Hall of Fame Village work continues, company hopes to resolve Johnson Controls dispute

CANTON – The name "Hall of Fame Village powered by Johnson Controls" remains, but how long it will be used is in question.

Johnson Controls wants out of a multimillion-dollar naming rights and technology service agreement with Hall of Fame Resort & Entertainment Co., developer of the Hall of Fame Village project.

Hall of Fame Resort officials hope to resolve the dispute, but until that happens the name will stay in place. The naming rights agreement outlines a process for resolving conflicts.

The naming rights agreement generates revenue for Hall of Fame Resort. According to filings with the U.S. Securities and Exchange Commission, the company has received payments in the past, and was due to receive $4.75 million this year.

More: Johnson Controls claims deals breached, seeks to end Hall of Fame Village relationship

So far, Johnson Controls has declined to make a payment and Hall of Fame Resort hasn't recorded the revenue.

The two companies reached the naming rights agreement the same week Hall of Fame Resort formed in July 2020. The deal gave Johnson Controls recognition by aligning the company with professional football and the Pro Football Hall of Fame.

Meanwhile, a "technology as a service" agreement was signed in October 2020. It had Hall of Fame Resort buying equipment and services from Johnson Controls.

The July 2020 agreement replaced an original deal signed in November 2016, and gave Johnson Controls naming rights until 2034. It also promised $99 million to secure those rights.

A quarterly report filed last week by Hall of Fame Resort and covering the 2022 first quarter indicates a total of just over $66 million still was due on the naming rights agreement.

Hall of Fame Resort, Johnson Controls saying very little

The dispute appears to be several months old, based on details in SEC reports filed by Hall of Fame Resort.

Johnson Controls officials responded to questions about the dispute with a two-sentence email: "Johnson Controls has decided to discontinue its sponsorship of the Hall of Fame Village. We wish the Hall of Fame Village team success as they continue their efforts to create a premier tourism destination."

Meanwhile, Hall of Fame Resort officials can't comment on a pending legal matter, said Anne Graffice, executive vice president for public affairs.

Hall of Fame Resort said in an SEC filing that it wants to pursue dispute resolution concerning the naming rights and technology agreements. According to the agreement, after 30 days of negotiations, the matter can be referred to a mediator. If there is no resolution within 60 days, it can be moved to binding arbitration.

HOF Resort CEO and President Michael Crawford comments

In a television interview this week with WKYC in Cleveland, Michael Crawford, president and chief executive officer at Hall of Fame Resort, cited the mediation process and said the two companies are working to resolve the dispute.

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Crawford said it was unfair to speculate on why Johnson Controls wants to end the agreements. He added, however, that Johnson Controls expressed disappointment about delays with the Hall of Fame Village project.

Construction at the site has been ongoing since late 2020, with work progressing on several structures.

"We continue to buy their product and services," Crawford said in the television interview, referring to Johnson Controls products.

Crawford noted in the interview that Johnson Controls has no ownership in Hall of Fame Village, nor does it own stock in the company.

Johnson Controls was one of 30 companies that have sponsorship agreements tied to the Hall of Fame Village development, Crawford said.

Johnson Controls involved since 2016

Discussions to develop Hall of Fame Village as a multi-use campus around the Pro Football Hall of Fame became public in 2014.

Johnson Controls has been involved with the development since November 2016 when the company, with U.S. operations headquartered in Milwaukee, entered the naming rights agreement with the Pro Football Hall of Fame Village and Industrial Realty Group, which was managing the development.

The initial plan called for Johnson Controls to help develop the village as a smart city, using the international company's technical skills for building construction of fire suppression, heat ventilation and air conditioning, and security equipment.

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When Hall of Fame Resort formed in 2020 and took over development of the village, it entered new naming rights and technology service agreements with Johnson Controls.

The naming rights agreement reduced Johnson Controls investment to $99 million from an original $135 million. The change was made "out of respect for the fact that what had been promised to be built hadn't been built yet," Crawford said in the television interview.

The naming rights agreement allowed Johnson Controls to terminate its relationship if Hall of Fame Village failed to show before Oct. 31, 2021 that it had secured sufficient funding to complete the second phase of the project. Johnson Controls also could terminate if the second phase wasn't operating by Jan. 2, 2024.

The deal set a $4.75 million penalty — based on when the agreement terminated — that Hall of Fame Resort would pay to Johnson Controls.

Johnson Controls hasn't said why it wants to end the relationship.

Crawford said he believes Hall of Fame Resort has held up its end of the agreements. "From our perspective we have not had a breach," he said.

Buildings going up

After a series of delays, construction has been steady since Hall of Fame Resort took over the project.

The company finished the work at Tom Benson Hall of Fame Stadium and built the Constellation Center for Excellence. A retail area called the fan engagement zone and the 100,000-square-foot center for performance are under construction and scheduled to open later this year.

Infrastructure and land preparation work is underway for a 180-room hotel, an indoor water park and the Play-Action Plaza, which will feature a ferris wheel and "Soaring Football Zipline."

Even with construction underway, Hall of Fame Resort acknowledged last week in its quarterly report that "there can be no assurance" that all of the structures in the second phase will be open for business on Jan. 2, 2024.

Dispute hurt first quarter results

According to SEC filings, Johnson Controls hasn't made a payment for 2022. Because there has been no payment, Hall of Fame Resort noted in its earnings report that it didn't receive $937,500 for the first quarter.

That reduced the company's revenue from sponsorships. Hall of Fame Resort reported $819,290 in revenue from sponsorships during the first quarter ended March 31, which was less than the $1.475 million reported in the 2021 first quarter.

Hall of Fame Resort ended its first quarter with a loss of $8.11 million compared with a 2021 first quarter loss of $126.1 million.

This article originally appeared on The Repository: Hall of Fame Resort construction continues despite naming rights fight