Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

Note 11: Leases

The Company has entered into operating leases as the lessee primarily for ground leases under its stadium, sports complex, and parking facilities.

At the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to January 1, 2022, which were accounted for under ASC 840, were not reassessed for classification.

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases and is subsequently presented at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The lease term for all of the Company’s leases includes the noncancelable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed periodically for impairment.

Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the shorter of the lease term or its useful life and interest expense determined on an amortized cost basis, with the lease payments allocated between a reduction of the lease liability and interest expense. 

The Company’s operating leases are comprised primarily of ground leases and equipment leases. Balance sheet information related to our leases is presented below:

	September 30,		December 31,
	2023		2022
Operating leases:
Right-of-use assets	$	7,423,884	$	7,562,048
Lease liability		3,425,314		3,413,210

Other information related to leases is presented below:

	Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
Operating lease cost	$	389,330		$	386,279
Other information:
Operating cash flows from operating leases		240,234			238,723
Weighted-average remaining lease term – operating leases (in years)		90.9			91.8
Weighted-average discount rate – operating leases		10.0	%		10.0	%

As of September 30, 2023, the annual minimum lease payments of our operating lease liabilities were as follows:

For The Years Ending December 31,
2023 (three months)	$	78,063
2024		311,900
2025		311,900
2026		311,900
2027		311,900
Thereafter		41,125,000
Total future minimum lease payments, undiscounted		42,450,663
Less: imputed interest		(39,025,349	)
Present value of future minimum lease payments	$	3,425,314

Lessor Commitments

As of September 30, 2023, the Company’s Constellation Center for Excellence and retail facilities were partially leased including leases by the Company’s subsidiaries.

Property and equipment currently under lease consists of the following:

	September 30, 2023			December 31, 2022
Land	$	5,067,746		$	5,141,008
Land improvements		189,270			185,995
Building and improvements		70,401,795			52,420,168
Equipment		2,797,189			672,733
Property and equipment, gross		78,456,000			58,419,904
Less: accumulated depreciation		(4,180,753	)		(1,983,382	)
Property and equipment, net	$	74,275,247		$	56,436,522

Lease revenue is included in “Event, rents and other revenues” in the condensed consolidated statements of operations. During the three months ended September 30, 2023 and 2022, the Company recorded $372,015 and $6,200 of lease revenue, respectively and for the nine months ended September 30, 2023 and 2022, the Company recorded $549,166 and $14,318 of lease revenue, respectively. The future minimum lease commitments under these leases, excluding leases of the Company’s subsidiaries, are as follows:

Year ending December 31:
2023 (three months)	$	187,583
2024		845,226
2025		830,044
2026		834,633
2027		822,605
Thereafter		3,360,817
Total	$	6,880,908