Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) Q2 2022 Earnings Conference Call August 12, 2022 8:30 AM ET
Company Participants
Anne Graffice – EVP, Public Affairs
Michael Crawford – President and Chief Executive Officer
Benjamin Lee – Chief Financial Officer
Conference Call Participants
Jack Vander Aarde – Maxim Group
Operator
Good morning and welcome to the Hall of Fame Resort and Entertainment Company’s Second Quarter 2022 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 questions and answers following the prepared remarks.
It is now my pleasure to turn the conference over to Anne Graffice, Executive Vice President, Public Affairs. You may begin.
Anne Graffice
Good morning and thank you all for joining us for our second quarter 2022 earnings conference call. Our latest press release, supplemental slides, and Form 10-Q were posted yesterday evening after market hours. These documents can be found in the Investor Relations section of our website at hofreco.com.
After my brief introduction, Michael Crawford, our President and CEO will give an overview of the quarter’s results and an update on our fiscal year priorities. Benjamin Lee, our Chief Financial Officer will then provide analysis of the quarter’s financial results, and update on our fiscal 2022 financial 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.
If you have any additional questions after today’s call, please contact me directly.
It is now my pleasure to turn the call over to Michael Crawford. Michael?
Michael Crawford
Good morning. Thanks Anne. Good to be with everyone on this great day for the earnings call. A lot going on over this last quarter and certainly over this last couple of weeks. I think and I hope you would have seen the Hall of Fame Village coming to life and did you know as we hosted significant events nationally televised I think we showed up very well. So I’m incredibly proud of the team and all the accomplishments that we’ve had over the Q2 period of time.
But specifically over these last couple of weeks as well, I think you probably would have seen our enshrining of our new class of 2022 Hall Famers which was fantastic. We kicked off the NFL preseason with the Jags and the Raiders, a great game, even though there was weather delay. I think it came out and showed strong and it really showed the popularity professional football with the Hall of Fame game kicking off the preseason for the NFL.
Of course we had our Concert for Legends with Journey and I can tell you standing in the front row it was an absolutely mind blowing concert. These guys are just the greatest hit band that wowed the crowd. And then on Sunday night we closed the acts with Dave Chappelle and he was just an over top A lister comedian and I think everybody enjoyed that as well.
Typically as I do, I’d like to start off just talking about a few macro trends that we’re watching and things that are impacting our ability to drive business in some cases, and in some cases, things that we’ve overcome and really made great strides against in spite of those issues.
First I think it’s worth mentioning that we continue to watch a lot of things. You know, the — I’ve said before as an old Disney guy, the parade of horribles just continues to go by. But one thing our shareholders should know by now, and I hope you should take comfort in, is this team really just doesn’t give up. It continues to execute in spite of very, very difficult environments. And while inflation seems to be easing in some categories, certainly product availability and supply chain constraints remain very real for us.
In addition, over the last quarter stock market volatility, federal reserve raising interest rates, inflationary pressures. And I know it sounds crazy to say, inflationary pressures when at the same time we’re now talking about recessionary types of conditions, but that’s kind of upside down world that we’re living in.
GDP releases show that we are probably in a recession. But as I said, we’re not overly concerned with this. We’re focused on our future growth and this is just one more thing that the company and its leadership team and its Board has to overcome. I mean, we’ve been dealing with a world health pandemic that still continues on some level. New introduction of health concerns with monkeypox, supply chain issues, labor constraints.
And when you take all of that into consideration and you think about the strides forward that this team has made, it gives me great comfort that in a more normalized, whatever that new state of normal looks like and more normalized world, that our team can really overcome anything that’s put in front of it, a bunch of fighters that just don’t give up.
A couple of key things though to remind people of, consumer spending remains very strong and elevated frankly, and unemployment remains low. And even in a recessionary environment, people forgo a lot of things that are those higher priced items. They may not buy a new refrigerator. They may not buy a new car, but gosh, they like going and having experiences and we’re seeing that. We’re seeing dining. We’re seeing travel, hotel stays, sporting events attendance. We’re seeing these things return to 2019 levels.
And it’s very encouraging for us, especially as a company that, you know, in the early days is a regional drive destination. So as we know, you may not want to get on a long flight, but you may be willing to drive four or five hours to get to a really compelling destination for an event, for a sporting event or just to have a great time in a very immersive environment.
And this is all being confirmed by other recent companies reportings. I think hotels are showing RevPAR growth back to the 2019 levels as I said. The length of stay is growing as well. Leisure travel remains elevated. Business travel is now coming back which is exciting for us as well. And again, entertainment and theme park attendance going very high to those 2019 levels and just as important to the attendance levels, spending is up.
So I always say, and I’ve said this before on these calls, the one thing that I know is people are resilient and you just never can bet against the consumer. If they want something and they find you’re creating a new and exciting experience, whether it’s a media show that you’re streaming, a gaming opportunity or a physical destination, never bet against the consumer. They are there, they show up and they spend money.
As I move into some of the more relevant updates, I did want to talk about over the last quarter, there seemed to be a lot of discussion around broader company news, broader company updates. And I felt like I needed to address those and provide a few points of clarification around how I see things currently and how I see them moving forward.
So let’s start with the comment that I get a lot, how could the management and Board of Directors not be buying stock at the current prices that the stock is trading at? And by the way, the stock is trending up over the last month, which we’re encouraged to see. And I could tell you, if you look at the history of that question, myself personally, I have bought hundreds of thousands of shares, as has my management team, as has our Board of Directors, maybe not all at the same levels, but the confidence in this company is incredibly high.
But we’ve had a policy that deals predominantly with, as stocks are granted to our management team or our Board of Directors as a form of compensation, there is always tax obligation that is associated with those grants. And so what our policy has been, not an individual choice, but a company choice, we have sold stock to cover the tax liability on behalf of those individuals.
So what does that mean to you? Well, what it means is, it prohibits us from trading in those open trading windows for a period of six months after those taxes have been covered by the sale of those shares on behalf of the individuals. So we took a hard look at that, and we’ve now changed that policy to withhold shares to cover the tax liability, freeing up senior executives or the management team and the board to freely trade now when the windows are open.
And I think what you’re going to see, and hopefully what you have seen is, there is such a deep belief in this company’s long term and near term success that everyone across the board will continue to invest where they find appropriate and where personally reasonable for them to do so in the success of our company. And I’ll come back and talk about that one in just a moment.
Couple of other things. Dilution, you know that we’ve had an ATM or At The Market offering out for quite some time. We paused that. We decided that the stock prices were going too low. We didn’t want further dilution and so we changed directions and brought in a bridge loan until we could close on some of the more meaningful public and private debt financing that we have now started to close upon.
And then actually we started to repay that bridge loan as well. One of our senior shareholders and investors in our company, kind enough to provide that bridge loan. And so, you know, what you should take comfort in there is, we have a management team that’s focused on creating value and not diluting where we don’t have to and so that ATM, the sale has been on pause for quite some time.
One of the things that I also get asked a lot about recently being in compliance or I should say being deficient in terms of being in compliance as it relates to NASDAQ rules being traded on the NASDAQ index. I’ll just remind everybody. We went and received the deficiency notice out of compliance May 24, 2022. And that was because the stock had traded, our stock had traded below a dollar for 30 consecutive trading days. Now, when we have looked at this, there are obviously opportunities to correct that. And our management team, our Board of Directors have had, I can’t tell you, countless meetings talking about how do we approach this in the best interest of all of its shareholders and in the best interest of the company.
As you know, there are four opportunities to do this. First of all, the obvious one, the company trades above a dollar for 10 consecutive trading days. We started down that path a few weeks ago. We missed on a day. We’re back above a dollar. We were before I started this call. That that’s a game of chance and one that, you know is, I think we’re trending in the right direction. I, I think our shareholders and investors are seeing us execute, open new assets, sell media, create gaming environments. And so I think they’re encouraged by, and we’re seeing a nice uptick and we’re moving in a direction where that remediation opportunity really is one that could present itself.
The second is, you know, that we have 180 days to become compliant. We can ask for 180 days additionally to correct or cure that deficiency notice. And so that is an opportunity for us to continue to look and monitor how the stock trades and ask for additional time as we continue to execute our business strategy.
The third is a reverse stock split. And let me just take a moment to explain how a reverse stock split works. The value of stock that you carry today would be the exact same value you would carry in the future if a reverse stock split were to occur. The thing that happens is, it takes back a number of shares and revalues those shares at a higher level. And so there is a formula that we would potentially use to take back a number of shares, reversing the number of shares that are out there in terms of availability, which then increases the value of the shares that you hold.
So if you had $100 worth of value at, you know, 10 shares and we took back and we divided that by 5, the trading value of those two shares you had remaining would still equal $100. A lot of people view that as a negative and having a negative impact on the company. I can tell you that versus the fourth option to remediate this deficiency notice, which is to be removed from the primary exchange into a lower tiered exchange really is one that we would not recommend and one that we do not see as a viable option at this point.
Our goal and our obligation to our shareholders is to give them a trading environment that is easy, easily accessible, that has liquidity, that’s being traded, and to be removed from the NASDAQ into a pink sheet environment would complicate that and make it much, much more difficult. So again, we are looking at all of our options. We’re studying those. We’re measuring them against a very volatile stock market. Our Board of Directors is actively involved.
Management continues to seek out expert opinion and have conversations with several Wall Street investment banks. We’re looking at academic research. We’re looking at trending from years past. We’re looking at companies that have done reverse stock splits to see how that has worked out. And we’re having multiple conversations and watching daily trading activity, something that frankly I’m not used to doing, because my focus has been on running the business as has the team to execute our strategy and really create shareholder value.
But I want to reiterate one key fact here. This is not us and you. This is not management-board in one bucket and our shareholders in another. We are all in this together and it is personal for us and myself just as it is for you. And people have asked me a lot if that’s really the case. And my answer is 100% yes.
And why I answer that way is, over the last few years, and you can go back and check the filings, I personally have purchased hundreds of thousands of shares of our stock at all pricing levels, not at $0.50. Some have been at $4, some have been at $3 and below. And yes, that’s myself taking my personal money and investing in this company because I see where it is and I see where it is going to go. And I understand the value that we’re creating.
The same holds true for the management team and the same holds true for our Board of Directors. Yes, we are granted shares as well and I think that’s sometimes where that confusion comes into play. We get granted shares of stock for one primary reason. The shareholders should feel like the company management is aligned with them. And if we get shares of stock granted to us as part of our compensation package versus just getting cash, we should be making decisions that create value for everyone.
And so the shares that are granted to us, that what I just spoke about that, sell the cover policy, shifting to a withhold to cover the tax obligation is something that people should not look at and get confused by and say, well, they don’t care because those are just free shares and they’re given to them.
No, no. I’m going to remind everyone. Our company, our management team has actually foregoed cash in lieu of buying stock. Meaning I’ve taken part of my bonus or I’ve taken part of my annual compensation and I’ve said, I don’t want the cash. I believe so deeply in the company. I would rather take it in stock. I’ve done that multiple times as has our Board of directors. And again, I think there is confusion because when those filings occur, people say, oh well, that’s just stock being given to them.
No, that’s real cash out of their pockets into this company. And they do that because they want to make sure that people understand that they believe this company and the strategies that we have and the management team we have, and the support from our Board will create long-term value for all of us. We’re all in this together.
I’d also just like to say that over the last several months there’s been a lot of criticism as to why wouldn’t management be buying at these lower levels and we listened to that. But again, I just want to reiterate, there have actually been a desire to do that, but we’ve been prohibited to do that by creating rules. You know, the windows have been closed. The sell to cover policy has prohibited us from doing that. And so we’re hoping that as we move forward, we have the chance to invest in our company just like you have invested in our company as well.
The last thing I want to reiterate here, and it’s one I think that was confused by that sell to cover policy is no one and I’m going to repeat this, no one in our company, management team, Board of Directors has sold a single share of their stock. This sales that you’re seeing were conducted on behalf of the individual, by the company to cover the tax obligation.
It’s important that you know that. This management team, this Board of Directors has complete confidence in the company, in the near mid and long-term goals that we have set out for ourselves. The way we’re executing and accomplishing those goals and creating long-term value is the most important thing in every decision that we make for you as our shareholders. So I just — I wanted to be very clear on that so that people were not confused and I’m happy to take questions at the end.
Let’s start with a couple of other key updates here, construction. Hopefully you saw over multiple nationally televised hours of events that we’ve hosted in the last few months at our stadium, Tom Benson Hall of Fame Stadium and at the village, USFL playoffs and championships, and trying at the NFL game, et cetera, that our campus is really growing, and growing in a big way. But we are having to be very purposeful and very planful in doing that.
If you would have asked a lot of the skeptics out there, they would have said no way the progress that we have been made would have been possible, but we did it. From one year the saying that I’m using now, we’ve gone from dirt to destination. We have literally taken dirt fields and now created a destination.
You see a giant indoor dome called Center for Performance. You see a phenomenal outdoor activation area called Play-Action Plaza. You see the fan engagement zone. And I’m going to talk in a moment about tenanting and how that’s progressing and the timing of opening those tenets. No one should interpret what has been done in a year has been, as being easy. And we have been, and I have been very thankful for the ingenuity, the sticktuitiveness of our team.
Our team has worked seven days a week and tirelessly to get the destination to where it is today. And we continue to have plans to advance how we will do things in a very measured way. Inflation is real. And so we’re looking at how fast we move forward with the hotel water park, given significant price increases in commodities and materials. Prices in some cases and categories have been up 20% to 30%. Now, no one should walk away from this call saying, oh, that means they’re going to delay or push back in a significant way the opening of the hotel and the waterpark. Not the case.
We’re looking at when we buy certain packages of materials to ensure that we’re maximizing the dollars we’re going to spend. And just as we did with the Center for Performance, you’ll remember that that was an original brick and mortar building and we reimagined what that facility could be and what it could look like and how it could create an architectural statement for the Village and for the City and for the County.
And frankly, for the region in this wonderful new dome complex, that is by the way, one of the largest in the country fabric domes that hosted already multiple events over Enshrinement Weekend, another big event this weekend and then we’re going to start really rolling into the season of where an indoor facility becomes highly advantageous for a company that faces winters and rain, and a lot of bad weather.
But, but my point here is, we are now looking at some of the design work in the hotel, water park, looking at how we value engineer without compromising the experience. We’re reexamining every detail. Some things aren’t necessary. Some things can be changed to different materials. We have a team that has done that and has proven that we can save money and we can create just as compelling an experience. And I want to thank people like Carol Smith and her team for doing just that type of work and all of our contractors that worked so tirelessly to get the village to where it is today.
As a destination the Hall of Fame Village had a phenomenal week as I said with enshrinement. We welcomed tens of thousands of people to campus. Everyone was blown away. Everyone got to see incredibly compelling content. I would tell you that the question I kept getting asked over and over, how did you do this? How did you do this in a year? You know, we were here three months ago and it didn’t look like any way that this was going to happen.
We had record setting attendance for non-enshrinement events. If you tuned in on Fox and watched the USFL playoffs and championships, there were thousands of people in our stands. And even though the gas prices are high and inflation is still there, people come, people buy tickets, people eat concessions, people stay in hotels. We have been full on campus for events over the last couple of months and we’re building the slate of events even larger.
We announced the O’Jays & Gladys Knight, two Hall of Fame bands coming to Canton, Ohio, where the O’Jays started their band and where they’re trying to finish their last tour. And we — most importantly were able to cater and create an experience that was very compelling for those large sized crowds, proof cases showing that as we grow, we have the ability to offer world class service and immerse guests in an environment that is amazing, just like it showed up for Enshrinement Week and beyond and before.
Tom Benson Hall of Fame Stadium, I want to talk about how we’ve continued to monetize and grow the number of events that we’re hosting there. We do a lot of things in the stadium. Some events we own and we own every aspect of it from the planning to the selling to the hosting and the servicing. Some events we rent the stadium to vendors and we monetize through that kind of rent. But then we take percentages of ticket and concession and maybe even merchandise. All of these types of events are by the way filling up our own hotel downtown at the DoubleTree, so there are multiple ways which we’re monetizing this and mitigating risk.
Some events we want to take on, some events are better served if other groups are running them in our stadium. USFL Championships was a good example of that, where you had Fox and USFL coming in, paying us for the stadium, giving us an opportunity to also have percentages of the concessions and the ticket fees and so on. But being here for two weeks, that was a lot of business for our company, and a lot of revenue that was generated off of that.
Women’s Football Alliance Championships, a three-day Fatherhood Festival. These are all things that you’re now starting to see year-over-year growth in not only the events slate, but how these events perform. And again, I’ll reemphasize being on national television for these types of events is incredibly meaningful for us. It’s important to drive things like sponsorship dollars. It’s important to leverage national television without having to pay for it for marketing of the destination and marketing of all of the other types of things that we’re doing as a company. It’s advertising that you just simply cannot pay for.
And so this physical location, this large destination stadium gives us that, and we’re looking forward to continuing that model as we start to host major events and the other assets that we have built and will continue to build. Center for Performance is up, as I promised up and running. Three days of events over Enshrinement, renting out that facility, making a lot of money and generating revenue in its very first couple of days of existence, it gives us the opportunity for that year round capacity which we’ve so desperately needed.
We’ve started to successfully move business from other sports domes into our CFP Sporting Leagues. We’re now looking and hiring people to sell conventions and other large scale meetings. And so this facility shows up really well and it’s one of a kind for this region and people are incredibly excited for it.
I talked about the DoubleTree. ADRs are up year-over-year. Occupancy is up year-over-year. The hotel remains in the top 5% of customer service within all DoubleTree hotels. That’s an important statement. What we build has to be quality. The assets have to be compelling. It’s people that make the experience. And so I get more excited when I see the 5% — in the top 5% of customer service, than I do with the occupation and the ADRs, because if you’re in the top 5% of service, those things take care of themselves.
We are now proving out our synergy model here, which is why we’re looking forward to our second onsite hotel. Every event we have, every meeting we have, we’re an official hotel for the Hall of Fame now. The Hall of Famers stayed at this hotel over the last week. They had an incredible time that the assets showed up well. We hosted multiple private parties for the Hall of Fame at the DoubleTree. Multiple different ways to generate revenue and a synergy model that I’ve spoken about is incredible. And being the official hotel for the Pro Football Hall of Fame, they host events year round, and it’s just, I’m thankful to Jim Porter and his team for the confidence they’ve showed in us in having the ability to generate great experiences out of our hotel.
Let me shift to media. The media vertical while it’s still in its early stages has had several key wins. We’ve hosted live events. We’ve added brand new content, and we are a really cool emerging media company. And adding partners that I think are going to be meaningful for us like Jake Paul and the deal that we just did with Betr to really produce interesting one of a kind content in our media group. And I’ll talk about Betr in just a moment for our, our gaming division.
But you will have seen many, many shows now in development, many shows being produced and many shows now being put through distribution. The Perfect Ten, we have secured distribution, and I think you’re going to be very pleased with the result of that distribution and I’ll leave it at that. There’s more to come. The inspired pilot that we ran, number one broadcast within the age group of 25 to 54 over that time period. It aired across 63 different markets in the U.S. and we’re now out looking to sell that in a much bigger way.
I talked about Football Heaven podcast. This is going to be an incredible way to enhance your knowledge of football. And three great hosts Football Heaven will have, we’ve already secured and started filming with 18 phenomenal guests, guests that are going to blow you away. We’ve secured a new sponsor which we will talk about in the future. And we’ve also continued to deepen how we view media. We’ve sold multiple new shows that we haven’t announced. We’ll be doing that in the future. We’re securing talent like Keegan-Michael Key for Enshrinement. Our group is really expanding its capabilities and I’m proud of them and what they’ve done.
And NFTs, we’ve signed multiple partnership deals on the NFTs, including with the Pro Football Hall of Fame and a company called I Got It, but we’ve also hired our own NFT developer and strategist. I really continue to believe that digital collectibles done right with enhancements around them, things that will really make them compelling, entitlements that come with them will be a way in which fans engage in that type of media in the future and. And we want to be on the forefront of that.
You know we hired Rob Borm, a really high profile gaming executive and our gaming division is really starting to take off. Rob has started to execute. I’ve appreciated his passion and his determination. He talks to me on a daily basis. We will not fail here is his words. You will have seen that we were preparing to launch and continue to now talk about season two of our Hall of Fantasy League. But you’ll also have seen the adjustments we’ve made to make this an even more compelling and dynamic product.
We added three new teams; the Denver Mile Highs, the Green Bay Winter Warriors, the New Jersey Board Walkers. Again, fun, whimsical, the logos, the names, the markets, we’ve studied all of that. Where is fantasy very popular? Where can we give those guests an opportunity to engage with our product? We’re excited about that.
We did eliminate one team, the Texas Yodelers [ph], sad to do that, but maybe in the future, you never know. We have added more ways in which you can engage with this league. Last year, we realized that backing or staking a team after the season started, it was very limiting for our fans and guests to become a part of the league and enjoy everything we’re doing. We’ve added a free to play option. There are weekly opportunities to engage and win prizes.
One thing that I’m excited about, fantasy is based on information and I have a lot of friends that do fantasy. Aggregating, several sources of information into one service, where you can pay a small fee and have access to this service will make you a better fantasy player. It will enable you to have access to information that you so desperately need in making selections to your teams, traits, drafts, et cetera.
We have a better merchandise online store, better quality merchandise. We have a better and more easily accessible app and multiple apps that you can engage with and enjoy the game. And we added Emmitt and Smith as our Commissioner. And what you’re going to find this year is the promise of, and the execution of more interaction with our GMs and our Commissioner. These are all passionate folks. Rob has laid out a plan that I think is going to be very compelling for them and very exciting for you.
This is a one of a kind league. This is a national fantasy football league that is now adding multiple ways for you to engage. So go out there, download the app, get going. You’re going to have the time of your life and then watch our live draft this Sunday. We will be doing this on SiriusXM Radio, Fantasy Sports Channel 87, starts at four o’clock. We will be having some surprise guests. I’m one of them. That’s not the reason why you tune in. You tune in for people who know what they’re talking about, and you get really excited about what this league is going to represent for us and the multiple ways in which we intend to monetize and grow revenue through this league and its unique offering.
Also in our Gaming Division the thing that’s probably been closely followed, most closely followed is sports betting. And what I hope you will have seen is, both of our applications, retail betting and mobile betting have been submitted to the Ohio Casino Control Commission. We have stayed in very close contact and communication with them. We’ve hired outside consulting experts that really give us the right advice and the best chance as we’re going through the application process, which is cumbersome.
But you know, one that ensures that Ohio has the right companies in control or in the seat of sports betting on behalf of the state. And I think Ohio has done it right and we’re proud to say that we’re anxiously awaiting our approvals. But as we are waiting, we’re watching things like in July, Ohio is setting records for gaming for the casinos and the Recinos $210 million, unbelievable how people are enhancing and engaging with sports now through betting. And we’re wanting to bring new and different opportunities for our guests to do that.
Rush Street Interactive is a high quality, I know Richard Schwartz, he is committed to, he is their CEO, he is a high quality individual committed to delivering experiences, immersive experiences. He and I, the moment we spoke, I knew we were aligned and I knew we could create something fantastic together at the village.
And then you will have seen our new mobile betting partner, Betr. Joey Levy and a guy by the name of Jake Paul, you might have heard of him, tens of millions of followers around the world. This is a guy and two gentlemen that I, you know, had the chance to interact with. They get it, they get where the future is going. They get where the future consumers and sports betters would like to engage. Micro betting is fun. It’s allowing our fans to enhance the way they view all sports, not just football. They are forward looking and we see a ton of synergies between our company and theirs.
By the way, Jake is starting a new media show. He’s been a social media influencer for a long time. It’s the synergy that was so exciting to me and our team. We think we can create great revenue opportunities and great experiences for our guests in at least two of our business verticals in terms of gaming and media, and who knows, maybe some onsite presence at the village stay tuned.
Let me turn to partnerships and sponsorships. I’ve talked about strategically maximizing sponsor dollars. You now see we’re growing our events slate. You now see the assets are growing. Media is growing. Gaming is growing. And so it allows us to, through our partnership with Allied Sports, through our team on the ground. By the way, I think we’ve hired one of the best in the business as our Executive Vice President of Sales and Marketing, Vic Gregovits, he is putting together a team. We already have a great team in place and he’s really laser focused now on monetizing the great progress the company has made.
We are selling partnerships across all our business verticals and with that progress specifically opening assets at the Village and seeing real construction and events happening on site and media content being distributed. We feel like that we can leverage that and maximize the dollars by category that we’re seeing from a sponsorship point of view. And so, you know, we’re excited about where this is going to go.
Now, let me address one thing from a sponsorship point of view that I know many of you want to know more about, and that’s our relationship with Johnson Controls and the sponsorship there. As we’ve talked about, we are in dispute with Johnson Controls predominantly over the services agreement we had in place, but also timing of building assets and obtaining construction lending. We believe they’re in breach of their obligation to us and they have said that about us as well to them.
Here’s where it stands. It’s been slow to get the Johnson Controls team and our team to move forward, but we are moving forward now. We have mediation planned in the very near term. This is non-binding. And if that mediation is unsuccessful, we will then and fully intend to pursue the next step in binding arbitration in the State of Ohio. We cannot simply accept that this relationship is in breach. We are not in breach. We do not feel we’re in breach. And so we have an obligation to, as shareholders to continue to pursue this rectify this situation.
However, in the meantime, we are also in parallel working with Johnson Controls to better define the products and services that they offer and how it fits into what we are building and the operation that we are running. And some of which, those types of things we are now seeing we can provide and can source in a more cost effective manner with the same quality level of course, but through different service providers. And so, I can assure you that the process, the dispute resolution process is underway. We will pursue it and we will have a resolution. And so that’s the update that I would have for there.
And I’m going to stop for a moment now and turn it over to Ben Lee to give us a financial overview of the company and then I’ll come back and talk about some of the other things that we’re progressing and some updates that you can look forward to in the future. So Ben, over to you.
Benjamin Lee
Thanks Mike and good morning everyone. Moving into results, and as Anne mentioned earlier, we filed our second quarter 2022 Form 10-Q post market yesterday. That document is available on the SEC website, as well as our Investor Relations site.
Second quarter total revenue was $2.7 million, which represents an increase of 14% from the same period in the prior year and an increase of 27% on a linked quarter. Revenue growth was primarily driven by higher event revenue at Tom Benson Hall of Fame Stadium and significant increases in operating revenue at our DoubleTree Hotel.
While sponsorship revenue was down from the prior year due to the previously disclosed dispute with Johnson Controls, as Mike just discussed, revenue growth and diversification have improved, and we continue to add new partners, including Molson Coors and Sugardale as previously announced. Second quarter adjusted EBITDA was minus $6.1 million.
The company posted a net loss of $9.2 million partially offset by the change in the fair value of our warrant liabilities, which increased by $2.4 million. Under U.S. GAAP the fair value of these liabilities will decline and income will improve if the company’s stock price declines. The company would experience the opposite effects when our stock price moves higher. While this line in the financial statements will vary based on the company’s stock price, it does not impact our cash flow from operations, cash and cash equivalents or liquidity for all prior and future periods.
Moving to the balance sheet. We finished the quarter with a cash balance of approximately $18 million compared to approximately $13 million at the end of the first quarter. Both values are inclusive of our restricted cash balances. The company’s primary usage of cash continues to be driven by construction expenditures with approximately $20 million spent during the second quarter. This cash usage was offset by proceeds obtained from various financing instruments during the quarter, in addition to cash flow from operations and the sale of common stock under the ATM.
Our net debt balance increased to $123 million compared to $104 million at the end of the first quarter. The increase in notes payable was primarily due to increased principal amounts related to at $10.5 million bridge loan from CH Capital, a $4 million loan from Midwest Lender and a $2.5 million loan from Stark Community Foundation. The bridge loan allowed the company to pause the at the money equity offering for much of the current quarter and shows the company’s largest shareholder CH Capital continues to invest in the company.
In addition, the financial support provided by the local community foundation reflects our common goal of driving significant economic impact into the local community. These dollars will be used to fund destination infrastructure and site work, both areas that traditional lenders do not typically provide financing for. I’d also like to give a bit more detail on financing as we’ve continued to make significant progress since quarter end. In early July, the company closed on a $33.4 million in PACE financing supported by our premier asset the Tom Benson Hall of Fame Stadium.
We’ve been laser focused on building a capital structure that allows the company to reach its long term financial goals. So far we’ve invested in nearly $90 million of company equity into building Phase 2 assets. And since December 31st of 2021, we’ve raised approximately $55 million in additional debt financing to round off the capital stack. But even more importantly, and this is critical, we’ve extended debt maturities by five years to a weighted average maturity of 10.8 years. And through our pragmatic approach, we’ve maintained a weighted average interest rate of only 7.4% even as credit markets have tightened as evidenced by the rising interest rate environment.
As it relates to guidance, we are revising our fiscal 2022 guidance with expected full year revenue in the low $20 million range and an adjusted EBITDA loss of approximately $20 million. This reduction in full year guidance is primarily the result of a lower than expected sponsorship revenue as Mike discussed and timing delays in expected media and lease revenue.
While lower than our previously stated guidance, we still expect significant revenue growth in the second half of 2022, continuing on our upward trajectory as we add resources and work to operationalize our Phase 2 assets. We remain diligent in balancing operating expenses while investing in the future across all three of our business verticals.
Throughout the remainder of the year, we expect to maintain our current construction spend run rate in the mid-teens, millions of dollars per quarter. Longer term, we continue to target $150 million of annual run rate revenue and approximately $50 million of annual run rate adjusted EBITDA across the key pillars. Those key pillars again are destination based assets, our media platforms and our gaming vertical. The revenue and EBITDA generation will be diversified across multiple streams with each one driving synergies to support the exciting ecosystem we are working so hard to build.
In closing, the team continues to execute on the financial priorities that we’ve communicated. We also remain extremely committed to maintaining a balance sheet that provides financial flexibility through our growth phase to deliver long-term shareholder value. Finally, and as you’ve come to expect, we will continue to provide transparent and timely updates to our shareholders as we move ahead.
Now, I’ll turn it back to Mike, who will provide some closing comments. Mike?
Michael Crawford
Thank you, Ben and thanks for the great job you’re doing. Ben has really supported and helped lead so many efforts to conclusions, so I’m grateful for him and his partnership. One thing, I just want address a little bit off script. You’ve heard Ben talk about some of the loans that we have been bringing in. And there’s been lots of discussion about, well, it feels like the Hall of Fame Resort & Entertainment Company is just adding debt.
Let me remind everyone, it’s been well over a year ago where I talked about the need to develop a very balanced capital stack as we built assets, as we invested in media, as we invested in our gaming division. This may or may not be something that people will recall. We have invested over a $100 million of equity in building all of those things. That’s not debt that’s equity. Okay?
You have to invest equity in order to get access to the right type of debt to round out your capital stack. We have been incredibly creative around things like PACE lending that is longer term debt, 25 years lower interest rate debt to ensure the long-term success of this company. So before anyone walks away from this call thinking all they’re doing is just adding more debt, which is going to put at risk the company’s success, I’d just like to remind you, this is going according to plan and the capital stack for each asset, for each media asset, for each gaming asset requires an investment of equity first and then you start layering in these other vehicles.
I’d also tell you that the approval of loans from the city, from the community and from the county in general really show the confidence that our surrounding area community has in us and the belief that they have to help support this in order to have the economic impact that we are projecting and are already having on the community and the region. And so just a couple of things to keep in mind when people start talking about debt is bad. Debt is good and debt is necessary. It’s the right types of debt that we’ve been focused on just in time to ensure we’re not overpaying for debt or paying interest too soon.
We entered this year with a lot of goals, some of which were very basic. Maintaining our construction schedule, I think we’ve done a good job of that. Building our media pipeline, you’re seeing that right now. Developing our gaming vertical and improving our Hall of Fantasy League experience, sports betting applications and e-gaming focus with Rob being hired, Hall of Fantasy League, I’m incredibly excited about this experience. We’ve really listened and evolved it this year and we’re getting ready to launch it, and it’s going to be successful.
One of the things though that is important to me, and I know to you, we are really in the early stages of monetizing assets and creating new content. How do we drive revenue? Shifting from this building and construction mindset to this monetization of the assets and the content that we’re creating? We are, again, that we’re laser focused on generating revenue. Had it not been for the Johnson Controls non-recognition of the revenue this past quarter, we would have well exceeded.
And we did exceed already, which means we’re replacing that revenue coming in from that one sponsor again, sponsor not lender, not investor, not shareholder, but a sponsor we’ve replaced that revenue and we’ve grown it. And so that should give everyone confidence that we are really focused on continuing to monetize and grow our assets.
We are completing and aligning the financial needs and the structuring of financing in a way that supports the long term needs of our company. And we’re doing it without putting at risk anything that’s already been done and invested and so it’s going a little slower. The markets are a little more volatile. We’re having meetings with key banks. Now we’re hoping to be able to announce in the near future closing of more debt, the right type of debt. And so it’s a really important note to make to all of us that this is moving according to plan, but it’s being balanced against the equity we’ve already invested.
One of the things that I had the privilege of doing over Enshrinement Weekend was meeting with the Hall of Fame Board, Roger Goodell, Jerry Jones was in the meeting. Several owners were in that meeting and I presented to them our strategy, our plan, and our progress. All of them commented about the progress that has been made is incredibly exciting, needed, and one that they very much look forward to seeing the success in the long-term.
Commissioner Goodell commented about revenue, talked about how he was pleased with how everything has been moving forward. And so we stay in close contact with key individuals from the NFL, from the Pro Football Hall of Fame to ensure that we can continue to grow business with them and align and partner with them and synergize with them in as many ways as possible.
We’re executing across adding new sponsorships. You’re seeing that the number of events are growing, the number of nationally televised events continue to grow, that free advertising, that exposure for our company and for our campus. And then lifting up the Play Action Plaza area, we have one of our ride attractions up and running, the Forward Pass. We have others that we have planned, and I’ll talk about the timing of those in just a few moments.
The Fan Engagement Zone, corn shell for that retail area is complete or will be complete in the very near term and tenants are already starting in some cases they’re fit out. I’ll talk about the timing of that right now and just as important, achieving our financial objectives. While we are reducing our 2022 guidance, we’re not adjusting our long-term model. And a lot of this I’ll just remind you is timing of supply chain issues, timing of financing, timing of construction. But I have complete confidence that you’re going to see quarter-over-quarter, year-over-year growth for multiple years to come.
The Village itself, major sporting events, the youth league component we cut ribbon on our sports complex, adding three new fields, a lot of amenities. Enhancing and expanding that experience was key to us. And now we’re bringing in even larger groups, even bigger camps. This is a driver, an attendance driver for all of our other assets, for people to come have dinner, have a meal, play games enjoy a ride. So we really think that this over Q3 and Q4 is going to continue to grow for us. Along with attendance growth and things like tenant leases, ride attractions, event revenue, those are all ways in which this destination is coming to life. Sale of media content is really important.
The breadth of media, we’ve signed multiple new partnership deals that we haven’t announced. We’ve sold content for distribution, and we have multiple new shows in development. So that is a very, very good progress in terms of media. I spoke about gaming. We’re really hopeful that in the near term or over the next quarter or two, we’ll get a response from the Ohio Casino Control Commission. Mobile will be ready to launch as quickly as the legalized licensing, the legalized sports betting is in place. They’re saying Jan 1 of 2023. And I’ll talk about our retail location here now.
Let me go through the tenanting process, because this is a big driver of revenue for us, and I’ve had a lot of questions. You’ve built boxes, but we don’t see a lot of things open. Things will be opening. Okay. Shula’s will open Q4 of this year. Brew Kettle, Topgolf Q4 of this year. Build-A-Bear will open Q3 of this year.
Visit Canton will open Q3 of this year. Visit Canton being on site was strategic for us. Having the visitor bureau there, seeing all the great things we’re doing, brainstorming with us, becoming almost a guest service amenity for us, really leveraging their contacts and the work they’re doing to bring in visitation and tourism into the city, into the county is important and we wanted a physical location for them on site.
SMOOSH Cookies, Isaac Bruce, another Hall of Famer Q4 of this year. The Sports Book because of the food operations, the Sports Book integration, we’re looking at Q2 of 2023, but with a lot of education and a lot of customer acquisition well before that, so that when we’re open, we’re running and we’re ready to go.
Our Center for Excellence, we have tenanted out the third floor of that building, those tenants are expecting to be up and operational or paying rents to us in Q4 of this year. Starbucks is now open on the first floor. We have very good line of sight on another first floor, a tenant that will be an interesting and compelling experience and I’ll just leave it at that and we hope to announce something there very soon.
And in Play Action Plaza the Red Zone, our Ferris Wheel finally will be moving construction on that. We didn’t want to start before Enshrinement and have too much disruption, but we look forward to opening that in Q4 of this year. And most importantly, enhancing with a lot of programming in our Fan Engagement Zone and Play Action Plaza ways in which our guests can come out and enjoy the destination without some of these retail boxes being open just yet.
Our relationship with the Pro Football Hall of Fame continues to grow and strengthen. As we noted before, we took over the concert for legends journey this year, but we are really focused on packaging and working with the Hall of Fame to create a bigger experience for our guests to enjoy. Stadium tours, combine attraction inside the stadium, again multiple things for our guests to do when they come on site. Now, this is not just a couple of hour visit. This can be an all day thing, maybe a day and a half thing as we add our hotel in our water park and break ground and construction on them this summer. We’re hopeful that by the end of next year and early 2024, those two assets will be up and running.
I’ll just end by saying, what you’re hopefully seeing is a team that is created, has created and is committed to creating an exceptional experience across every single platform and every business vertical that we have. I could not be more proud of what they’re doing. I know I’ve said that, but it’s just true. And our goal of honoring the past and inspiring the future is alive and well along with driving synergy throughout all of our company, when one business vertical is creating opportunity we look at it across the other two as well.
Sports betting we think is a game changer for us and our partnerships with Rush and Betr. We could not have imagined two partners more aligned with what we’re doing and creating synergy for us at our destination through gaming and in our media.
And I’ll just — the last thing I’ll say, and I’ve said this in some of my posts and explain why. You just have to trust the process here. We are a company that is committed to excellence. We’re a company committed to long-term and midterm value. This is never going to change. While we’d like to do things quicker, we want to do things great and the process allows us to do that.
I couldn’t be more proud of the team. I think all of you as shareholders and investors, hopefully we’ve answered a lot of questions. I know this was a bit longer call. I felt it was important for you to hear directly from me on some of these broader key issues and just the progress we’re making. And it’s exciting for me every single day. It changes and evolves.
And now I’ll stop and turn it back over to Anne and open this up for questions. Thank you.
Anne Graffice
Thank you, Mike. Do we have any questions from anyone on the call?
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from the line of Jack Vander Aarde with Maxim Group. You may proceed with your question.
Jack Vander Aarde
Great. Good morning guys. I appreciate all the added color. Michael, I’ll start with the question. It’s good to hear the Village continues to advance. You noted the record attendance. How do you see those attendance and awareness levels as maybe you look into the summer of next year? And maybe the NFTs maybe play a role in that, just any other color? Thank you.
Michael Crawford
Yes, thanks Jack. I would say that, if you look at, from last year to this year, the growth in our event slate has been exponential. And we now have a destination that as people came for USFLs, as people came for women’s football championships and certainly Enshrinement, you see that the excitement and the juices flowing with ideas. I can’t tell you the number of conversations with talent booking agents, with sporting event operators, that were, wow we have to be here, seeing what you’ve created, seeing how easy it is and the amenities that you have to offer. So I’m very excited about next year.
We’re in the process of booking right now. As you know, talent gets booked a year or even sometimes multiple years out. We’re still suffering a little bit with COVID in terms of hangover with concerts and events that had to be canceled for a couple years. So they’re still trying to course correct those. But I think the event slate for next year is going to be very strong. If this year was an indicator and the growth that we saw, I expect that same kind of growth out of our team and out of our partners.
We have others that are helping, agents that are helping book talent for us now. And as we open more assets, it just becomes such a compelling destination. And I think the comment around the quality of experience that these artists and that these athletes are having is really unparalleled and I’m proud of that and what we’re creating. And so it should be exciting for our guests and for our fans next year, even more so than this year.
I think you asked a question about NFTs. We really want to grow NFTs from just being collectable to being usable. And you’re seeing this across sports in general, tickets becoming NFTs to events. But I think entitlements, we have an opportunity to create NFTs that will give one of a kind experiences, not only one of a kind collectable pieces, digital pieces, but one of a kind experiences that are attached to those. And so while I won’t talk a lot about that on this call, I do think there is going to be opportunity for us there.
Jack Vander Aarde
That’s great. And then maybe a question for Ben in terms of the outlook and target. My line was cutting in and out a little bit. Can you may be just touch on the 2022 guidance Ben and comments on the construction spend? I did hear long-term guidance remains impact, so that’s most important, but just a reminder on the 2022 guidance.
Benjamin Lee
Yes, sure. Glad to revisit that. So as it relates to guidance for 2022, we’re expecting full year revenue in the low $20 million range and adjusted EBITDA loss of approximately $20 million. Again, we talked about, we reduced that primarily due to timing changes for sponsorship, I’m sorry, for media and lease revenue, but we’re still on that upward trajectory seeing quarter-over-quarter growth, and we expect a pretty strong second half here, as you can imagine. In terms of construction spend, we expect to maintain right where we’ve been the past couple quarters of a run rate of around the mid-teens, millions of dollars for the next couple of quarters.
Jack Vander Aarde
Okay, great. That’s really helpful. And then Michael, just one more point on the second season of Hall of Fame or the Hall of Fancy League, that’s such a near term event. Cool to see that launch. You talked about maybe adding free to play league in new monetization schemes or plans. Can you just touch on that a bit further?
Michael Crawford
Yes, I think, look we realized that we had a brand new model, a franchise model that was unfamiliar to the fantasy world. I think it was very popular. I think those that played had a great time and we learned a whole bunch. Engagement is important. These fantasy expert GMs, the Commissioner being meaningfully engaged with our participants really changes the game for them. Right? They get to hear from people who are living in this world and celebrities in the space, and then also one of the best to ever take the ball from the quarterback and gain meaningful yards and make an impact on the game and Emmett Smith.
And you’re already seeing more engagement than last year. I think Rob has done a good job at really laying out a plan of execution and engagement that will be important for our guests and our fans to enjoy. But we wanted to be able to have people come in and out of the season last year, you were in, you backed a team and that was sort of how the league worked this year. This year you can still do that. You can still come in, select the team, you could build your own team. You can play on a weekly basis and have chances to win prizes on a weekly basis.
But the one thing that was really interesting to me is, the access to information and our ability to aggregate from multiple sources, multiple feeds, if you will, fantasy feeds into one and give easy access to information on a subscription based model, I think is a really important game changer for those that want to play fantasy. So you can come in if you’re a novice and say, hey, I just want to follow a team that’s in place and that GM, I really believe will create a great team and potentially win the league.
Like the Atlanta hot wings did last year, Atlanta’s coming back this year. I want to create my own team and compete against those teams. I want to have access to information. I want to have it in a way in which I can engage with the folks that are running this league and subject matter experts that can really help me. We know that fantasy players typically play in multiple leagues. But we want to be able to have them in ours and provide the right level of experience.
So I think this is a very, very progressive model. We’ll look to enhance with podcasts, we’ll look to enhance with sponsorships. So the opportunity to monetize this league for us, I think comes in four or five different ways. But again, if you create great experiences, people will find them and we’re going to do a lot more marketing around them this year, so that people understand how great this can be and how fun it can be. And, as they engage with it, I think they’re going to find it to be both of those things.
Jack Vander Aarde
Great. I really appreciate all the color. Thanks, that’s it from me.
Michael Crawford
Absolutely. Thanks Jack.
Operator
Ladies and gentlemen, we have reached the end of today’s question-and-answer session. I would like to turn this call back over to Anne Graffice for closing remarks.
Anne Graffice
Thank you. In closing, I just want to say on behalf of the entire team at the Hall of Fame Resort & Entertainment Company extending just a very sincere thank you to our shareholders, our investors, and our partners. We really appreciate your continued support and belief in our game plan. So thank you for being with us today. I hope you have a wonderful Friday and a great weekend ahead.
Operator
This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.
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