Venu CEO Details $1.5B Venue Pipeline and Funding Plans in Fireside Chat

Key Points

• Venu says it has a $1.5B-$1.6B development pipeline across five markets, with the first venue in Broken Arrow, Oklahoma nearing completion and McKinney, Texas slated to follow as a 20,000-seat year-round venue.
• The company’s venues are designed to go beyond traditional amphitheaters, with multi-season, multi-configurational programming that is expected to be split roughly 50/50 between music and other content like comedy, movies and theater.
• Venu is funding projects through public-private partnerships, suite sales and C-PACE debt, and CEO J.W. Roth said the company expects to close $150 million in C-PACE financing within weeks while aiming to avoid further equity dilution.

Venu NYSEAMERICAN: VENU Founder, Chairman and Chief Executive Officer J.W. Roth outlined the company’s venue development strategy, financing plans and project pipeline during a RedChip Companies investor event, describing Venu as a builder of next-generation live entertainment venues designed to operate beyond the traditional amphitheater model.

Roth said the company is focused on what he described as a supply-and-demand imbalance in live music, with fan demand and artist supply at record levels while many U.S. music venues remain outdated. He said the average music venue in the United States is 41 years old and was built before current consumer expectations around food and beverage, transportation and premium experiences.

“In the world that I live in, supply and demand meet each other at the venue,” Roth said. “That’s where artists meet fans, and that’s where fans meet artists.”

Venu Plans Multi-Use Venues Across Several Markets

Roth said Venu currently has approximately $1.5 billion to $1.6 billion of construction underway across five markets. The first venue expected to open is in Broken Arrow, Oklahoma, in the Tulsa market, which Roth said is about 90 days from completion and will have 12,500 seats. He said the venue is expected to generate about $25 million in annual EBITDA once stabilized.

The next planned opening is in McKinney, Texas, in the Dallas-Fort Worth market, about 150 days later. Roth described that project as “the largest fully seated music venue in the world,” with 20,000 seats and year-round operations. Additional venues are planned in El Paso, Houston and Chattanooga, with Roth saying the company expects a new venue to open roughly every 180 days after McKinney.

Roth said Venu’s venues differ from traditional amphitheaters because they are designed to be multi-seasonal, multi-configurational and “omni-content.” He said about half of the programming is expected to be music, while the other half could include movies, theater, comedy, documentaries and other content similar to experiences offered at Sphere-type venues.

For McKinney, Roth said the company expects approximately 50 to 60 music events annually, with about half being traditional routed tours and the remainder lower-capacity or off-season events. He said non-music content would represent about 50% of overall programming.

Financing Model Includes Public-Private Partnerships and Suite Sales

Roth said Venu’s financing strategy relies on public-private partnerships, fractional ownership of premium suites and debt financing rather than traditional equity raises. He said Venu has assembled five public-private partnerships over the past three years that represent about $10 billion in economic value and fund about 40% of the infrastructure and project buildout costs.

According to Roth, the municipal agreements generally include contributed land, tax abatements or rebates and cash contributions for site work, utilities and road improvements. He said municipalities are attracted to the projects because of expected economic impact, including hotel, restaurant and other development around the venues.

Roth also discussed the company’s Fire Pit Suites, which he compared to condominiums in a luxury hotel. He said the company sells the suites and leases them back, using the proceeds to offset construction costs. In Colorado Springs, Roth said Venu sold all 132 Fire Pit Suites at the Ford Amphitheater over 22 weeks. Across current projects, he said the company recently crossed $250 million in sales and is selling close to $1 million per day on a 20-day month basis.

For a typical 12,500-seat venue, Roth said Fire Pit Suite sales are expected to generate about $150 million, compared with an all-in construction cost of about $175 million. He said Venu expects to add about $50 million in C-PACE financing for each such project, resulting in what he described as a $25 million development profit.

CEO Says C-PACE Financing Expected Within Weeks

In response to an investor question, Roth said the company expects to close on $150 million of C-PACE financing within the next six weeks. He said the remaining condition is a final appraisal for Broken Arrow, expected shortly, followed by a McKinney appraisal roughly four weeks later.

Roth said C-PACE financing is expected to represent roughly 35% of total project value based on appraisals, and he said the company believes it is “significantly under that number.” He said the financing is expected to cover remaining construction costs for Broken Arrow and McKinney through opening.

Roth said management is seeking to avoid additional equity offerings, though he did not rule them out entirely. He said Venu has 102 million fully diluted shares, including 58 million issued and outstanding, with the balance in warrants and options at an average exercise price of about $5.30. Roth said exercise of those securities would generate about $140 million of additional cash for the company.

Pipeline Includes More Than 40 Municipalities

Roth said Venu has about 40 to 41 markets in its pipeline through its work with Ryan LLC and expects to add two to three markets per year as they move through entitlement. He said the company can build approximately three venues annually and expects to announce five more markets this year, though not all would necessarily be built.

“The bench is deep,” Roth said, adding that of roughly 40 municipalities in the pipeline, about 20 are likely to be built.

Roth said the company’s operational model is built around partnerships with major venue operators and promoters, including Live Nation, AEG, LiveCo, Opry and Peachtree. He said Venu seeks to operate primarily as a landlord while using participatory leases that provide base rent and a share of profits, while retaining sponsorship and naming rights revenue.

Roth said the Ford Amphitheater in Colorado Springs was built as a proof of concept for the company’s Fire Pit Suite model, premium offerings and naming rights strategy, rather than as a test of the company’s newer multi-seasonal and multi-configurational model.

Addressing risks, Roth said construction cost inflation was an early concern, but said the company has moved to guaranteed maximum price contracts. He also identified content as an ongoing risk in the venue business and said partnerships with established promoters are intended to reduce that risk.

Roth repeatedly said he believes the company is undervalued relative to its assets and stated that he has been buying Venu shares. Those comments were made in the context of an investor presentation and included forward-looking statements about future openings, financing, EBITDA and asset values.

About Venu (NYSEAMERICAN:VENU)

Venu Holding Corporation is a premier hospitality and live music company dedicated to crafting luxury, experience-driven entertainment destinations. Venu Holding Corporation is based in COLORADO SPRINGS, Colo.

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