Hall of Fame Village earnings call: Johnson Controls dispute settled, water park delayed
CANTON − An arbitration panel ruled that the Hall of Fame Village did not default on its technology service and naming rights agreements with Johnson Controls and awarded the Village $2.87 million.
"However, all of that award goes to cover the fees and the costs of the arbitration," John Van Buiten, the Village's vice president of accounting and corporate controller, said during Thursday's earnings call.
In 2022, Johnson Controls claimed the Village was behind on the payments established in a "technology as a service" agreement and sought $4.75 million from HOF Village Newo, a subsidiary of the Hall of Fame Resort & Entertainment Co. After failed mediation, the companies began the arbitration process last year.
Michael Crawford, president and CEO of the Hall of Fame Resort & Entertainment Co., said the technology deal was for Johnson Controls to service equipment that the Village would have purchased from the company. The arbitration ruling saves the Village more than $200 million in obligations from the multi-year deal.
"It freed up a lot of costs that we had to be committed to, and we can go out and have those services performed for us at a much cheaper rate," he said. "And so, I was very excited about that because it's going to save the company a great deal of money over time."
The outcome ended both agreements with Johnson Controls, and Crawford said the Village would not seek any further relationship with the global technology and energy solutions company. Johnson Controls, which has a North American headquarters in Milwaukee, provides building management systems, such as HVAC and security equipment.
"We are now looking for different sponsors that fill some of the same categories that they fill, in terms of equipment and technology. We're doing that already," Crawford said, adding that he couldn't elaborate at this time.
Trent Perrotto, vice president of external communications for Johnson Controls, said the company was pleased that the process ended its sponsorship of the Village.
"We wish the Hall of Fame Village team success as they continue their efforts to create a premier tourism destination," he said in an emailed statement.
The initial partnership was announced in 2016 by former Pro Football Hall of Fame President David Baker. The initial agreements were replaced in 2020 after the formation of the publicly traded Hall of Fame Resort & Entertainment Co.
The new sponsorship agreement gave Johnson Controls naming rights until 2034 in exchange for $99 million, a reduction from the original $135 million. The company also was the presenting sponsor for the annual Pro Football Hall of Fame Enshrinement Week.
“With the termination of the JCI (Johnson Controls) agreement, the Pro Football Hall of Fame is looking at its sponsorship options,” Rich Desrosiers, chief communications and content officer for the Hall, said in a prepared statement.
Hall of Fame Resort reports fourth-quarter revenue
The Hall of Fame Resort & Entertainment Co. reported fourth-quarter revenue of $6.1 million ― a 101% increase over the same period last year. The increase was attributed to event and rental revenue.
Revenue also increased 51% year-over-year to $24.1 million last year, as the result of DoubleTree by Hilton revenue in addition to events and rental revenue.
However, the Village still operated at a net loss of $20.2 million in the fourth quarter of last year, compared to an $18.5 million net loss in the fourth quarter of 2022. The company reported a net loss of $69.7 million last year, compared to $46.9 million the year prior, and attributed that to increased interest and operating expenses.
"In all honesty, this was our first full year of operation," Crawford told investors. "It's the first full year that we've had our Fan Engagement Zone, our Play Action Plaza, our Center for Performance, all of the different assets here, fully functional."
Key highlights of Hall of Fame Resort earnings call
Some areas of the Village, such as the Gameday Bay water park and Hilton Tapestry hotel, still are "not even 100%" yet, Crawford said. He said construction on the water park has not stopped but has slowed because of the time it's taking to finalize the "capital stack." The estimated opening has been pushed back to at least early 2025.
"Amazingly enough, we hit our 2024 attendance targets in 2023," Crawford said. The Village welcomed more than 3.1 million visitors, a number tracked with cellphone data. He credited the "organic growth" of Village attractions and on-campus events and programs.
The outlook for this year includes projected revenue of $27 million to $30 million because of increased programming and efficiencies. "The company is intensely focused on expense management and staying lean where possible, while at the same time balancing the need to invest in order to support our continued growth," Van Buiten said.
Crawford said this year's priorities include growing attendance to the range of 3.5 million to 3.7 million, launching a campus-wide operating system and restructuring the Village's "balance sheet." He said most but not all of the company's debt is "very good, long-term debt." The Village has taken advantage of debt extensions. "But the primary goal is to restructure the balance sheet to have more equity in the company and then also the debt restructuring to make it longer-term and more user-friendly for an early-stage company," Crawford said.
In his closing remarks, Crawford said the Village's goal remains the same ― to create the best experiences for guests. "And we look forward to a great 2024," he said. "Even though we've had some delays, I think 2024 is going to be an exceptional year for us."
Reach Kelly at 330-580-8323 or kelly.byer@cantonrep.comOn X: @kbyerREP
This article originally appeared on The Repository: Hall of Fame Village, Johnson Controls dispute settled
