Hall of Fame Resort & Entertainment Company Announces Fourth Quarter and Full Year 2023 Results
- Record fourth quarter revenue of $6.1 million, a 101% increase compared to the same period last year.
- Full-year revenue of $24.1 million, a 51% increase from the prior year, driven by event and rental revenue at Hall of Fame Village.
- Fourth quarter net loss attributable to shareholders was $20.2 million, compared to $18.5 million in the same period last year, primarily due to impairment expense.
- Full-year net loss of $69.7 million, compared to $46.9 million in the prior year, driven by increased net interest expense and operating expenses.
- Fourth quarter adjusted EBITDA improved to a loss of $1.9 million from $5.5 million in the same period last year.
- Full-year adjusted EBITDA was a loss of $25.5 million, compared to $26.0 million in the prior year, as increased operating expenses were offset by revenue.
- Cash balance at the end of the fiscal quarter was $11.8 million, including $8.6 million in restricted cash.
- Key business highlights include hosting large events at Hall of Fame Village, strategic partnerships to expand youth sports programming, and partnerships with prominent companies like Coca-Cola Consolidated and Ohio Lottery!.
- Completion of a $2.8 million public offering of common stock and warrants to increase institutional ownership and improve stock trading volumes.
- None.
Insights
The reported increase in revenue for Hall of Fame Resort & Entertainment Company is a positive sign, indicating that the company's strategic focus on events and rentals is yielding financial benefits. The 101% growth in fourth quarter revenue and 51% increase for the full year suggest that the company is effectively capitalizing on its unique positioning in the sports and entertainment industry. However, the widening net loss year-over-year, driven by impairment expenses and increased net interest and operating expenses, raises concerns about the company's current profitability and cost management strategies.
From an investment perspective, the substantial net loss despite growing revenues may signal underlying challenges in achieving profitability. The cash balance, including a significant portion of restricted cash, remains relatively unchanged quarter over quarter, which could indicate a tight liquidity position. The completion of a public offering to increase institutional ownership and improve stock trading volumes reflects an active approach to capital management, but it also suggests a need for external financing to support ongoing operations and development phases.
The emphasis on a synergistic business model and the creation of integrated guest experiences is a strategic move that aligns with current industry trends towards experiential offerings. The partnership with high-profile entities like Coca-Cola Consolidated and the Ohio Lottery, as well as the expansion of youth sports programming, are likely to enhance the company's brand and attract a broader audience. These strategic partnerships and the development of media projects could diversify revenue streams and strengthen the company's market position over time.
Looking at the industry as a whole, the focus on media and gaming products, as well as the development of Hall of Fame Village, suggests an understanding of the evolving landscape of entertainment and sports. The company's efforts to pivot towards these growth areas could pay off in the long term, as consumer preferences continue to shift towards immersive and interactive experiences. However, the short-term financials present a mixed picture, with impressive revenue growth overshadowed by significant losses.
The reported increase in hotel revenue at the Doubletree by Hilton Downtown Canton indicates that the company's hospitality segment is contributing positively to the overall revenue growth. This aligns with broader hospitality industry trends, where strategic location and themed experiences can drive occupancy rates and pricing power. The Hall of Fame Village's ability to host large events, such as those with a comedian of Bill Burr's caliber, demonstrates its potential as a destination for diverse entertainment offerings.
The focus on completing the Phase II development of Hall of Fame Village points to a long-term vision for creating a comprehensive and differentiated guest experience. However, the success of such developments hinges on sustained visitor interest and the ability to manage operational costs effectively. The balance between investing in expansion and managing the existing operational costs will be critical for the company's long-term financial stability and growth within the hospitality and entertainment sector.
"The performance of the fourth quarter highlights the significant progress that we have made over the course of the last year," stated Michael Crawford, HOFV President & CEO. "We remained focused on operational execution within all our business verticals, which led to record fourth quarter revenue. As an early-stage Company, it is mission critical that we continue to make the necessary strategic investments to enhance business growth, increase operational efficiency, and elevate our Media and Gaming product and brands within the sports and entertainment industry. In addition, our synergistic business model helps create integrated guest experiences and growth throughout our organization. As we enter 2024, I am very excited with the plan we have to grow our operational capabilities by adding a roster of diverse events, strategic partnerships, and new experiences that will bring millions of guests to our campus. Finally, we are committed to telling great stories with multiple new Hall of Fame Village Media projects being shopped for production and distribution."
Key Financial Highlights
- Fourth quarter revenue was
$6.1 million 101% compared to the same period in the prior year, primarily driven by continued operationalization of Hall of Fame Village through event and rental revenue. For the full year, revenue was$24.1 million 51% compared to the prior year. Full year results were driven by event and rental revenue at Hall of Fame Village and hotel revenue at the Doubletree by Hilton Downtown Canton. - Fourth quarter net loss attributable to shareholders was
$20.2 million $18.5 million $69.7 million $46.9 million - Fourth quarter adjusted EBITDA was a loss of
$1.9 million $5.5 million $25.5 million $26.0 million - The Company finished its fiscal quarter with a cash balance of
$11.8 million $8.6 million $11.8 million $7.5 million
Key Business Highlights
- Hall of Fame Village hosted many large events at Hall of Fame Village including Emmy and Grammy nominated comedian, Bill Burr, all seven divisions of the OHSAA Football Championships, and Winter Blitz. In addition to these large events, additional revenue was generated from campus programming and tenant and event rentals associated with our synergistic revenue model.
- The Company announced the strategic partnership with Josh Harris and David Blitzer to elevate and expand youth sports programming at the Hall of Fame Village. The partnership will amplify youth sports programming and create world-class experiences for participants at the ForeverLawn Sports Complex and will extend to youth sports programming at the Hall of Fame Village's Center for Performance.
- The Company partnered with several new prominent companies including Coca-Cola Consolidated, the Ohio Lottery!, and Enviroscapes.
- The Company completed a
$2.8 million
Conference Call
The Company will host a conference call and webcast Thursday, March 21, 2023, beginning at 8:30 a.m. ET, to provide commentary on the business. Investors and all other interested parties can access the live webcast and replay at the Company's website: https://ir.hofreco.com.
About Hall of Fame Resort & Entertainment Company
Hall of Fame Resort & Entertainment Company (NASDAQ: HOFV, HOFVW) is a resort and entertainment company leveraging the power and popularity of professional football and its legendary players in partnership with the Pro Football Hall of Fame. Headquartered in
Forward-Looking Statements
Certain statements made herein are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words and phrases such as "plan," "opportunity," "future," "will," "goal," "enable," "pipeline," "transition," "move forward," "towards," "build out," "coming" and "look forward" and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements are not guarantees of future performance, conditions, or results, and involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside the Company's control, which could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors that may affect actual results or outcomes include, among others, the Company's ability to manage growth; the Company's ability to execute its business plan and meet its projections, including obtaining financing to construct planned facilities and for working capital; litigation involving the Company; changes in applicable laws or regulations; general economic and market conditions impacting demand for the Company's products and services, and in particular economic and market conditions in the resort and entertainment industry; increased inflation; the inability to maintain the listing of the Company's shares on Nasdaq; and those risks and uncertainties discussed from time to time in our reports and other public filings with the SEC. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES | |||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
For the Years Ended December 31, | |||
2023 | 2022 | ||
Revenues | |||
Sponsorships, net of activation costs | $ 2,819,041 | $ 2,697,487 | |
Event, rents, restaurant, and other revenues | 13,855,169 | 7,116,594 | |
Hotel revenues | 7,455,463 | 6,165,291 | |
Total revenues | 24,129,673 | 15,979,372 | |
Operating expenses | |||
Operating expenses | 43,171,407 | 35,982,464 | |
Hotel operating expenses | 6,491,625 | 5,949,839 | |
Impairment expense | 8,845,000 | - | |
Depreciation expense | 15,069,782 | 12,037,374 | |
Total operating expenses | 73,577,814 | 53,969,677 | |
Loss from operations | (49,448,141) | (37,990,305) | |
Other income (expense) | |||
Interest expense, net | (18,763,838) | (5,377,146) | |
Amortization of discount on note payable | (3,589,858) | (6,250,721) | |
Other income | 4,265,937 | 604,912 | |
Change in fair value of warrant liability | 686,000 | 9,422,000 | |
Change in fair value of interest rate swap | 163,850 | (200,000) | |
Change in fair value of investments available for sale | (2,067,754) | - | |
Loss on extinguishment of debt | - | (6,377,051) | |
Total other expense | (19,305,663) | (8,178,006) | |
Net loss | $ (68,753,804) | $ (46,168,311) | |
Preferred stock dividends | (1,064,000) | (1,064,000) | |
Loss attributable to non-controlling interest | 72,265 | 285,807 | |
Net loss attributable to HOFRE stockholders | $ (69,745,539) | $ (46,946,504) | |
Net loss per share, basic and diluted | $ (11.97) | $ (9.01) | |
Weighted average shares outstanding, basic and diluted | 5,826,504 | 5,208,054 | |
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
For the Years Ended December 31, | ||||
2023 | 2022 | |||
Cash Flows From Operating Activities | ||||
Net loss | $ (68,753,804) | $ (46,168,311) | ||
Adjustments to reconcile net loss to cash flows used in operating activities | ||||
Depreciation expense | 15,069,782 | 12,037,374 | ||
Amortization of note discount and deferred financing costs | 3,577,034 | 6,250,721 | ||
Amortization of financing liability | 6,914,176 | 1,156,362 | ||
Bad debt expense | 244,143 | 807,877 | ||
Recognition of film costs | 160,000 | - | ||
Impairment of sports fields and film costs | 8,845,000 | - | ||
Interest income on investments held to maturity | (563,652) | (72,917) | ||
Interest paid in kind | 6,671,400 | 3,969,093 | ||
Loss on extinguishment of debt | - | 6,377,051 | ||
Gain on sale of asset | (148,796) | - | ||
Gain on outcome of arbitration | (4,117,141) | - | ||
Change in fair value of warrant liability | (686,000) | (9,422,000) | ||
Change in fair value of interest rate swap | (163,850) | 200,000 | ||
Change in fair value of investments available for sale | 2,067,754 | (67,754) | ||
Stock-based compensation expense | 2,756,849 | 3,925,303 | ||
Non-cash operating lease expense | 520,831 | 179,898 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (798,752) | (251,795) | ||
Prepaid expenses and other assets | (357,126) | 289,396 | ||
Accounts payable and accrued expenses | 2,026,036 | 9,924,830 | ||
Operating leases | (319,056) | 17,753 | ||
Due to affiliates | 438,389 | 3,015,292 | ||
Other liabilities | (383,655) | 2,939,079 | ||
Net cash used in operating activities | (27,000,438) | (4,892,748) | ||
Cash Flows From Investing Activities | ||||
Additions to project development costs and property and equipment | (45,590,651) | (95,167,689) | ||
Proceeds from securities held to maturity | 89,470,392 | - | ||
Proceeds from sale of property and equipment | 241,691 | - | ||
Investment in securities held to maturity | (71,947,597) | (16,960,598) | ||
Net cash used in investing activities | (27,826,165) | (112,128,287) | ||
Cash Flows From Financing Activities | ||||
Proceeds from notes payable | 43,075,339 | 79,196,400 | ||
Payment for fractional shares | - | (118,344) | ||
Repayments of notes payable | (5,757,301) | (19,256,319) | ||
Payment of financing costs | (2,226,310) | (11,559,606) | ||
Payment for repurchase of interest rate swap | (36,150) | - | ||
Payment of Series B dividends | (450,000) | (750,000) | ||
Proceeds from sale of common stock under ATM | 39,261 | 20,777,893 | ||
Proceeds from failed sale leaseback | - | 65,588,519 | ||
Proceeds from common stock offering | 2,500,996 | - | ||
Payment on financing liability | (4,019,531) | (729,166) | ||
Net cash provided by financing activities | 33,126,304 | 133,149,377 | ||
Net (decrease) increase in cash and restricted cash | (21,700,299) | 16,128,342 | ||
Cash and restricted cash, beginning of year | 33,516,382 | 17,388,040 | ||
Cash and restricted cash, end of year | $ 11,816,083 | $ 33,516,382 | ||
Cash | $ 3,243,353 | $ 26,016,547 | ||
Restricted Cash | 8,572,730 | 7,499,835 | ||
Total cash and restricted cash | $ 11,816,083 | $ 33,516,382 | ||
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES | |||
CONSOLIDATED BALANCE SHEETS | |||
As of December 31, | |||
2023 | 2022 | ||
Assets | |||
Cash | $ 3,243,353 | $ 26,016,547 | |
Restricted cash | 8,572,730 | 7,499,835 | |
Investments held to maturity | - | 17,033,515 | |
Investments available for sale | 2,000,000 | 4,067,754 | |
Accounts receivable, net | 1,108,460 | 1,811,143 | |
Prepaid expenses and other assets | 3,514,135 | 3,340,342 | |
Property and equipment, net | 344,378,835 | 248,826,853 | |
Property and equipment held for sale | 12,325,227 | - | |
Right-of-use lease assets | 7,387,693 | 7,562,048 | |
Project development costs | 59,366,200 | 140,138,924 | |
Total assets | $ 441,896,633 | $ 456,296,961 | |
Liabilities and stockholders' equity | |||
Liabilities | |||
Notes payable, net | $ 219,532,941 | $ 171,315,860 | |
Accounts payable and accrued expenses | 21,825,540 | 17,575,683 | |
Due to affiliate | 1,293,874 | 855,485 | |
Warrant liability | 225,000 | 911,000 | |
Financing liability | 62,982,552 | 60,087,907 | |
Derivative liability - interest rate swap | - | 200,000 | |
Operating lease liability | 3,440,630 | 3,413,210 | |
Other liabilities | 5,858,682 | 10,679,704 | |
Total liabilities | 315,159,219 | 265,038,849 | |
Commitments and contingencies | |||
Stockholders' equity | |||
Undesignated preferred stock, | |||
authorized; no shares issued or outstanding at December 31, 2023 and 2022 | - | - | |
Series B convertible preferred stock, | |||
designated; 200 shares issued and outstanding at December 31, 2023 and 2022; | - | - | |
Series C convertible preferred stock, | |||
shares designated; 15,000 shares issued and outstanding at December 31, 2023 and | 2 | 2 | |
Common stock, | |||
6,437,020 and 5,604,869 shares issued and outstanding at December 31, 2023 and | 643 | 560 | |
Additional paid-in capital | 344,335,489 | 339,038,466 | |
Accumulated deficit | (216,643,882) | (146,898,343) | |
Total equity attributable to HOFRE | 127,692,252 | 192,140,685 | |
Non-controlling interest | (954,838) | (882,573) | |
Total equity | 126,737,414 | 191,258,112 | |
Total liabilities and stockholders' equity | $ 441,896,633 | $ 456,296,961 | |
Non-GAAP Financial Measures
The Company reports its financial results in accordance with accounting principles generally accepted in
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
| Adjusted EBITDA Reconciliation | |||||||
Net loss attributable to HOFRE stockholders | $ (20,163,050) | $ (18,507,694) | $ (69,745,539) | $ (46,946,504) | |||
(Benefit from) provision for income taxes | - | - | - | - | |||
Interest expense, net | 4,700,254 | 1,571,836 | 18,763,838 | 5,377,146 | |||
Depreciation expense | 4,583,447 | 2,616,789 | 15,069,782 | 12,037,374 | |||
Amortization of discount on note payable | 432,043 | 2,639,983 | 3,589,858 | 6,250,721 | |||
EBITDA | (10,447,306) | (11,679,086) | (32,322,061) | (23,281,263) | |||
Loss on extinguishment of debt | - | 6,228,579 | - | 6,377,051 | |||
Impairment expense | 8,845,000 | - | 8,845,000 | - | |||
Other income | (4,117,141) | (67,754) | (4,265,937) | (604,912) | |||
Change in fair value of warrant liability | (179,000) | (411,000) | (686,000) | (9,422,000) | |||
Change in fair value of interest rate swap | - | 72,000 | (163,850) | 200,000 | |||
Change in fair value of securities available for sale | 3,751,000 | - | 2,067,754 | - | |||
Preferred stock dividends | 266,000 | 266,000 | 1,064,000 | 1,064,000 | |||
Loss attributable to non-controlling interest | (6,616) | 51,359 | (72,265) | (285,807) | |||
Adjusted EBITDA | $ (1,888,063) | $ (5,539,902) | $ (25,533,359) | $ (25,952,931) | |||
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SOURCE Hall of Fame Resort & Entertainment Company
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