On July 1, HOF Village, LLC—the owner of a sports and entertainment destination affiliated with the Pro Football Hall of Fame—announced the completion of a merger with the publicly traded SPAC, Gordon Pointe Acquisition Corp. The combined entity was renamed the ‘Hall of Fame Resort & Entertainment Company’ and now trades on the NASDAQ exchange under the symbol HOFV. Considering the country’s continued struggle with containing the coronavirus and the U.S. economy’s slide into a depression over the last four months, it does not seem like an opportune time to introduce a recreational travel play to the capital markets. But HOVF CEO Mike Crawford said the NFL’s massive “fan base, [the company’s affiliation] with the most powerful sports league [in the world], its ability to leverage the Pro Football HOF brand and the brand of [the individual] Hall of Famers” would enable the creation of “an entertainment conglomerate” not solely reliant on travel to Canton. By taking the company public now, he said, it’s positioned to “grow at a slightly faster pace than [it] might have been able to with a private placement.”
Our Take: The Hall of Fame Resort & Entertainment Company has aspirations of being far more than a sports-themed resort in Eastern Ohio. Crawford said that initially the company would be “heavier on real estate creation—two hotels, a technology-based waterpark, retail and dining” are all in the plans—before the focus shifts to “creating assets that drive new events and programming, which will in turn drive new sponsorship revenue.” Historically, sponsorships have contributed approximately $6 million annually to HOFV’s revenue. That number is projected to climb to between $20 million and $25 million within the next half decade as the company puts on more events (think: NFL alumni academies, sporting events, concerts).
Over the last three years, the Hall of Fame Village Powered by Johnson Controls has built a “pretty robust youth sports business unit” that hosts regional camps and tournaments, championships (including the Ohio state high school football championships) and some collegiate games at Tom Benson Hall of Fame Stadium. Crawford suggested there is room to grow the vertical (the National Youth Football and Sports Complex is projected to comprise 5% of 2025E revenue), a narrative echoed by Anh Hoang, CIO of GHG Invest (which, it should be noted, owns HOVF warrants). “The youth sports business overall has been growing really fast. A current worldwide youth sports market is around $24.9 billion, expected to grow to $77.6 billion by 2026. However, that was the pre COVID-19 projection. Even if there were to be a 20% reduction in the 2026 market size estimation it would grow to $62 billion (roughly +14% CAGR).”
Crawford, who was at Disney when they built the Wide World of Sports Complex, sees a chance to construct HOFV’s youth sports tourism business in a similar vein. “[Youth Sports] is a great attendance driver, and we have the ability to take those that are coming to participate [along with their families/community members] and give them a place to be entertained, to stay and to be immersed [in the game of football],” he said.
In the short-term, media will be a small piece of the revenue pie (+/- 10%); it’s simply too time-consuming to produce high-quality content. But the former Disney executive believes the “interesting intellectual property” exclusively available to them (think: video and audio clips, imagery and artifacts) provides an opportunity to build a media giant that can eventually power the physical destination—much like The House of Mouse has done. While it won’t be easy to create that kind of ecosystem (remember, Disney is a legacy brand), Huong says, “the results can be extremely rewarding.”
Fantasy sports is another vertical the Hall of Fame Resort & Entertainment Company believes it can grow. As Huong noted, what is currently an $18 billion market is “expected to grow to nearly $43.4 billion by 2026.” Crawford was hesitant to put a number on the upside in the HOFV fantasy outfit, but he did say he expects The Crown League (an asset they acquired in mid-June) would “likely become a significant contributor to the company’s revenue and EBITDA lines” within the next half decade.
To be clear, the Hall of Fame Resort & Entertainment Company does not include the actual Pro Football Hall of Fame, which operates as its own private non-profit entity. The Hall is, however, a shareholder in HOFV (they own a percentage in the mid-teens). Before the development of the Hall of Fame Village Powered by Johnson Controls, the Hall itself retained just a small fraction of the money spent by the million or so visitors it drew to Canton each year. But now, by being a partner in an immersive fan destination, they will be able to capitalize on the “business opportunity [associated] with giving [those coming to the HOF] a place to eat and a place to stay while there.”
HOFV’s listing on the NASDAQ exchange “gives the company access to some liquidity and adds credibility and stability [from an investor POV].” Crawford said that the primary use of the capital raised would be to complete the world-class destination in Canton. While the company has invested +/- $250 million to date on upgrades to the Tom Benson Hall of Fame Stadium and on the development of a youth sports complex, there is roughly $300 million in ‘new spend’ still available. For what it’s worth, the company—which holds a market cap in the +/- $300 million range—brought on +/- $50 million worth of new retail investors during its first week of trading. Crawford is confident once HOFV “stands up its fantasy vertical and starts to gain greater potential in e-gaming” that number will be “$500 million or larger.” He said, “There’s tremendous upside to having a horizontally integrated sports-driven company based on the most powerful sport in America.”
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