeing in Q1. And while we can't give specific guidance because we're a young company and because of the uncertainty in the environment, we are very optimistic as the light at the end of the tunnel for COVID starts to appear brighter and brighter with the rollout of vaccines.

Governor DeWine in Ohio has said once we get to 50 cases per 100,000 all restrictions will be lifted here. Meaning full stadiums, arenas, concert, venues will be back to full capacity. We're right now at about 150 cases per 100,000. That's down from 700 plus cases in December per 100,000. We are headed in the right direction.

When I look at adjacent leisure tourism businesses, airline business, restaurants, bars, beers, leisure tourism destinations, big companies, the trend lines are all headed in the positive way. Airline bookings are up. Our own hotel is seeing an increase in occupancy and rate week over week. Theaters are reopening. Restaurants are reopening to full capacity.

We are very hopeful that all of these big events that we are scheduling for this year, and I'll talk about those in just a second. We'll be at full capacity. We will be able to host and entertain tens of thousands of guests each and every time that we open up our campus. By the way already we have hosted multiple big sporting events here in early 2021. New sporting events.

It's been great to see the campus full of kids. It's been great having those kids and families stay in our hotel, even our restaurants. Go to our Pro Football Hall of Fame. This is coming back. We are optimistic that we are going to have the right assets, the right service, the right events for people to really come back to and engage in.

Our Center for Excellence, as I spoke about, is on time and on budget to open in Q3. So that's another new asset that we'll add. Highway 77 music festival. This is a music festival that was first announced a couple of months ago. Sold out of all the suites, the VIP areas. General admission tickets continue to sell. We expect that as the relief comes in terms of social anxiety around COVID, more and more of these tickets will be selling out, and we hope to have a sold-out event in the very near future.

Women's football. We signed a multiyear deal with the Women's Football Alliance to host their championships. We feel strongly football is not just for men. We have to support women in their goals to play this sport and any other sport, and hosting those championship here in July in Tom Benson Hall of Fame Stadium.

It's going to have great synergy for us from a media point of view. Those will be broadcast from a lodging and other point of view, attendance, food and beverage and concessions, et cetera. So excited to have that as a big tentpole event for multiple years. On the media front that music festival allows us for live streaming. Another revenue opportunity for us and sponsorship increases with that media streaming.

New partnerships with companies like the Lead Holdings. This was an amazing story that I was approached with by the then nine gentlemen -- the only gentleman to ever win a Heisman Trophy and be inducted into the Pro Football Hall of Fame.

This year we added our 10th and Charles Winston would be enshrined as part of the two entrainment events that we will be hosting here in August, the Centennial entrainment that we delayed to this year and this year's class featuring Peyton Manning, Charles Woods, and just to name a few.

But this is going to be a fantastic story that we're going to be able to tell in partnership with elite holdings in NFL films, and we look forward to producing that this year and hopefully launching and selling that early next year. More men have walked on the moon then have had these two distinctions bestowed upon them, which is absolutely amazing to me.

Tupelo Honey, we signed a deal with them to produce a show called Inspire Heroes and Change. NFL players, current and past, are doing great things in their community, and we have never needed it more than what we need right now. We want to be a part of telling their stories. We have a lot of things on the horizon. Podcast, art deals, more media deals in our pipeline that we're excited about for 2021, and we'll look forward to talking about those.

And then lastly, before I turn it over to Jason, gaming. Successful launch of Hall of Fantasy League. This professional football fantasy experience is going to be unlike any other. March 30 we will be launching it. It will be open for staking and backing your team, buying merchandise to support your team. Sponsorship opportunities will be there. We're really excited about this as a revenue generator, but even more excited about it as a new and unique space in the fantasy area.

And then our focus on sports betting, as I spoke about before. We're really engaged with lobbyists and potential partners to ensure that we're selecting the right sport betting partner for us and that what we have to offer to them will help them as well. We are the only tourism development district in all of Ohio, based on sports and entertainment. We are uniquely positioned to bring great value to sports betting partners, and that is going to be a focus of ours in the very near term.

I'll stop there now and turn it over to Jason to give us our financial overview for the year and specifically Q4. Jason?

All right. 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 Camden, 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 COVID-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 Aquarion Holdings, using a portion of those funds to repay an existing bridge loan that had reached its term. We're really pleased to have been able to work with Aquarion Holdings on that loan, and are now diligently working on our construction loan, which I'll provide more details on in a moment.

We've continuously been working to improve the balance sheet. With a goal of strengthening our company's 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 the 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 TIP, which stands for tax increment financing.

We'll continue to refine these assumptions as we finalize the construction loan, and we'll 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've announced so far this year.

In terms of the financials, given the continued uncertainty driven by COVID-19, we're not going to be providing specific financial guidance for 2021. However, I can comment regarding revenue that we expect it 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 of COVID-19 cases and the continued rollout of COVID-19 vaccinations. While COVID is expected to impact our event schedule and attendance through the first half of this year we're 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've evidenced this by the partnership agreements that we've already announced through the end of 2020 and early here in 2020. 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 here. I want to reiterate that our longer-term goalposts have not moved.

By the time construction on Phase 2 is complete and operational we continue to target $150 million of annual run rate revenue and $55 million dollars in annual run rate adjusted EBITDA across our key pillars, which again include destination based assets, our media platforms, and our gaming vertical.

We continue to execute on the financial priorities we've communicated over the past few quarters, and we're 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 the hard work that you and the rest of the team continue to do to execute against our strategy. I'll just say a couple of things, and then we'll open up for questions. To words that come to mind for me, excitement and optimism. We're excited about the NFL draft that we have in Cleveland and our ability to potentially connect to that event. I think that's going to be fantastic this year.

We're excited about the trend lines we're seeing in art industry and adjacent industries, even our Pro Football Hall of Fame attendance continues to rise. Our hotel occupancy and rate continued 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 investment (inaudible) 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've heard me talk about how we're investing pragmatically to grow each of our business verticals.

This year is exciting. Two Pro Football Hall of Fame enshrinements. 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, eight players in the enshrinement events this year between the Steelers and the Cowboys would be in trying. Five from Pittsburgh and three from Dallas. You think there might be a few back stories going on there, may be a little competition before the game.

I think it's fantastic that we're able to host an event like that here. The women's football alliance championships here. Again, women in sport, women and football. This is really important to us. Highway 77 music festivals. Synergy with media, synergy with live events that we're 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're 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'll do more activation throughout the year. And then, of course, our NFL Alumni Developmental Academy -- in its second season HQ Trivia, and its second season.

We're 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'll 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're seeing is what we say we do we do, and we are a team that is committed to create value and to drive opportunity for our shareholders.

Well, thank everybody. We'll look forward to our next call, and now we'll open it up to questions.

(Operator Instructions) Michael Diana, Maxim Group.

Okay. Thank you. Good morning. Mike, could you just repeat, first of all, what Governor DeWine has said about his criteria of 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 two week period. He then went on to say that over the last, call it three 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 in arenas and stadiums for big events. They've 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.

All right. 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 using the stadium, the hotel, you have a 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. And so there's admission opportunities there. There's concession revenue. We think there's a merchandise play as well, the NFL Alumni Developmental Academy.

Of course, they're 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 wanted to have brands affiliated with that. I just spoke with our director of the Academy yesterday and we're 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 and missions, 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 a 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. All right. And I'm looking forward to an update in the second quarter or conclusion, I guess, in the second quarter on your construction. 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 at our post and share. So Mike and Jason, would you mind discussing the timing of the construction line? Are you able to provide any additional details pertaining to that process?

Yeah, let me just say a couple of words and then I'll turn it over to Jason because Jason has done a great job managing this process for us. Anytime you're trying to get a couple of hundred plus million construction loan in an environment like we're facing today, you really have to have a very good business plan. But we have to do the work prior to that so that the construction lending groups really understand what they're lending for.

We spent the last, I'll call it three 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 a -- a lady [named] Carol Smith who runs our Project Management Group, have done an excellent job at doing this.

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

Jason, you want to --

Yeah, thanks, Mike, and yeah, I would just reiterate, we're in talks with several lenders. We're encouraged with how those conversations are going. As I mentioned before, we're hoping to have something finalized here in Q2. Once we have those terms we'll make sure -- we obviously announce them.

The only other comment I'd make is one of the benefits that we had from our February equity offering, was that it really helped provide some capital here to keep construction progressing while we can review and optimize our construction loan options. So again, hoping to finalize here in Q2, and we'll 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 talked about and continue with construction. I mean we're 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're not stopping construction. This is just the next step in the cap stack that allows us to continue to pursue it [over] -- this year and 2022 as well.

Okay. Here's 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 offerings plus a debt to equity conversions. Are there any other anticipated changes that you're entertaining as you look to continually improve the balance sheet?

Yeah, so I'd say, our balance sheet has been very dynamic over the past year, year plus. We're 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're pleased with the progress we've 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 rebalancing of our balance sheet. And we went to many of our partners and shareholders, and said, we'd much rather convert this debt to equity or we'd really prefer to have it just forgiven altogether.

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 that gives me great hope and it shows great commitment from all of our partners and shareholders that they're invested in the long-term success of this company. (inaudible)

Absolutely. Yeah, 100% agree.

We had a question posed about the construction loan itself. We 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 a quarter or two?

Yeah, so I'd say we've had some of our construction timelines just to finish a bit later as we work through all the initiatives that we've talked about on today's call. We've done that really to optimize revenue cash flow, and really align our building schedules and our construction schedules to allow us to reach our five-year financial goal and optimize shareholder value.

And I'll reiterate what I mentioned before. Our long term goalposts remain exactly what they have been since we've talked this over the past few quarters. $150 million in our annual run rate revenue $55 million dollars of annual adjusted EBITDA once we are up and operational here with Phase 2.

And just one thing I would add, either we work very closely with our partners at Turner Hunt and our Project Management Group, PMC, we push 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 at Phase 2 assets sort of late 2022. Only one of those assets will finish a little later than that, early in Q1 in 2023.

So we're 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 and 50, and we had a chance to pivot more into media and gaming and maybe sports betting, we have a very opportunistic view of how to drive incremental revenue as well.

You've 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, three or four very close in the pipeline now that we are potentially going to sign in the near term. But 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've been cautiously approaching certain categories like auto, like banking, like airline to ensure the point in time where we engage in meaningful conversation with them that they're 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 taking a step back to make sure whatever money they're spending in and whatever way they're spending 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 for setting 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 Famers (inaudible) the 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 Camden, 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 are transported from our environments into these allowing them to make bets. We have a fantasy league. The 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, sports betting partnership.

And at the end of the day sports betting is a way I've 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, five bucks discounting 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.

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

Yeah, I could start. I mean, specific to media, our team's really done a lot to address that vertical quite substantially. We've completed a sizzle reel for several of the projects, and we're continuing discussions around distribution at this point. We're really excited about these projects and the other things the teams working. They're really completed -- Mike mentioned, the 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've positioned ourselves as a content creation company. And so when we think about creating great content, you have to have access to things that no other company has. And we do. We have brand partnerships with the NFL Alumni Association, with the Pro Football Hall of Fame. We're 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 the distributor, right? So we're in -- the pipeline -- we're in various stages of that pipeline with the different projects that we have. We have multiple other projects that we're just now starting to think about in terms of content creation. It usually takes anywhere from 6 to 12 months by the time you've created to produce, to then get out into sale. And so we're hopeful that Q3 and Q4 of this year will actually have shows out for people to be able 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, hlsreco.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.