The InvestorPlace Q&A: Embrace the NFT Revolution with HOFV Stock

HOFV stock - The InvestorPlace Q&A: Embrace the NFT Revolution with HOFV Stock

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Companies at the forefront of the NFT revolution are generating a ton of attention right now, and for good reason. Hall of Fame Resort & Entertainment (NASDAQ:HOFV) is one of those companies, and eager investors have chased HOFV stock up more than 250% in 2021.

For those unfamiliar with Hall of Fame, the company emerged in 2020 as the result of a merger with a special purpose acquisition company. HOFV touts itself as a leading sports, media, and entertainment company. It is also working on a Hall of Fame Village destination site in Ohio.

However, in recent months, investor interest in Hall of Fame has pivoted from its destination site to its plans for non-fungible tokens. These cryptocurrency assets have been booming, giving investors access to art, music and collectibles on the blockchain. Hall of Fame also hopes to make its mark in this space, leveraging its intellectual property.

On behalf of InvestorPlace, I recently had a chance to sit down with HOFV CEO Mike Crawford to discuss the company’s plans for the future. Mr. Crawford detailed his long-term vision for the company, including its three key business verticals.

The InvestorPlace Q&A: Meet Mike Crawford and HOFV Stock

Chris MacDonald, Contributor, InvestorPlace: In a few sentences, what is Hall of Fame Resort and Entertainment all about? Can you walk us through each of your different business initiatives so investors can get a clearer picture?

Mike Crawford, CEO, Hall of Fame Resort & Entertainment: Yeah, thanks. HOFV is a sports and entertainment company. It’s powered by professional football, if you will.

We like to think that we have the ability to get into three very distinct business verticals on creating theme destination-based assets. The first of which is here in Canton, Ohio around the Pro Football Hall of Fame.

The second business vertical obviously is media. So, we have direct access to exclusive content. This is both in the relationships that we have with the Pro Football Hall of Fame and the NFL Alumni Association, but also content that we’re creating. Accordingly, media becomes a really important part of what we do, helping tell stories of the history of the game, the franchises, the players, etc. And so, we’ve already signed several media deals just this year, and announced those.

And then the last business vertical that we’re in is gaming. So, obviously, there’s a lot of players, and a lot of fans that engage with esports, sports betting and fantasy sports. We’ve launched our gaming division with a unique, original fantasy experience that we’ve created out of an acquisition that we made prior to going public.

InvestorPlace: It sounds like a lot of the newer verticals that you have are in the virtual space. So I’m wondering if you could talk a little bit about how the pandemic has affected your business and what your outlook for growth is over the coming quarters and years.

Crawford: We had built phase one of the destination here in Ohio, and we were really doing a lot of different events — sport and non-sport events in our football stadium, Tom Benson Hall Of Fame Stadium, and at our national youth football and sports complex.

Obviously the pandemic put a pause on all of that in 2020, or I should say, for a good part of 2020. We actually were successful in bringing back many of our youth sporting events, towards the end of the year, in a very safe environment with operating standards that allowed us to feel comfortable in welcoming those types of events back to campus.

We have been operating phase one for a few years — we did over a few million in visitation in 2019.

And we were on the path of creating what I like to refer to as the destination. So, a place for guests to stay. A place for them to play when they’re not participating in events…

And, continuing to grow some of the other verticals that we were planning on being in, but accelerated. So the pandemic allowed us a chance to focus on really creating that virtual environment and getting it up and running. Or I should say, progressing the technology to a place where we could launch it this year.

The same goes for our media division. We had the opportunity to advance some of the media projects that we were focused on. While we were pacing them with the development of assets, I think the pause in the development cycle, the event cycle, and the physical on-campus work that we were doing allowed us to really divert resources to be more focused on those environments as well.

The good news for us if there is good news was, we hadn’t built the assets yet for phase two.

You know, we were in the process of going public, to have access to equity which was what was needed to finalize the capital stack with the lending environment that we were going to be in. And we had to put a pause on that, so we didn’t have assets that we had to shut down. We simply moved out the construction timeline, and now we have restarted that. We were still very successful in launching the company, raising over $100 million in new equity.

We had the chance to re-plan, if you will, or reconfigure our plan, phase that plan, and create a strategy that I think has proven us right. The original plan when I came in was to build a lot of things all at the same time, and we changed that to build pieces, and react to guest demand and trend.

And who knew that a pandemic was going to hit, giving us a chance to really think about that phasing. But now we’re full steam ahead. We’ve cleared the site, we’re doing infrastructure work, we have an asset on campus that should be complete at the end of Q3, our Constellation Center for Excellence… The pandemic allowed us to acquire a hotel asset for a very reasonable price. We renovated that asset, and we had a soft opening in November of last year. So, that’s generating revenue for us now.

For us it was [a chance to] take a step back, really recalibrate our physical planning. Focus on the virtual and media verticals and really be pragmatic about the investments that we were going to put forward.

I think we’ve done that very successfully and investors found that story to be very compelling. In the meantime, it also allowed us the chance to focus on partnerships and sponsorships, and so we’ve signed several of those. And we continue to do that.

And so, I feel good about where we’re at as a company, although we had to take that pause and watch in the middle of that pandemic.

InvestorPlace: Do you see the company needing to tap equity markets again for growth financing or additional capital raises on on the horizon? And what does the cash flow situation look like presently for Hall of Fame?

Crawford: The reality is we were always striving to have about $100 million of equity come into the company. When we went public, it was July of last year. The markets were in turmoil when we merged with Gordon Pointe Acquisition and all we were able to retain in that SPAC was a little over $30 million.

We had to go back out to the equity markets a few more times to finish the raise that we needed. We’re now finalizing the debt in the capital stack. There are different tranches of that. There’s public financing that we’re focused on obtaining. Of course there’s traditional construction lending. And right now, we’re in a very good position in terms of the equity and the assets and the value of the assets in the company to obtain the lending that we need.

Our plan isn’t to go back to the equity markets. You never say never. Not in the near term anyways, for future phases. Certainly that would probably be the case. But we feel like we are in a place where we are really pushing forward with the plan that we had. And, as I said, we were able to achieve the equity that we feel like we need.

InvestorPlace: What is the plan to get earnings in the black, and what your timeline is on being profitable?

Crawford: I said this on our last earnings call — I always think about losses probably not the way that everyone thinks about them. But when you’re building, you’re investing. And so you’ve got to build the assets before you can generate revenue from the assets. And so we’re augmenting. … We’re augmenting the revenue streams by opening a hotel, by restarting the event engine with concerts and football programming, and youth programming sponsorship revenue. And then getting into those other verticals, such as selling media content that no one else has access to, creating that content that people will want to distribute, like the deal we signed with Elite Team Holdings, telling the story of the 10 men that have won a Heisman Trophy and also been inducted into the Pro Football Hall of Fame. …

InvestorPlace: Your press release on March 23 highlighted a partnership with Dolphin Entertainment to move into the NFT space. Why NFTs? And how do you feel these complement Hall of Fame’s business model?

Crawford: When you have access to content that is unique and original, you can create different experiences for fans and guests to enjoy or partake of. NFTs have been around for multiple years, they just started to become more popular over the last several months because… as technology evolves, it allows people to have access to things that before were a little bit more difficult, and so the only way a business really takes off is when it becomes mainstream. …

[Dolphin Entertainment] brought to the table an opportunity for us to match our ability to create content, or provide access to content with creatives, that could could help bring it to life. And then the opportunity for them to pair their skill set in marketing and advertising to really create awareness around these, so it seemed like a very natural partnership for us to step into that.

InvestorPlace: There was a lot of excitement around the NFT announcement, with the potential for an NFL partnership. And that’s been something that I think investors were looking for. So, is that something that you can comment on?

Crawford: Yeah, I mean right now we’re focusing on the IP, and the content that we have at our disposal. We have 50 million pieces of unique content that no one else actually has. The history of the game. Draft cards of players like Tom Brady. I mean, these are things that won’t be seen by the masses, and certainly won’t have an opportunity to be owned or or re-digitized in a way that someone can enjoy and experience them. We’re not going to sell Tom Brady’s draft card of course, but the ability to replicate that in a digital way [is intriguing].

And we haven’t done that, so please don’t take me out of context here — I’m just giving an example. Those are things that we felt like we had the opportunity to really create value for our guests and for our fans. The Hall of Famers themselves, their stories, I mean these were the greatest. They made the game, the they made the NFL. So the Hall of Famers are, we think, certainly very compelling subject matter material.

… The NFL has not approached us to be a partner with them. But we [operate] in a way that really takes care of those players that have played the game for the NFL. So I feel like we’re an extension of the game, and the league, today, by what we’re able to do with those partnerships with the Pro Football Hall of Fame and the NFL Alumni Association.

InvestorPlace: Let’s touch on the big announcement about the Hall of Fame League. Are there any additional announcements coming on this front?

Crawford: Well, I think what we did was we announced the partnership with Dolphin, just to say, hey, we’re going to be in this space with the content that we have, and this is a great marriage for Dolphin and for Hall of Fame Resort and Entertainment company.

We followed though with the announcement around who the first NFTs would be. Tim Brown, Earl Campbell and Doak Walker are the NFTs that we’re now working on that we will have on sale in the very near term.

We have artists that are out there doing some really cool things with those three gentlemen. But those are the first three names we’ve announced. The pipeline is continuing to be filled with others.

It’s not our intention to announce every name that we sign in every NFT. That’s why we have Dolphin in their space, and the platform that these will go for sale on will certainly play a big part of how we bring to life the opportunity for fans to purchase these kinds of experiences.

I think there’s two very different kinds of experiences in the NFT world. There is that one-of-a-kind original art, that can be created around the player or around a piece of memorabilia, or artifact or something that depicts a great moment in the game.

And then there is the collectible series. If you look at NBA Top Shot, it’s effectively what, when I was growing up, the static trading card. You got five of one and you traded two of those for another one, and so on. I mean, it’s really a cool thing, and something that I find very fascinating, in terms of how people are collecting them [and] how people are reselling them.

We’re creating a very unique version of that trading opportunity as well. And so, our goal is to bring these to life. You don’t want to simply just create something for the ultra-high-end consumer. You want to create something that allows for all fans to engage and to own a piece of that type of digital memorabilia. So that’s our goal.

InvestorPlace: For investors interested in Hall of Fame, what is one thing you would want them to take away from this interview, in terms of what the company is all about and what you’re excited about right now?

Crawford: Well, I think it’s very simple. We’ve shown through an incredibly difficult time that we have a team that can win. That we have a team that has the ability to produce results.

Opening a hotel, signing media deals, launching a fantasy league, assets are now underway and starting to be built. These are not easy things to do in the middle of a global health pandemic. Yet we have been nimble, we’ve been creative.

I think our guests, our investors and our fans have understood our story to be one that allows us to create unique content out of the access to brand partnerships and intellectual property that no one else has access to. And so I feel very confident that as we continue to emerge out of the pandemic, and as the team and the company continues to perform, we will offer great value to our shareholders and, just as important, will create great experiences and great content for our guests and fans to enjoy.

You know we’ve been quoted as saying the “Disneyland for football.” I don’t know that we’re the “Disneyland” but I would say that I think we have a model that mirrors a Disney Company, in that, synergistically, we can drive great value from one vertical to another with the business initiatives that we’ve undertaken.

NFTs are just a small example of how nimble we can be in taking our content and creating new assets for sale. And then leveraging those in ways where you could have unique experiences to Hall of Famers, or you could have opportunities to, in our fantasy league, create unique NFTs around that business vertical as well. Synergy is a great thing and we have that chance with our business verticals. That’s part of how we think about our strategy every time we create new business.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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