Item 1. Business
Item
1. Business
Overview
of Venu’s Business
Business
Overview
Venu
is an entertainment and hospitality holding company based in Colorado Springs, Colorado that designs, develops, owns, and operates (whether
directly or through third-party operators) up-scale music venues, outdoor amphitheaters, and full-service restaurants and bars where
music, dining, and luxury experiences converge. Venu was founded in 2017. Since its inception, Venu has strived to set a new standard
in the hospitality and entertainment industry through its entertainment-campus venue concept and to meet the growing demand for live
entertainment by developing new venues in strategically selected, rapid-growth, entertainment-underserved markets. Venu takes pride in
being a catalyst for memorable experiences, a champion of local entertainment, and a contributor to vibrant communities.
To
date, Venu has developed, or is in the process of developing, three restaurant concepts and one bar concept, as well as live music
indoor venues that accommodate approximately 1,400 guests and outdoor amphitheaters that accommodate 8,000 or more guests.
Currently, Venu operates indoor venues and restaurants in Colorado and Georgia, but it is in varying levels of planning or
development to open venues in Oklahoma and Texas, with the Sunset at Broken Arrow expected to open in late 2025 or early 2026, and other
locations in 2026. Venu forecasts meaningful economic and cultural impacts in communities targeted for expansion across the United
States.
Venu
is a growing entertainment and hospitality company. Venu attributes its growth capabilities, in part, to its key partnerships with leaders
in the music and entertainment industries, its experienced management team with prior success in hospitality and entertainment, and its
strategic public-private partnerships that support ongoing economic growth. Venu believes that its venues offer patrons memorable experiences
through a variety of music acts, high-end venues, desired food menu options, and exceptional hospitality. Venu is exploring business-expansion
opportunities to meet the growing demand for live entertainment and touring acts by artists and fans alike.
Venu
believes that its strategic development of venues in rapid-growth areas, experience in building partnerships with local governments and
managing the elevated regulatory standards associated with public-private projects, and ability to negotiate naming and sponsorship rights
with ubiquitous brands make it a highly sought-after entertainment and hospitality company by municipalities across the United States.
Venu’s
principal executive office is located at 1755 Telstar Drive, Suite 501, Colorado Springs, Colorado 80920. (telephone: 719-895-5483).
Venu’s principal website is https://venu.live. Information contained on, or accessible through, Venu’s website is
not a part of this Annual Report.
Corporate
History
Venu
was originally formed in Colorado on March 13, 2017, as Bourbon Brothers Restaurants, LLC, a Colorado limited liability company. On April
6, 2022, the Company converted to a corporation. On September 6, 2024, Venu adopted Amended and Restated Articles of Incorporation to,
among other things, change its legal name to “Venu Holding Corporation”.
After
opening its first restaurant in Colorado Springs, Colorado in 2017 followed by its first indoor music hall venue adjacent to the restaurant
in 2019, Venu expanded to Georgia, where it opened its second restaurant and indoor music venue in Gainesville, Georgia in June 2023.
Venu is now in the process of expanding to markets in Oklahoma and Texas. Venu opened its first amphitheater, the Ford Amphitheater,
in Colorado, in August 2024.
Overview
of Venu’s Venues
Venu
currently has two music venue concepts: (1) an indoor, more intimate music hall venue known as Bourbon Brothers Presents
(“ BBP ”), which currently operate under the names of Phil Long Music Hall at Bourbon Brothers with respect to the
Colorado venue and The Hall at Bourbon Brothers or Boot Barn Hall with respect to the Georgia venue in accordance with the naming
rights of the BBP venues; and (2) an outdoor amphitheater venue known as The Sunset Amphitheater, which are intended to offer
higher-end amenity options to patrons that will vary depending on location, but will generally include offerings such as firepit
suites, VIP suites, and access to an adjoining restaurant and/or rooftop bar. Venu has operated a BBP in Colorado Springs, Colorado
(“ BBP CO ”) since 2019 and in Gainesville, Georgia (“ BBP GA ”) since June 2023. Venu’s
debut outdoor Sunset Amphitheater venue opened in Colorado Springs, Colorado, in August 2024, which is called Ford Amphitheater
pursuant to a naming-rights agreement (“ Ford Amphitheater ”). From time to time Venu may also explore other music, restaurant and entertainment venue concepts.
Venu
currently has three restaurant concepts: (1) a flagship, full-service restaurant concept known as Bourbon Brothers Smokehouse &
Tavern (“ BBST ”); (2) an upscale, five-star, fine-dining restaurant concept known as Roth’s Seafood &
Chophouse (“ Roth’s ”); and (3) a full-service restaurant featuring live music called Notes Eatery
(“ Notes Eatery ”). Venu opened a BBST in Colorado Springs, Colorado (“ BBST CO ”) in 2017 and in
Gainesville, Georgia (“ BBST GA ”) simultaneously with its BBP GA indoor music hall in June 2023. Venu expects to
open Roth’s adjacent to Ford Amphitheater in summer 2025 for exterior concert seating and in fall 2025 for restaurant
operations.
Venu
expanded its live-music and entertainment footprint in Colorado Springs in September 2022 when it opened “Notes” bar-restaurant,
which featured upscale bar fare and dive-bar specials, before expanding to the full restaurant “Notes Eatery” in May 2024.
Venu
has one bar concept, which is an elevated, craft-cocktail bar experience called Brohan’s (“ Brohan’s ”).
Brohan’s is anticipated to open in fall 2025 and will operate on the rooftop of Roth’s overlooking the Ford Amphitheater.
6
Lastly,
Venu has a hospitality suite concept called Notes Hospitality Collection (“ NHC ”), which consists of hospitality suites
intended to be used for hosting large events such as corporate conferences, weddings, expos, galas, trade shows, and conventions. Venu’s
first NHC development is expected to open in fall 2025 as part of the mixed-use development where Roth’s and Brohan’s will
operate adjacent to the Ford Amphitheater. NHC will consist of two premier, configurable hospitality spaces framing either side of Roth’s
to be used for hosting corporate events, weddings, trade shows, conventions, and other events.
Venu
typically constructs and operates its music, restaurant, and bar venues concurrently and in close proximity to one another, creating
an entertainment campus that enhances guests’ dining, social, and live-entertainment experiences.
Venu’s
Mission and Strategy
Venu’s
mission is to revolutionize entertainment and hospitality by offering dynamic entertainment campuses where music, dining, and luxury
converge. Venu carries out its mission by leveraging its:
●
exclusive collection of premium restaurants and luxury
venue properties, designed to enhance the customer experience through thoughtfully designed spaces and a spectrum of ticket and menu
offerings that accommodate the needs and desires of a wide range of customers, whether their priority is to enjoy an outing that
maximizes both fun and affordability or to be treated to a decadent, VIP type of experience;
●
management team with years of experience and prior
success in hospitality and entertainment, venue and infrastructure development, and venue and restaurant management;
●
operational and brand partnerships with well-known
industry leaders that create brand recognition for Venu’s venues and enable them to be operated efficiently and effectively
to provide a seamless experience for customers while maximizing the returns of shareholders;
●
institutional knowledge of the entertainment landscape,
insight regarding which artists and entertainers drive audience engagement, and strong industry relationships that make it possible
to route those acts to Venu venues;
●
community ties and relationship leads in the markets
that Venu focuses its development efforts in, which enhances its capital-raising efforts and advances its ability to deliver the
types and genres of entertainment that complement the desires and demographic of the community being served;
●
optimization of the functionality and use of its venues,
which can be rented for both personal and corporate events with a range of seating capacities and spaces that can accommodate intimate
gatherings or large, table-top events for 500-700 seated guests;
●
financing and acquisition strategy that catalyzes growth
while minimizing future dilution, as discussed in more detail under “ Financing and Acquisition Strategy ” below;
and
●
strict criteria for evaluating business-expansion opportunities
and ensuring that any new markets for its venues meet specific demographic profiles, are undersaturated with entertainment options,
and have local governments that recognize the value of investing in an entertainment campus to drive local economic growth and to
build community culture, as discussed in more detail under “ Financing and Acquisition Strategy .”
Financing
and Acquisition Strategy
A
key factor to Venu’s current and future success is its ability to continue growing through venue and infrastructure development
while attempting to minimize future dilution. The financing and acquisition strategy of Venu and its subsidiaries include three primary
components: (1) partnering with municipalities that attract local development by offering financial incentives; (2) conducting pre-sales
of naming rights, sponsorships, and suite ownership rights at its venues; and (3) accessing attractive debt capital.
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Financial
Partnerships with Municipalities
When
deciding where to develop new venues, Venu focuses on high-growth areas that it believes are materially underserved of premium music
and entertainment options and are located in cities that are willing to partner with, and offer financial incentives to, Venu in exchange
for Venu’s agreement to develop a venue in the partnering city. Often, those financial incentives are made possible through economic-development
funds (“ EDFs ”), which enable local governments to fund projects and programs intended to spur the local economy or
to induce local property development by offering investments such as below-market land sales, land grants, tax abatements and rebates,
and/or property-tax refunds. Venu is experienced in obtaining land for new venue developments by negotiating favorable land-sale contracts
with cities who use EDFs to sell the land to Venu for substantially less than market value in exchange for Venu’s agreement to
develop and operate an entertainment campus on the land, which will in turn drive local economic growth, foster a community-wide culture,
and attract other developments.
As
an example of this strategy, Venu introduced its restaurant and music venue concepts to Gainesville, Georgia in January 2022 by
negotiating a Purchase and Sale Agreement between one of its subsidiaries, GA HIA, LLC (“ GA HIA ”), and the
Gainesville Redevelopment Authority (the “ GRA ”), pursuant to which the GRA agreed to sell approximately 1.7 acres
of land to GA HIA for $800,000 to incentivize the development of the BBST GA restaurant and the BBP GA music hall that Venu opened
on the property approximately 18 months later in June 2023. The GRA viewed its public-private partnership with GA HIA as an
opportunity to induce and stimulate redevelopment and investment in one of Gainesville’s tax-allocation districts that was in
need of improvement. Similarly, in April 2024, Venu and the City of El Paso, Texas (“ El Paso ”) agreed to a term
sheet defining the terms of the proposed definitive Chapter 380 Economic Development Program Agreement and Contract of Sale to be
entered into between the parties, pursuant to which El Paso intends to incentivize Venu’s construction of a 12,500-person
amphitheater by conveying approximately 17 acres of city-owned land to Venu, issuing Venu an eight-year, no-interest, forgivable
promissory note, and providing annual rebates to Venu for up to 20 years on real and business personal property, sales and use, and
mixed beverage taxes. Through its agreements with the Cities of Gainesville, Georgia and El Paso, Texas, Venu has negotiated more
than $2.0 million in tax incentives through property-tax rebates and sales-tax abatements that will flow through to the bottom line
over the term of the rebates via reduced occupancy expenses. As Venu plans and implements its Texas and Oklahoma expansion, it has
entered into public-private partnerships and incentive packages for the McKinney, Texas and Broken Arrow, Oklahoma markets as
described in this Annual Report. See “Business – Public-Private Partnership Obligations.”
While
Venu’s public-private partnerships with local municipalities enable Venu to acquire land on terms more favorable than Venu could
likely negotiate in open-market sales, or to obtain other financial incentives that offset Venu’s costs of constructing and operating
new venues, the agreements specifying the terms of Venu’s public-private partnerships with a given municipality also impose certain
conditions, obligations, and covenants (collectively, “ Restrictions ”) that restrict Venu’s ownership, use, and
development of the land it acquires and the venues it constructs and operates. Venu is typically subjected to those Restrictions pursuant
to the Development Agreements that Venu and a local municipality enter into in connection with the purchase and development of the land.
Certain immaterial obligations may also be imposed on Venu under the ancillary agreements to its public-private partnerships, which could
include, for example, parking or facilities-use agreements. The material terms of its public private partnership agreements and the Restrictions
on Venu’s ownership and use of the real property it has acquired through public-private partnerships are described in more detail
under “Subsidiaries and Properties — Public-Private Partnership Obligations” below. For a review of the material risks
Venu faces as a result of the Restrictions Venu and in connection with its public-private partnerships, see the section of this Annual
Report
entitled “Risk Factors — The agreements specifying the terms of Venu’s public-private partnerships with local municipalities
impose various conditions, obligations, restrictions, and covenants related to Venu’s ownership, use, development, and operation
of the properties it acquires and the venues it constructs ”.
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Pre-Sales
of Naming Rights, Sponsorships, and Suite Ownership
The
second component of Venu’s financing and acquisition strategy consists of pre-selling the naming rights to its venues and
generating capital that can be used to finance development-related costs. The cost of naming rights for each of Venu’s venues
range from approximately $100,000 per year for an indoor concert venue such as Bourbon Brothers Presents music hall to up to
$2,000,000 per year for a large outdoor amphitheater like The Sunset Amphitheater that Venu anticipates opening in McKinney, Texas
in 2026. Venu’s first naming-rights sponsor was Boot Barn (NYSE: BOOT), which agreed to acquire the naming rights for a
three-year term to Venu’s first indoor music venue in Colorado Springs, BBP CO, prior to its opening in 2019 along with the
naming rights of Venu’s next two BBP venues. Since the initial agreement, Boot Barn extended its agreement for the Colorado
Springs location and acquired the naming rights to the Georgia location. On July 31, 2024, Phil Long Dealerships, Inc. purchased the naming rights to BBP CO pursuant to an Agreement for
Naming and Sponsorship Rights. Pursuant to the agreement’s five-year term, BBP CO is called “Phil Long Music Hall at
Bourbon Brothers.”
Sunset
Operations, LLC, a wholly owned subsidiary of Venu, also entered into a naming and sponsorship rights agreement with Mountain States
FDAF, which agreed to acquire the naming rights to Venu’s first outdoor amphitheater in Colorado Springs. During the duration of
the agreement’s ten-year term, the amphitheater will be called “Ford Amphitheater.”
Venu
also enters into product-specific sponsorship agreements.
Certain
of Venu’s subsidiaries also accumulate financing and acquisition capital for the specific assets and properties held by that subsidiary
by selling non-voting membership units, which entitle holders to various in-kind benefits, such as rights to use a firepit suite at a
specific outdoor music amphitheater as well as certain preferential economic rights. The rights associated with the non-voting membership
units are set forth in the applicable subsidiary’s operating agreement, which provides that any distributions of available cash
that is attributable to a defined portion of revenues generated by ticket sales for an event held at a specific venue project will be
distributed to the non-voting members (which include all members except Venu and its subsidiaries), with the excess to be distributed
to the voting member (which is Venu or a wholly-owned subsidiary). At Ford Amphitheater in Colorado Springs, Venu incorporated 90 firepit
suites, which will each accommodate eight VIP guests per show and will be located on the concourse between the stadium-style seating
in front of the stage and the lawn. Prior to breaking ground on Ford Amphitheater, in this manner Venu pre-sold lifetime rights to each
firepit suite, with the proceeds deployed to fund most of the amphitheater’s construction-related expenses. Based on the reception
and success Venu had in its pre-sale and total sellout of the Colorado Springs firepit suites, Venu expects that those subsidiaries that
will own its amphitheater assets will replicate this financing strategy in the markets where there are plans to develop outdoor amphitheaters,
which currently include Broken Arrow, Oklahoma, Oklahoma City, Oklahoma, McKinney, Texas, and El Paso, Texas. Because the development
and market of each amphitheater is unique, pricing for firepit suites will vary depending on venue location.
In
addition to pre-selling the naming rights to its venues, Venu has developed a menu of sponsorship inventory at each BBP location, which
primarily consists of table and show sponsorships. Additionally, Venu may sell “Presenting Show” sponsorships for several
of its promoted shows.
Debt
Financing
The
final component of Venu’s acquisition and financing strategy is accessing attractive debt capital. Based on the land sales that
Venu has previously negotiated with various municipalities, Venu believes it can acquire land inexpensively through continuing to strategically
partner with municipalities. Venu also believes it is equipped to fund portions of its construction expenses using funds generated from
pre-sales of its naming rights, firepit suites, and sponsorships. Those abilities make Venu believe it is uniquely positioned to access
debt on attractive terms to finance any other unfunded construction costs.
Other
In
addition to the financing strategies outlined generally described above Venu’s financing strategy includes other components, such
as continued revenue growth and that certain of its subsidiaries such as GA HIA, LLC, have sold membership interests to third parties
as a component of the financing for the specific real property asset and development they hold, as described further below under “ Venu’s
Subsidiaries and Properties ”. Further, with respect to certain of its real property assets and interests Venu, may from time
to time, elect to hold title to a particular asset through a Delaware Statutory Trust and permit third parties to acquire beneficial
interests in the trust in a tax advantaged manner (such as through “1031 exchanges”) and realize certain tax benefits. Under
such an arrangement a wholly owned subsidiary would serve as the trustee of the trust and control all decisions with respect to the property
(including its potential sale). This structure is similar to a sale-leaseback arrangement in that Venu could in part monetize an otherwise
illiquid asset, yet, retain full control over the asset and have the power and authority to repurchase the applicable property in full
if deemed appropriate under the market conditions and the Company’s liquidity at any given time. For example, the real property
upon which the Ford Amphitheater was constructed, and, is leased to Sunset Amphitheater LLC under a ground lease, conveyed to a Delaware Statutory Trust and is expected that a portion (but in no event all) of the beneficial interests in that trust
will be sold to third parties.
9
Site-Selection
Strategy
Venu
has developed criteria and a disciplined process for expanding its live-music venues and restaurant properties. Venu searches for markets
that meet its strict criteria and in which there are few or no competing entertainment properties. To date, Venu has focused on markets
in warmer weather locations, metro areas that have expanded substantially and where there are few entertainment venues in the outer lying
areas (such as the greater Atlanta, Georgia market), or mid-market metro areas that Venu believes have been overlooked with respect to
live-music entertainment opportunities (such as Tulsa, Oklahoma).
When
evaluating potential markets to expand to and local municipalities to partner with, Venu looks for markets that meet the site-selection
criteria for The Sunset Amphitheater and BBP venues described below:
●
The market is materially underserved of premium, indoor
or outdoor venues for live music and entertainment.
●
The municipality is willing to partner financially
with Venu to attract the type of entertainment amenities that Venu offers and has focused on investments in entertainment districts
as part of its long-term city plans.
●
The demographic profile of the community meets the
age and household-income markers that Venu believes are most conducive to establishing a successful, well-attended music and entertainment
venue.
●
There are sites available that are adjacent to high-traffic-count
roadways with visibility for digital marketing.
●
There are physical locations suitable from a zoning,
sound, parking, and traffic perspective.
●
The location is conducive to Venu’s overall act-routing
strategy.
●
Venu has relationship leads in the market, which drives
financing strategy.
Venu
carries out its site-selection process in three stages:
●
Site Selection. Based on the expansion
criteria above, Venu identifies specific regions that serve as target markets for its venue concepts. Venu works to identify experienced
commercial real estate leads for each market, establishes the specific criteria for expansion, and works alongside those leads to
identify, assess, and negotiate contracts for new locations.
●
Site Acquisition. The site-selection
lead for each market identifies target properties that meet the base criteria. A team led by Venu’s Chief Executive Officer,
JW Roth, engages with the market lead to assess and, if deemed suitable, negotiate a purchase and sale agreement that meets Venu’s
financial framework.
●
Site Development. Once the purchase and
sale agreement is complete, Venu’s real estate development team manages entitlement, closing, finalizing municipal financial
incentives, architecture, and construction.
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Venu’s
Sources of Revenue
Venu’s
primary revenue streams consist of the following:
●
Ticket Sales and
Fees. Venu promotes tickets for the concerts and events it hosts through the location-specific websites of its BBP venues.
Tickets are primarily sold online through third-party, full-service ticketing businesses that Venu contracts with to promote and
sell tickets for BBP events. Venu retains a portion of the revenue generated from each ticket sale. Venu also generates ticket revenue
from walk-up sales at its BBP locations.
●
Fee Income.
Venu also generates revenue through collecting fees on tickets sold by third-party platforms, including convenience and order-processing
fees and service charges.
●
Venue Rentals.
Venu’s BBP venues are rented for a variety of events, including corporate gatherings, conferences, seminars, benefit concerts,
fundraisers, weddings, and holiday parties. Each BBP venue can be easily transitioned to different configurations, which allows for
operational flexibility and maximization of venue use. The BBP team of event staff is exceptionally experienced in managing each
aspect of the event-planning process.
●
Naming Rights.
Venu generates a portion of its revenue by partnering with industry-leading brands under naming-rights agreements. By selling the
naming rights to its venues, Venu benefits from the name recognition of its sponsors and can offset its development, operational,
and occupancy costs through its collection of naming-rights fees. The naming-rights sponsors, in turn, strengthen their brand recognition
and visibility, heighten their exposure, and benefit from being associated with the world-class events that a hospitality and entertainment
company like Venu makes possible. In addition to negotiating the naming rights to its venues themselves, Venu negotiates naming rights
for specific segments within its venues and restaurants, such as patio spaces and the backstage area where artists conduct meet-and-greet
events. The naming rights sponsor is Phil Long Dealerships, Inc. for BBP CO and Boot Barn for BBP GA. The naming rights sponsor for
our amphitheater in Colorado Springs is Mountain States FDAF, pursuant to which the amphitheater is called Ford Amphitheater. Our
future amphitheater locations are expected to have a naming rights sponsor when they open.
●
Sponsorships .
Venu’s sponsorship opportunities enable sponsors to advertise and connect to customers at Venu’s entertainment and
restaurant properties. Venu provides a marketing and communications platform that caters to the specific needs of each sponsor’s
unique brand. Venu offers: (i) foundational partnerships, which allow companies to enjoy exclusive benefits and recognition as founding
partners of Venu venues; (ii) industry-exclusive partnerships, which enable companies to gain exclusive rights to represent their
industries and stand out among their competitors; (iii) show and event sponsorships, which allow companies to associate their brands
with specific shows and events and to capture the attention of a targeted audience; and (iv) VIP sponsorship packages, which allow
companies to offer their clients and customers with a top-notch, VIP experience at Venu’s venues. While Venu’s primary
sponsorships are for tables and shows, it has a curated menu of sponsorship inventory at each of its venues that is available for
sponsors to showcase their brands. Venu’s seasoned sales leader spearheads its sales efforts nationally and manages the sponsorship
sales inventory at each entertainment property.
●
Food and Beverage
Sales. Venu’s collection of restaurants and bars are designed to provide guests with an elevated dining experience
featuring unique menu offerings, craft cocktails, and southern hospitality. Venu’s BBST restaurants, known for their selection
of rare bourbons, ryes, and whiskies, serve American classics and southern staples from a scratch kitchen and act as the exclusive
caterer for BBP concerts and events. Roth’s, upon the commencement of its restaurant operations expected in fall 2025, will
provide an elevated, fine-dining culinary experience. In 2023, Venu’s BBST CO and BBP CO locations were opened for the full
year, and its BBST GA and BBP GA locations opened in June 2023. In 2024, Venu generated revenues based on its BBST and BBP locations
in Colorado and Georgia both being operational for the full year. Venu expects to generate additional revenues in 2026 upon the expected
opening of its Roth’s restaurant and Brohan’s bar in fall 2025.
●
Parking Fees.
Venu generates revenue from the development of parking lots at its amphitheater locations. These lots are over and above the amphitheater
operators’ parking that is shared between Venu and the operators. These premium parking lots are controlled exclusively by
the Company. Venu began recognizing this revenue with the opening of Ford Amphitheater in Colorado Springs in August 2024.
11
Venu’s
Venues
Music
Venues — Bourbon Brothers Presents (Indoor Music Hall)
BBP
Overview
BBP
is Venu’s indoor, intimate music and event venue known for promoting a mix of national-touring, legendary acts as well as up-and-coming
artists and premier local bands and performers. BBP is dedicated to bringing musical acts from the country music and rock and roll genres
as well as entertainment from a variety of other performance categories, including comedy, magic, and inspirational speakers, to growing
suburban markets. Venu currently operates a BBP venue in Colorado Springs, Colorado, BBP CO, which opened in 2019, and a second BBP venue
in Gainesville, Georgia, BBP GA, which opened in June 2023. Venu also previously explored expanding its BBP venue concept to Murfreesboro,
Tennessee, and took various steps to acquire land to develop where a campus would have been developed; however, in July 2024 Venu terminated
its pursuit of that project.
Promoting
live entertainment is the foundation of the BBP revenue model. Each BBP location is designed to flexibly accommodate approximately 1,400
concertgoers at each general-admission concert featuring national-touring artists or to comfortably accommodate approximately 500-700
people for fully seated events complete with eight-top tables that are suited for intimate concerts, dueling piano shows, tribute bands,
and private events. In addition to promoting and hosting live concerts, BBP also generates incremental revenue through event rentals
and sponsorship sales. BBP rental rates vary depending on several factors, including the type, size, and date of the event. Typically,
event rentals is a high-margin revenue channel, as there are very few variable expenses associated with renting the venue.
Venu’s
designs for its BBP venues seek to showcase Venu’s attention to hospitality, care for artists’ comfort, and pursuit of delivering
the ultimate concert experience. Each BBP location features an expansive stage, arena-quality audio and visual systems, and an unparalleled
ambiance driven by a grand dance floor and video wall. In addition to the indoor music hall, each BBP venue is built with an outdoor
patio that features exterior bar access, an abundance of firepits, and unobstructed views of the surrounding areas.
BBP
— Colorado Springs, Colorado
Venu
opened its first BBP location in March 2019 in Colorado Springs, Colorado. BBP CO is built on roughly 3.5 acres adjacent to BBST CO.
The BBP CO property consists of 15,000 square feet and features a 100-foot bar, a Bottoms Up Draft Beer System, more than 50 bourbons
and whiskeys, and a menu of Southern fare served tableside, catered by BBST CO. The BBP CO venue accommodates up to 1,100 concertgoers
for general-admission concerts, 500 seated patrons in a banquet-style configuration, and 96 trade-show booths. BBP CO originally sold
its naming rights to Boot Barn, but on July 31, 2024, BBP CO sold its naming rights to Phil Long Dealerships, Inc. and is now known as
Phil Long Music Hall at Bourbon Brothers.
In
addition to its concert and event schedule, BBP CO has become a rental venue for private events. In the past, a multitude of organizations
and businesses have rented BBP CO, including school districts for prom and homecoming dances, the State of Colorado for an event at which
Governor Jared Polis gave the State of the State address, political organizations for fundraising dinners, several companies for corporate
parties and events, and families who have held weddings at BBP CO. The venue is capable of being transitioned from one configuration
to another, which allows for a maximization of venue uses. That operational flexibility make it possible, for example, for the BBP CO
event team to host a concert one night and then stage a wedding the following afternoon. Venu aims for the BBP CO venue to be rented
for events up to 100 times per year. Since 2021, BBP CO has met or exceeded this goal, being rented for 108 events in 2021, 114 events
in 2022, 182 events in 2023, and 219 events in 2024.
12
BBP
— Gainesville, Georgia
In early 2021, a Georgia municipality reached out
to gauge its interest in building a venue like BBP CO in Gainesville, Georgia, a growing city located roughly an hour north of downtown
Atlanta. That same year, Venu negotiated with the City of Gainesville and ultimately agreed to build its second BBP venue there, BBP
GA, which opened in June 2023. The land on which BBP GA was developed was purchased from the Gainesville Redevelopment Authority by GA
HIA, a subsidiary of Venu that is subject to Venu’s total voting control. BBP GA promotes music acts similar to BBP CO. Like BBP
CO did originally, BBP GA sold its naming rights to Boot Barn and thus does business under the name of Boot Barn Hall. BBP GA assigns
the revenue generated from Boot Barn’s naming rights to its landlord, GA HIA, effectively reducing the occupancy cost related to
the construction of the campus and subsequent lease.
The
BBP GA venue accommodates up to 1,700 concertgoers for general-admission concerts and 500 seated patrons for full-seated shows. BBP GA
built upon the design of BBP CO and features two full-service bars instead of one along with a mezzanine that offers spectacular, elevated
views of the stage. BBP GA is connected to BBST GA via a shared kitchen, which allows BBP GA to provide food and beverage service for
shows that is catered by BBST GA.
Venu’s
management was optimistic about establishing the BBP concept in the Gainesville market because the greater Hall County area of which
Gainesville is considered by many to be a hotbed for country music, as many of today’s biggest country music stars hail from Georgia,
yet Gainesville and the other suburbs surrounding Atlanta, Georgia were considered by many to be an “entertainment desert,”
devoid of premier live-music venues. Furthermore, the lack of mid-size and more intimate venues other than in downtown Atlanta was inconvenient
for residents living and working outside of the city center. Management projected that BBP GA would fill that opportunity gap by offering
a new entertainment venue to the approximately 1.2 million residents of the Northeast Georgia region.
Since
opening in June 2023, BBP GA has hosted concerts and live entertainment events and has attracted both up-and-coming and more established
names in country and rock music. BBP GA hosted 73 events from June through December 2023 and 268 events in 2024. In addition to maintaining
its event schedule and continuing to bring talent to the Northeast Georgia region, Venu continues to pursue its venue-rental and sponsorship-sales
channels to augment revenue generated for BBP GA by promoted concerts, duplicating its revenue strategies at the comparable venue in
Colorado Springs.
Music
Venues — The Sunset Amphitheater (Outdoor Amphitheater)
The
Sunset Amphitheater Overview
The
largest projects Venu has planned are the development of its open-air amphitheaters, including The Sunset Amphitheater in Colorado Springs,
Colorado, which is now called “Ford Amphitheater” pursuant to the sale of the venue’s naming rights, and planned amphitheaters
in Broken Arrow, Oklahoma and the McKinney and El Paso markets of Texas. The developments of those locations have been approved by the
respective city governments. Venu finalized the construction of its Colorado amphitheater, Ford Amphitheater, in August 2024. During
the six-month peak season each year, Venu expects each amphitheater to host up to 35-40 concerts and events.
Venu
is pursuing the development of an amphitheater in the greater Oklahoma City, Oklahoma area. Venu previously expected to close on property
in Oklahoma City and to begin construction of a 12,500-person amphitheater in spring 2024, but the project was ultimately voted down
by city council in April 2024 due to the property’s location, so Venu is pursuing new potential locations in the Oklahoma City
market to construct the amphitheater.
With
each planned iteration of The Sunset Amphitheater, Venu is attempting to pioneer the concept of music and entertainment investing. A
feature of each amphitheater is its private firepit suite lifetime ownership rights that Venu offers certain investors. In addition to
the luxury firepit suites, each amphitheater location will offer reserved seating, open seating on a landscaped grass berm, and premium
hospitality offerings that will enable concertgoers to experience shows in a world-class environment. Venu’s goal for The Sunset
Amphitheater is to serve as one of the most desirable venues in the world for artists to play and fans to experience live music.
13
Venu
believes the naming rights for The Sunset Amphitheater venues will be the most valuable naming rights of any of its properties. Venu
estimates that the naming rights for each of The Sunset Amphitheater venues will be acquired for between $1.0 million to $2.0 million
per year, per venue, depending on the venue’s capacity and market, pursuant to contracts with five- to ten-year terms. As such,
the tradename of each amphitheater location is expected to change to feature the naming-rights sponsor.
As
it relates to Venu’s outdoor amphitheater projects, Venu does not expect to directly operate those venues, and to instead utilize
a third-party operator to, among other things, book acts and events at those venues. In June 2023, Venu entered into an exclusive operating
agreement with AEG Presents — Rocky Mountains, LLC (“ AEG ”) pursuant to which AEG will operate Ford Amphitheater.
The
exclusive operating agreement with AEG grants AEG the exclusive right to operate and use Ford Amphitheater for events, subject to limited
exceptions such as Venu having the right to use and reserve the venue for local events or performances by bands that are not nationally
recognized or promoted. The agreement sets forth the parties’ various obligations with respect to the ownership and use of the
venue. In addition, the agreement provides for a defined split of the venue’s profits and losses between Venu and AEG in a range
between 45% to 55% between the two parties, but gives each party certain opt-out rights for events such that a party may not be responsible
for any losses that may result from certain events held at the venue (but will also not be entitled to any profits that may result from
such events). The agreement also imposes restrictions on AEG from operating venues that are comparable to Ford Amphitheater within a
defined radius of the venue and imposes restrictions on Venu from owning, operating, or developing a competing venue within a defined
radius. The agreement also provides that Venu is entitled to secure sponsorship rights for the venue, and sponsorship fees are included
in the factors that determine the venue losses and profits that are split between the parties also in a range between 45% to 55% between
the two parties.
Venu
expects to partner with a third-party operator and to enter into third-party operating agreements for the operations of its Sunset Amphitheater
locations planned for development in Texas and Oklahoma.
The
Sunset Amphitheater — Colorado Springs, Colorado
In
May 2023, Venu broke ground on its first outdoor amphitheater, The Sunset Amphitheater in Colorado Springs, Colorado, which is called
Ford Amphitheater pursuant to a sale of the venue’s naming rights. Venu opened Ford Amphitheater in August 2024. Sunset Operations,
LLC, a wholly owned subsidiary of Venu, is the operative entity that holds assets associated with Ford Amphitheater.
Ford
Amphitheater is an open-air, 8,000-person amphitheater that offers concertgoers views of Pikes Peak, the Rocky Mountains, and the United
States Air Force Academy. Venu hopes that Ford Amphitheater will draw certain comparisons to the Red Rocks Amphitheater in Morrison,
Colorado, which is one of the most attended music venues in the country. Ford Amphitheater was designed by industry-renowned architects
to be among the state-of-the-art open-air venues in the country. Ford Amphitheater features luxurious firepit suites and other design
configurations original to Venu, advanced audio technology, and “white-glove” service for its premium suites.
Ford
Amphitheater complements the first music hall venue Venu developed in Colorado, BBP CO, and the venues together are intended to fill
an entertainment gap in the Pikes Peak region. Venu believes Ford Amphitheater is capable of hosting the nation’s largest
touring acts, many of whom have not played Colorado Springs in the past due to a lack of suitable venues. Ford Amphitheater expects
to host shows during the peak concert season from the beginning of May through the end of October. Ford Amphitheater is operated by
AEG, a subsidiary of the Anschutz Entertainment Group, a major music and entertainment events presenter, pursuant to the operating
agreement between Venu and AEG generally described above.
In
addition to stadium-style seating and lawn seating, Ford Amphitheater delivers a premium hospitality experience with a total of 90 VIP
firepit suites, each featuring a private fireplace that can accommodate up to eight guests for a luxurious concert experience unlike
any other. Rights to a total of 90 firepit suites are privately owned and were sold to lifetime owners by Venu over a ten-month period
before construction of Ford Amphitheater commenced. Each suite offers the licensee the option to purchase up to eight tickets per event
hosted at Ford Amphitheater, but licensees are not obligated to purchase unused tickets, which can be privately sold or listed for sale
on Venu’s ticketing-sales platform.
14
Alongside
Ford Amphitheater, the campus will include Roth’s Seafood and Chophouse, a fine-dining restaurant, and Brohan’s, a top-shelf,
rooftop bar, which are expected to open for restaurant and bar operations in fall 2025. Roth’s Seafood and Chophouse is expected
to open in summer 2025 for exterior concert seating. In addition, Notes Hospitality Collection, which is expected to open in summer 2025,
will have 40 VIP firepit suites, each featuring a private fireplace, along with 1,200 stadium style seats for shows at the Ford Amphitheater.
In addition, these 40 firepit suites were offered to lease for a 99-year term in exchange for the licensee’s payment of a one-time
lease execution fee of $200,000 due at the inception of the lease. This entity will also include two owner’s club suites with upstairs
and downstairs viewing and seating configurations that are available for venue rentals year-round on non-Sunset CO show evenings. Together,
the three venues are intended to deliver a premier dining and entertainment experience for music lovers, fine diners, and bourbon enthusiasts
alike.
Ford
Amphitheater also includes a premium parking lot. On April 1, 2024, Venu, through one of its wholly owned subsidiaries, Notes Live Real
Estate, LLC, purchased approximately 5.5 acres adjacent to Ford Amphitheater property for $3,621,210. Together with a 1.1-acre parcel
that the Company owns on the south side of Ford Amphitheater, Venu improved this tract into a parking lot and its used for premium parking
and contains approximately 740 total parking spaces.
In
May 2024, Sunset Operations, LLC (“ Sunset Ops ”), a wholly owned subsidiary of Venu, entered into a Naming and Sponsorship
Rights Agreement with Mountain States FDAF (“ FDAF ”) for the naming, sponsorship, advertising, and promotional rights
for Ford Amphitheater. The term of the agreement is through June 30, 2034, and provides that FDAF is obligated to pay an annual fee (subject
to defined escalations during the term of the agreement) together with certain costs related to sign production for the venue. Under
the agreement, the amphitheater will be named “Ford Amphitheater” for the duration of the agreement’s ten-year term
(subject to potential changes in accordance with the agreement). In addition to providing FDAF with the naming rights for the amphitheater
itself, the agreement also provides that FDAF will be the official name and title partner of Ford Amphitheater with exclusivity in the
automotive category and that FDAF will be the exclusive automobile of Ford Amphitheater along with the Hospitality Collection property
and Roth’s restaurant in development. FDAF was also granted a right of first offer to purchase the naming and sponsorship rights
for each new market in which Venu builds a Sunset Amphitheater.
The
operator of Ford Amphitheater, AEG, has also entered into various sponsorship agreements related to various product categories. On July
1, 2024, AEG entered into a Sponsorship Agreement with Anheuser-Busch, LLC (“ AB ”) that has a term through December
31, 2027, subject to AB’s right to extend the term by one year. For the duration of the agreement, AB will be the exclusive malt-beverage
sponsor at Ford Amphitheater and will have the exclusive right in the malt-beverage category to use Ford Amphitheater’s trademarks
for advertising, marketing, signage, and promotional purposes. AB also has the right under the agreement to refer to itself in all marketing
materials as the “Official Beer Sponsor” and “Official RTD Sponsor” of Ford Amphitheater. In addition to securing
those sponsorship rights, the agreement provides that AB will receive various ticket and hospitality benefits. In exchange for the sponsorship
and event-related rights that AB will receive under the agreement, AB is obligated to pay AEG a set annual fee each year of the agreement.
Venu’s
exclusive operating agreement with AEG provides for a defined split between Venu and AEG of Ford Amphitheater’s profits and losses
(in a range between 45% to 55% between the two parties) but gives each party certain opt-out rights, pursuant to which a party may not
be responsible for any losses that may result from certain events held at the venue (in which case such party would also not be entitled
to any profits that may result from such events). The agreement also provides that Venu is entitled to secure sponsorship rights for
the venue, and sponsorship fees are included in the factors that determine the venue losses and profits that are split between the parties
(in a range between 45% to 55% between the two parties).
15
The
Sunset at Mustang Creek — Oklahoma City, Oklahoma
In
June 2023, Venu entered into a binding purchase and sale agreement to acquire 21 acres of land and to lease an additional 30 acres for
parking in Oklahoma City, Oklahoma (the “ OKC Property ”), with the intent to build a 12,500-person amphitheater on
the OKC Property named The Sunset at Mustang Creek (“ The Sunset OKC ”). Venu had contracted with a local private developer
and was in the entitlement process. However, on April 9, 2024, final approval for the development of The Sunset OKC was brought before
a vote by city council, which ultimately voted the project down. Venu’s contract with its private developer expired on April 26,
2024, and pursuant to its terms, Venu’s good-faith deposit was returned. Venu is aggressively pursuing potential new locations
in the Oklahoma City market to construct The Sunset OKC and is in the process of completing due diligence for a number of potential locations.
Venu is currently in negotiations with an adjacent municipality and expects to have a site contracted for The Sunset OKC’s development
in early to mid-2025.
Pursuant
to efforts to establish a Sunset Amphitheater in the Oklahoma City market, Venu entered into formal negotiations with the City
of Yukon, which sits just outside of Oklahoma City proper. On March 4, 2025, the City of Yukon’s city council unanimously approved
giving the city manager authority to negotiate an economic development agreement for a 12,500 person amphitheater to be located between
I-40 and Route 66, just west of Frisco Road. It is anticipated that a binding Letter of Intent reflecting the intent of both parties
will be considered by the city council in April 2025.
The
Sunset at Broken Arrow — Broken Arrow, Oklahoma
In
October 2023, Sunset at Broken Arrow LLC (“ Sunset BA ”), a subsidiary that Venu currently owns a majority equity interest
in but anticipates owning a minority equity interest in, and that Venu currently exercises and will continue to exercise total voting
control over, entered into an Economic Development Agreement with the City of Broken Arrow, Oklahoma (“ Broken Arrow ”),
which is a suburb of Tulsa and the largest city in Tulsa County, and the Broken Arrow Economic Development Authority (the “ Broken
Arrow EDA ”). Pursuant to the Economic Development Agreement, Sunset BA and the City of Broken Arrow are forming a public-private
partnership and intend to open a 12,500-capacity amphitheater that will be named The Sunset at Broken Arrow (“ The Sunset BA ”).
Sunset BA will hold the fixed assets of The Sunset BA. Venu also expects to form an operating entity, Sunset Operations at Broken Arrow
LLC, which will partner with a third-party operator to manage The Sunset BA’s operations.
The
Sunset BA is being constructed on a 17-acre property adjacent to the 165-acre Broken Arrow Events Park (“ Events Park ”),
which frequently hosts community-wide Broken Arrow events and is a community focal point. To induce Venu’s development of The Sunset
BA, Broken Arrow committed approximately 30 acres of land from Events Park to be used for parking and infrastructure needs along with
$17.81 million in capital improvements to the infrastructure at Events Park, which will include the development of a 360-spot parking
lot, the widening of roads entering and leaving the park area, and the improvement of stormwater and water lines. Venu has committed
$95 million of private investments to the construction of The Sunset BA, which it expects to finance primarily from proceeds of sales
of equity securities by Venu or Sunset BA and anticipates opening The Sunset BA in late 2025 or early 2026. Pursuant to the Economic
Development Agreement, Sunset BA must complete the amphitheater’s construction by December 31, 2025, subject to certain conditions
and exceptions. If the amphitheater is not fully constructed by December 31, 2025, Sunset BA must pay Broken Arrow $10,000 per month
for each month in which construction of the amphitheater remains incomplete.
Starting
360 days after construction is complete, The Sunset BA must host a minimum of 45 scheduled events each calendar year, although Venu will
aim to host closer to 60 events per year at The Sunset BA. Concertgoers can purchase reserved seats in the upper- and lower-bowl seating
areas or enjoy general admission in the upper bowl. The Sunset BA facility will have two unique features, including a roof and radiant
heating capacity that will provide for year-round use. Additionally, The Sunset BA will have a total of 202 lifetime-ownership VIP firepit
suites, accommodating groups of four, eight, or ten guests in each suite, plus four ultra suites. The Sunset BA will feature similar
amenities and suite offerings as The Sunset OKC.
On
January 22, 2024, Venu and Live Nation entered into an Exclusive Operating Agreement, pursuant to which Live Nation intended to serve
as the exclusive operator of The Sunset BA. Although the parties pursued their working partnership, in August 2024, Venu and Live Nation
terminated the Exclusive Operating Agreement due to Venu determining that it is unable to construct the number of parking spaces originally
contemplated by the Exclusive Operating Agreement. Venu is actively pursuing other third-party operators for The Sunset BA.
16
The
Sunset Amphitheater — McKinney, Texas
In
addition to its projects in the Colorado and Georgia markets, Venu is actively breaking into the Texas market with plans to bring The
Sunset Amphitheater to McKinney, Texas (“ The Sunset McKinney ”). Venu partnered with retired Dallas Cowboys’
player Chad Hennings to help facilitate its Texas expansion efforts. In April 2024, Venu entered into a Chapter 380, Grant, and Development
Agreement with the City of McKinney (“ McKinney ”) through a joint effort by McKinney, the McKinney Economic Development
Corporation (the “ MEDC ”), and the McKinney Community Development Corporation (“ MCDC ”). The parties
entered into a First Amendment to the Chapter 380, Grant, and Development Agreement in October 2024 and a Second Amendment to such agreement
in December 2024. Sunset at McKinney LLC, a majority-owned subsidiary of Venu that Venu exercises total voting control over, will hold
the fixed assets of The Sunset McKinney.
Pursuant
to Venu’s public-private partnership with McKinney, Venu will develop The Sunset McKinney on a 46-acre tract of land that is owned
by the MEDC. Venu closed on its purchase and acquisition of the McKinney tract on January 14, 2025. Given that one of the MCDC’s
strategic initiatives is to support the development of destination-entertainment facilities in McKinney, the MCDC has announced that
it expects to make a financial investment in The Sunset McKinney’s development.
Venu
anticipates that construction of The Sunset McKinney will begin in May 2025, with the amphitheater expected to be concert-ready in mid-2026.
Sunset Operations at McKinney LLC, a wholly owned subsidiary of Venu, will be the operative entity for The Sunset McKinney that Venu
expects will enter into an operating agreement with a third-party operator to run The Sunset McKinney’s operations. With a seating
capacity of 20,000, The Sunset McKinney will be Venu’s largest venue to date. The Sunset McKinney is expected to feature 295 VIP
luxury firepit suites that will be sold to lifetime owners, an Owner’s Club Suite that will accommodate 700 members, fully-covered
seating areas, traditional reserved seating along with open-seating options on a landscaped grass area that will have temperature-cooling
turf, a selection of gourmet food and drinks, state-of-the-art audio and technology enhancements, and a parking garage with 5,100 parking
spaces designed to make entering and exiting the venue as efficient as possible. Venu expects to host between 50 to 70 shows, a combination
of indoor and outdoor shows, per year at The Sunset McKinney.
Venu’s
management believes McKinney will be a promising market for expanding its open-air amphitheater concept. The Sunset McKinney is expected
to attract crowds from the Dallas and Fort Worth (“ DFW ”) areas of Texas, and to potentially rival the Toyota Music
Factory that currently serves the DFW metroplex, a market that Venu considers to be a high priority for adding entertainment value. McKinney’s
existing arts and recreation scene was one of the key factors that motivated Venu’s decision to develop an amphitheater in the
city. In 2020, McKinney was designated as a Texas Music Friendly Community by the Texas Music Office within the Office of the Governor,
certifying McKinney as part of a distinguished network of Texas cities that foster music-industry development and aim to attract and
develop music-industry growth.
For
the City of McKinney, partnering with Venu to develop The Sunset McKinney will represent a potential investment in the community in excess
of $220 million, which the city expects will drive local economic growth, catalyze commercial development, and enhance McKinney’s
brand on a national level, while allowing Venu to expand its operations to another state and to capitalize on McKinney’s promising
entertainment market.
The
Sunset Amphitheater — El Paso, Texas
Venu
further expanded its Texas market presence by forming a public-private partnership with the City of El Paso, Texas (“ El
Paso ”) to bring The Sunset Amphitheater to El Paso (“ The Sunset El Paso ”). Sunset at El Paso, LLC, a
subsidiary that Venu currently owns in its entirety, but ultimately anticipates owning a minority equity interest in (but, in each
case Venu would continue to exercise total voting control over the entity), will hold the fixed assets of The Sunset El
Paso.
In
April 2024, Venu and El Paso entered into a term sheet to define the material terms of the parties’ intended public-private partnership
and entry into a Chapter 380 Economic Development Program Agreement (the “ Chapter 380 Agreement ”), a Purchase and
Sale Agreement, and related transaction documents (collectively, the “ Definitive El Paso Agreements ”). The El Paso
City Council approved the term sheet on April 23, 2024. The parties finalized and executed a Purchase and Sale Agreement on June 24,
2024, and the Chapter 380 Agreement on July 2, 2024. The Purchase and Sale Agreement was amended on August 29, 2024, October 28, 2024,
January 27, 2025, and March 3, 2025, and in each case to extend the inspection period. Venu expects to close on its purchase and acquisition
of the El Paso property on or before April 30, 2025.
17
Pursuant
to the terms of the Definitive El Paso Agreements, Venu will construct and manage The Sunset El Paso as a 12,500-person amphitheater
on approximately 17 acres of land that El Paso will convey to Venu. Sunset Operations at El Paso LLC, a wholly owned subsidiary of Venu,
will be the operative entity for The Sunset El Paso that Venu expects will enter into an operating agreement with a third-party operator
to manage The Sunset El Paso’s operations.
In
addition to the land conveyance, El Paso will incentivize Venu’s development of The Sunset El Paso by: (i) contributing cash towards
Venu’s development costs by issuing an eight-year, no-interest, forgivable loan to Venu (the “ El Paso Loan ”)
in the principal amount of $8,000,000 that will be funded by the Texas Economic Development Fund; (ii) waiving all of the development,
building permit, and inspection fees required to develop The Sunset El Paso; (iii) providing Venu with annual rebates on real and business
personal property, sales and use, and mixed beverage taxes over up to a 20-year rebate period; and (iv) guaranteeing and/or funding parking
facilities that will include a minimum of 3,600 spaces. In total, El Paso is offering Venu an approximately $30.9 million performance-based
incentives package over the term of the Chapter 380 Agreement, demonstrating El Paso’s confidence that Venu’s construction
of The Sunset El Paso will stimulate both regional and international tourism, generate commercial activity, diversify and expand the
local tax base, create quality job opportunities, and promote local economic development in the city. If Venu completes construction
of The Sunset El Paso within 36 months from the date Venu receives all government authorizations required to develop and construct the
amphitheater (such process, “ Entitlement ”) and hosts a minimum of 25 events per year at The Sunset El Paso in years
3-5 of the rebate period, the El Paso Loan will be forgiven. Recognizing the parties’ mutual intent to support The Sunset El Paso’s
successful construction and operation, El Paso agreed that it would not develop a competing live-entertainment venue with a capacity
of more than 4,000 persons within 60 miles of The Sunset El Paso; subject to El Paso’s unrestricted right to pursue voter-approved
projects, projects affirmed by judicial decree, or regional projects that will not diminish The Sunset El Paso’s intent and operation.
Furthermore, as allowable by law, El Paso agreed to give Venu a first right of refusal to develop and/or operate any voter-approved project
as of the effective date of the Chapter 380 Agreement.
As
part of its public-private partnership with El Paso and in exchange for incentives package that El Paso is offering under the Chapter
380 Agreement, Venu must, among other obligations: (i) invest at least $80 million in the acquisition, development, carrying costs, construction,
and business personal property costs associated with developing The Sunset El Paso (such amount for such purposes, the “ Minimum
Investment ”); (ii) commence construction of The Sunset El Paso within 90 days following Entitlement; (iii) obtain a Temporary
Certificate of Occupancy no later than 36 months after Entitlement; (iv) secure a third-party venue operator to operate The Sunset El
Paso for a 10-year term with two, five-year extensions prior to obtaining a Certificate of Occupancy; and (v) host a minimum of 40 national-touring
events per year. Venu is also subject to various development and certification deadlines, including completing and providing El Paso
with a final Traffic Impact Analysis and Parking Study by August 15, 2024, submitting documentation to El Paso to verify that it has
expended the Minimum Investment and received the Temporary Certificate of Occupancy for the development of The Sunset El Paso within
36 months after Entitlement, and submitting documentation to verify that it has obtained the Certificate of Occupancy within 42 months
after Entitlement or within six months after receiving the Temporary Certificate of Occupancy. El Paso’s Director of Economic and
International Development may extend Venu’s development deadlines by up to six months, provided that Venu has made a good-faith
effort to fulfill its obligations under the Definitive El Paso Agreements. If Venu defaults under the terms of the Chapter 380 Agreement
and fails to timely and diligently cure such default, Venu must repay any rebates it received from El Paso during the five-year period
prior to its default pursuant to a recapture schedule to be set forth in the Chapter 380 Agreement.
Much
like The Sunset McKinney, The Sunset El Paso will feature luxury firepit suites while offering a variety of seating options with both
mid- and lower-bowl sections and general admission seating in the upper bowl. The amphitheater will have a roof and radiant heating capacity,
which will provide full-year programming of the amphitheater. The Sunset El Paso is expected to also feature a custom-built Owner’s
Club where members will enjoy an exclusive, elevated view of the stage and premium dining and beverage options. The Sunset El Paso is
expected to attract crowds not only from El Paso, Texas but also from Las Cruces, New Mexico and even across the border in Mexico from
Ciudad Juarez, the largest city in the Mexican state of Chihuahua. Venu intends for The Sunset El Paso to mirror the multicultural tastes
of its US and Latin audiences by showing acts from both markets.
18
On
July 2, 2024, the El Paso City Council formally approved a resolution authorizing the El Paso City Manager to execute the Chapter 380
Agreement with Venu and two ordinances providing for El Paso’s conveyance of city-owned land to Venu in accordance with applicable
Texas statutory code provisions and for El Paso’s amendment of a tax-increment reinvestment project and financing plan for the
area where The Sunset El Paso will be developed to reflect the development assumptions set forth in the Chapter 380 Agreement. Pursuant
to an amendment to the Purchase and Sale Agreement between Venu and the City of El Paso dated October 28, 2024, the parties extended
the inspection period during which Venu was permitted to inspect the property to be acquired from the City of El Paso.
Restaurant
Concepts — Bourbon Brothers Smokehouse & Tavern
BBST
Overview
Bourbon
Brothers Smokehouse & Tavern is Venu’s flagship, full-service restaurant concept. BBST serves American classics and Southern
staples out of a scratch kitchen, accompanied by a selection of rare bourbons, ryes, and whiskies as well as local craft beers.
BBST
— Colorado Springs, Colorado
Venu
opened its first BBST location in April 2017 (“ BBST CO ”) in Colorado Springs, Colorado, adjacent to the land where
Venu later opened its BBP CO music hall in 2019. The BBST CO location can serve up to 300 customers at a time across its two bars, primary
dining areas, sunroom, and a private dining area known as the “Library.” The concept was conceived as a farm-house theme
with an eclectic blend of dining areas that is intended to offer a unique foodie experience in an unparalleled setting. The Bourbon Bar
is an attached, yet secluded, bar area, built to replicate a bourbon warehouse from the days of prohibition, complete with a full-size
bar that is constructed from floorboards sourced from aging railroad cars. BBST CO’s close proximity to BBP CO allows for cross-selling
between the businesses, as BBST CO serves as the exclusive caterer for all BBP CO events. In both venues, Venu strives to deliver high-quality,
consistent food with exceptional service, which it believes is the key to restaurant success.
BBST
— Gainesville, Georgia
In
conjunction with Venu’s opening of BBP GA in June 2023, Venu opened its second BBST location in Gainesville, Georgia (“ BBST
GA ”). Like its Colorado Springs counterpart, BBST GA serves American classics, Southern staples, local craft beers, and a selection
of rare bourbons, ryes, and whiskies. Unlike BBST CO, the ambiance of the BBST GA restaurant replicates that of a 1930s-era, red brick
industrial building, with seating spaced around an indoor square bar that integrates a 6,800-square-foot outdoor patio with four fireplaces.
The restaurant accommodates up to 300 customers in its first-floor bar, primary dining areas, second-floor bourbon bar, and 1,500-square-foot
walk-out rooftop bar and lounge. The distinctive dining configurations at BBST GA are meant to capture the ambience and aesthetic of
the Gainesville Square.
One
advantage of the Gainesville location is that the BBST GA restaurant and BBP GA music venue were built simultaneously and are connected
via a shared kitchen, which streamlines BBST GA’s ability to operate food and beverage service at BBP GA. The 4,400-square-foot
kitchen serves the site’s more than 7,800-square-foot dining room and rooftop bar as well as the food and beverage needs for the
18,000-square-foot BBP GA music hall.
Restaurant
Concepts — Notes Eatery
“Notes
Eatery,” formerly known as “Notes” bar, is Venu’s newest live music and restaurant concept. Notes Eatery serves
a jazz brunch in a vibrant and eclectic environment, while also hosting private events for breakfast, lunch, and dinner. Notes Eatery
originally opened in September 2022 as “Notes” bar in the same Colorado Springs campus where BBP CO and BBST CO operate. Notes
Eatery features a full stage that is capable of hosting a four- to five-person band. Since opening, the Notes Eatery stage has been booked
with performances such as open mic nights, karaoke, dance bands, and even a unique live jazz band that performs at Notes Eatery’s
weekend brunch. In 2024, Notes Eatery hosted 201 events.
19
Restaurant
Concepts — Roth’s Seafood & Chophouse and Notes Hospitality Collection
In
fall 2025, Venu expects to open Roth’s Seafood & Chophouse (“ Roth’s ”), an upscale, five-star restaurant
that specializes in fine dining, in a mixed-use development that is being constructed adjacent to Ford Amphitheater. Venu expects to
open Roth’s for purposes of exterior concert seating in summer 2025. Roth’s and Ford Amphitheater will both sit on the 4.97-acre
tract in Colorado Springs that Venu purchased in March 2023. Roth’s is intended to be a luxurious restaurant space and was designed
to offer views of not only the Rocky Mountains but also the Ford Amphitheater concert stage, immersing guests in what Venu believes will
be an unparalleled dining and concert experience.
Colorado
Springs boasts a significant percentage of high-income households and a steady growing population. Despite being home to many multinational
corporations and much of the defense contractor industry, customers seeking an elevated dining experience believe the city is sorely
lacking in this pinnacle of the restaurant spectrum. Venu believes Roth’s can help fill that gap.
The
prominence and features of Ford Amphitheater made that area a desirable and viable location for Roth’s, which is intended to cater
to the more affluent populations in El Paso and Douglas Counties. Venu also believes Roth’s will be well suited for concertgoers
looking for a premium dining experience to accompany their premium tickets. Roth’s will anchor the first floor of the mixed-use
development being constructed at the eastern perimeter of Ford Amphitheater. On the top floor, Venu is opening a top-shelf bar and lounge
named Brohan’s, which Venu expects to open in fall 2025.
Notes
Hospitality Collection (“ NHC ”), which is expected to open in summer 2025, will feature two, approximately 1,500-square-foot
configurable hospitality spaces framing either side of Roth’s on the first floor of the mixed-use development and two, approximately
2,500-square-foot suites framing either side of the Brohan’s rooftop bar. Venu envisions NHC being used to host corporate events,
weddings, trade shows, conventions, galas, expos, and other large gatherings. Venu believes NHC will be a premier venue rental location
in Colorado Springs.
Bar
Concept — Brohan’s
Venu
is opening Brohan’s, a cocktail bar and lounge on the top floor of the mixed-use development where Roth’s and NHC are being
constructed. Brohan’s is named in honor of Venu’s longtime business development executive, Gary Tedder, whose nickname is
Brohan. The bar will have premium views into Ford Amphitheater, which can be monetized during marquee shows. Brohan’s will feature
top-shelf liquors and fine wines from around the world served by a host of bartenders and sommeliers that will be employed by Venu. Venu
foresees Brohan’s being a popular gathering spot for happy hour or evening cocktails in an elevated environment for personal or
business use, complemented by exceptional service in a comfortable yet classy lounge space that will be enhanced by dramatic amphitheater
lighting features and striking panoramas. Venu also envisions Brohan’s as being a go-to spot for concertgoers looking to elevate
their experience with the premium libations and views that Brohan’s will offer. Along with Roth’s and NHC, Venu intends to
open Brohan’s in fall 2025.
20
Venu’s
Subsidiaries and Properties
Subsidiaries
Venu
conducts its operations and holds its assets through many wholly- and majority-owned (and controlled) subsidiaries. Certain of Venu’s
subsidiaries have raised capital from third-party investors as a means to fund the specific projects and operations of those subsidiaries
and received capital contributions from third-party investors, such as The Sunset Amphitheater LLC, and as a result, these subsidiaries
are not wholly owned. In some instances, Venu owns a minority membership interest in a subsidiary but, under the terms of the governing
documents for the applicable limited liability company, exercises 100% voting control because the membership interests issued to third-party
investors represent non-voting interests, and otherwise retains economic rights in the revenue streams of a given project that may exceed
its ownership percentage. For example, third-party investors have contributed capital to Sunset at Broken Arrow LLC and The Sunset Amphitheater
LLC, with those capital contributions being used to help fund the development of the amphitheater projects owned and developed or to
be developed by those specific limited liability companies. In each case, the operating agreement provides that any distributions of
available cash that is attributable to a defined portion of revenues generated by ticket sales for an event held at the specific venue
project are distributed to the Class B non-voting members (members other than Venu and its subsidiaries), and then the excess is distributed
to the Class A voting member (Venu or a wholly-owned subsidiary of Venu). However, upon any liquidation, after the payment of creditors
and the establishment of any reserves, distributions are made to the members in satisfaction of their respective capital accounts. For
tax allocation purposes, the depreciation of company assets, in certain cases, are allocated to the Class B non-voting members. Membership
interests in these limited liability companies afford the investors certain rights to use suites at the venue owned by the applicable
limited liability company. Venu has used this model to help fund and develop certain of its amphitheater projects such as those of The
Sunset Amphitheater LLC and Sunset at Broken Arrow LLC. In the case of GA HIA LLC and Sunset Hospitality Collection LLC, third-party
investors hold non-voting membership interests under the terms of operating agreement of these subsidiaries and also are afforded certain
in-kind benefits intended primarily for their personal use, such as complimentary tickets to live events.
The
following table summarizes Venu’s current and projected ownership and voting interests in its subsidiaries as of March 15, 2025, which Venu either
owns directly or indirectly through one of its other subsidiaries. For subsidiaries that are not wholly owned by Venu or that Venu
anticipates later not wholly owning, the table indicates which entity owns, or would be expected to own, the remaining interest. In
addition, for those subsidiaries in which certain of the non-voting members’ economic rights under the applicable operating
agreement differ from their percentage interest in the limited liability as a whole, the economic rights of the non-voting members
are outlined in the notes to the table.
Subsidiary
Venu or
Subsidiary Owner
Current or Projected Company
Ownership Percentage
Interest
Owner of
Remaining
Interests
Bourbon Brothers Holdings LLC (“ BBH ”)
Venu Holding Corporation
100%
Not applicable.
Notes Live Real Estate, LLC (“ NLRE ”)
Venu Holding Corporation
100%
Not applicable.
Hospitality Income & Asset, LLC
Venu Holding Corporation
99%
(100% voting control)
Third-Party Investors
Notes Holding Company LLC (“ NHC ”)
Venu Holding Corporation
100%
Not applicable.
Bourbon Brothers Licensing LLC
Venu Holding Corporation
100%
Not applicable.
13141 BP, LLC
Venu Holding Corporation
100%
Not applicable.
The Sunset Amphitheater LLC
Venu Holding Corporation
10%
(100% voting control)
Third-Party Investors (1)
GA HIA, LLC
Venu Holding Corporation
16%
(100% voting control)
Third-Party Investors (1), (4)
Polaris Pointe Parking LLC
Venu Holding Corporation
100%
Not applicable.
Venu VIP Rides LLC
Venu Holding Corporation
50%
(100% voting control)
Third-Party Investors
Roth’s Seafood & Chophouse LLC
BBH
100%
Not applicable.
Notes Hospitality Collection LLC
BBH
100%
Not applicable.
Sunset Hospitality Collection LLC
NLRE
46% (as of March 15, 2025)
40% (projected ownership)
(100% voting control)
Third-Party Investors (1), (4)
Sunset at Mustang Creek LLC
NLRE
89% (as of March 15, 2025)
30% (projected ownership)
(100% voting control)
Third-Party Investors (1)
Sunset at Broken Arrow LLC
NLRE
73% (as of March 15, 2025)
35% (projected ownership)
(100% voting control)
Third-Party Investors (1)
Sunset Ground at Broken Arrow, LLC
Venu Holding Corporation
100% (as of March 15, 2025)
30% (projected ownership) (2)
(100% voting control)
Third-Party Investors
21
Subsidiary
Venu or
Subsidiary Owner
Current or Projected Company
Ownership Percentage
Interest
Owner of
Remaining
Interests
Sunset at El Paso, LLC
NLRE
100% (as of March 15, 2025)
35% (projected ownership) (2)
(100% voting control)
Third-Party Investors
Sunset Ground at El Paso LLC
NLRE
100% (as of March 15, 2025)
30% (projected ownership) (2)
(100% voting control)
Third-Party Investors
Sunset Operations at El Paso LLC
NLRE
100%
Not applicable
Sunset at McKinney LLC
NLRE
73% (as of March 15, 2025)
60% (projected ownership) (3)
(100% voting control)
Third-Party Investors (1)
Sunset Ground at McKinney LLC
NLRE
100% (as of March 15, 2025)
60% (projected ownership) (3)
(100% voting control)
Third-Party Investors
Sunset Operations at McKinney LLC
NLRE
100%
Not applicable
Notes CS I, DST
Notes CS I Holdings, LLC
99% (as of March 15, 2025) (5)
(projected ownership is not yet determined) (5)
(100% voting control)
Third-Party Investors (5)
13141 Notes LLC d/b/a Notes
NHC
100%
Not applicable.
Sunset Operations LLC
BBH
100%
Not applicable.
Bourbon Brothers Presents, LLC d/b/a Phil Long Music Hall at Bourbon Brothers
BBH
89%
Third-Party Investors
Bourbon Brothers Smokehouse and Tavern CS, LLC
BBH
100%
Not applicable.
Bourbon Brothers Smokehouse and Tavern GA LLC
BBH
100%
Not applicable.
Bourbon Brothers Presents GA LLC
BBH
100%
Not applicable.
Notes CS I Holdings, LLC
Venu Holding Corporation
100%
Not applicable.
Notes CS I ST, LLC
Venu Holding Corporation
100%
Not applicable.
22
(1)
Venu or NLRE, as applicable, has sold or intends to
sell non-voting membership interests to third-party investors in this limited liability company. However, the governing documents
for these subsidiaries provide that third-party investors who hold non-voting membership units are, in the case of distributions
resulting from operations of the venue or restaurant owned by the limited company entitled to a defined portion of distributions
of available cash that are attributable to certain revenue streams of the entities, such as ticket sales, or otherwise a targeted
return. All other portions of distributions of available cash from facility operations, income and profits are distributed to Venu
(or a wholly owned subsidiary of Venu) as the Class A member. Where the economic waterfall for the holders of non-voting membership
units of a subsidiary is other than in accordance with the members’ percentage interest in the subsidiary as a whole, those
economic rights, as of the date of this Annual Report, are described below:
●
The Sunset Amphitheater LLC : In the event
The Sunset Amphitheater LLC at any time makes a distribution of available cash to its members from operations, it will first distribute
to the Class B members as a class an aggregate amount equal to the “rental profit” attributed to the venue. Class B members
share in this amount on a pro rata basis determined solely with respect to the total number of Class B units outstanding. Class B
members are only entitled to their pro rata share of any “rental profit,” and are not entitled to any other distributions
of available cash from operations or any other income or profits of The Sunset Amphitheater LLC, which are distributable solely to
the single Class A member (Venu). “Rental profits” are calculated on a per ticketed show basis, and the amount of “rental
profits” distributable to the Class B members for each show is calculated by multiplying $5.00 by the number of tickets sold
for the ticketed event at the venue owned by The Sunset Amphitheater LLC (excluding any other venue revenues or profits of any kind).
●
GA HIA, LLC : All distributions of net
profits and available cash (other than Priority Proceeds, as defined below) to its members will be made to the Class A members, Class
B members and Class C members on a pro rata basis. All amounts of cash received by GA HIA, LLC pursuant to the primary naming rights
for the music venue operated on GA HIA, LLC’s property and tax rebates from or through the City of Gainesville, GA (collectively,
“ Priority Proceeds ”) are distributable solely to the Class B members and Class C members on a pro rata basis.
Notwithstanding the foregoing, the Class C members are capped at an 9% annual return on their capital contribution, after which they
no longer participate in distributions for such year.
●
Sunset at Mustang Creek LLC : In the event
Sunset at Mustang Creek LLC at any time makes a distribution of available cash to its members from operations, it will first distribute
to the Class B members as a class an aggregate amount equal to the “rental profit” attributed to the venue. Class B members
share in this amount on a pro rata basis determined solely with respect to the total number of Class B units outstanding. Class B
members are only entitled to their pro rata share of any “rental profit,” and are not entitled to any other distributions
of available cash from operations or any other income or profits of Sunset at Mustang Creek LLC, which are distributable solely to
the single Class A member (a wholly owned subsidiary of Venu). “Rental profits” are calculated on a per ticketed show
basis, and the amount of “rental profits” distributable to the Class B members for each show is calculated by multiplying
$7.00 by the number of tickets sold for the ticketed event at the venue owned by Sunset at Mustang Creek LLC (excluding any other
venue revenues or venue profits of any kind).
●
Sunset at Broken Arrow LLC : In the event
Sunset at Broken Arrow LLC at any time makes a distribution of available cash to its members from operations, it will first distribute
to the Class B members as a class an aggregate amount equal to the “rental profit” attributed to the venue. Class B members
share in this amount on a pro rata basis determined solely with respect to the total number of Class B units outstanding. Class B
members are only entitled to their pro rata share of any “rental profit,” and are not entitled to any other distributions
of available cash from operations or any other income or profits of Sunset at Broken Arrow LLC, which are distributable solely to
the single Class A member (a wholly owned subsidiary of Venu). “Rental profits” are calculated on a per ticketed show
basis, and the amount of “rental profits” distributable to the Class B members for each show is calculated by multiplying
$7.00 by the number of tickets sold for the ticketed event at the venue owned by Sunset at Broken Arrow LLC (excluding any other
venue revenues or venue profits of any kind).
●
Sunset at McKinney LLC : In the event
Sunset at McKinney LLC at any time makes a distribution of available cash to its members generated through ticketed events at the
venue, the company will distributes to the Class B members, as a class and on a pro rata basis, an aggregate amount intended to cause
the Class B members to realize an annual return equal to 3% of the amount of their respective capital contributions. All other distributions
from venue operations, income or profits of any kind are distributed solely to the single Class A member (a wholly owned subsidiary
of Venu).
23
●
Sunset Hospitality Collection LLC : In
the event Sunset Hospitality Collection LLC at any time makes a distribution of available cash to its members attributable to lease
payments made by the tenant of the property owned by Sunset Hospitality Collection LLC, it will distribute to the Class B members
an amount intended to cause the Class B members to realize an annual return equal to 8% of the amount of the total capital contributions
of the Class B members and to the Class C members an amount intended to cause the Class C members to realize an annual return equal
to 4% of the amount of the aggregate capital contributions of Class C members. All other distributions of cash from venue operations,
income or profits of any kind are distributed to the single Class A member (NLRE).
(2)
Venu or NLRE, as applicable, intends to sell up to
70% of the membership interests in this limited liability company to third-parties while retaining a 30% membership interest. Any
interests sold to third-parties will be non-voting membership units, and therefore, NLRE would maintain 100% voting control. As it
relates to Sunset Ground at Broken Arrow, LLC, Sunset at El Paso, LLC, Sunset Ground at El Paso LLC economic terms and rights to
be afforded to third-party (non-voting) members have not yet been determined.
(3)
NLRE intends to sell up to 40% of the membership interests
in this limited liability company to third-parties while retaining a 60% membership interest. Any interests sold to third-party investors
will be non-voting membership units, and therefore, NLRE would maintain 100% voting control. Economic terms and rights to be afforded
to third-party (non-voting) members in Sunset Ground at McKinney LLC have not yet been determined.
(4)
GIA HIA LLC, in addition to the voting Class A membership
units held solely by Venu, has issued non-voting Class B membership units and non-voting Class C membership units to third parties.
Sunset Hospitality Collection LLC, in addition to voting Class A membership units held solely by a wholly owned subsidiary of Venu,
has issued non-voting Class B membership units and non-voting Class C membership units to third parties.
(5)
As of the date of this Annual Report, the Company also
holds its interest in one of its real property assets through a Delaware Statutory Trust. On August 22, 2024, NLRE conveyed the 9.41
acres of real property upon which the Ford Amphitheater is located to Notes CS I Holdings, LLC, a wholly owned subsidiary of Venu
(“ Holdings LLC ”), and Holdings LLC conveyed that property to Notes CS I, DST, a Delaware Statutory Trust (the
“ Trust ”) in exchange for a 100% of the beneficial interests in the Trust. The signatory trustee for the Trust
is Notes CS I ST, LLC, a wholly owned subsidiary of Venu. Beneficial owners have no voting rights with respect to the affairs of
the Trust and do not have legal title to any portion of the property held by the Trust. Instead, the signatory trustee has the sole
power and authority to manage the activities and affairs of the Trust, including the power and authority to sell the property, and
the Trust holds legal title to the property. Under the documents governing the Trust, beneficial interest holders are entitled to
distributions on a pro rata basis of the base rent payments made to the Trust from the ground tenant. Holdings LLC is one of two
beneficial interest holders of the Trust and holds an approximate 99% interest. The Trust expects to from time to time sell additional
beneficial interests to third parties but in no event is it expected that Holdings LLC would cease to hold a beneficial interest
in the Trust.
As
it relates to the larger Ford Amphitheater project in which certain Company subsidiaries have a direct or indirect interest, the rights
of stakeholders are summarized below and described elsewhere in this Annual Report.
●
Operating Agreement :
With respect to venue profits and venue losses generated at the Ford Amphitheater, those profits and losses are payable and allocated
to AEG and Venu in accordance with the terms of the exclusive operating agreement between Venu and AEG described elsewhere in this
Annual Report. After its entry by the parties, this agreement was assigned by Venu to Venu’s wholly owned subsidiary Sunset
Operations, LLC (as defined above, “ SunsetOps ”). SunsetOps is the Venu subsidiary that oversees the operations
of Ford Amphitheater. Amounts due to SunsetOps under the exclusive operating agreement with AEG are based on a base fee derived from
a portion of the tickets sold at public events held at the venue, and a percentage of venue profits (with such profit split between
the two parties being in a range between 45% to 55%). Venue profits that are split and allocated between the parties take into account
various revenues streams generated through venue events, including ticket sales, ticket rebates, VIP services, net food and beverage
sales, net revenue commissions from artist merchandise sales, parking, and venue sponsorship fees (such as naming rights), but subject
to certain limitations set forth in the agreement, and any profits that are divided between the parties are net of various venue
operating expenses incurred by the AEG and certain insurance and property expenses incurred by the owner of the venue.
Amounts due to SunsetOps
from event and venue operations under the exclusive operating agreement with AEG are the primary source of funds utilized to pay
lease payments due under the operations leases, and as further described below, “Event Fees” and the base rent due under
the ground lease described below for the property on which Ford Amphitheater was developed, and with any excess retained by SunsetOps.
●
Ground Leases : The real property upon which
the amphitheater was developed is owned by the Trust, and The Sunset Amphitheater LLC own all of the improvements (i.e., the amphitheater)
on that property. The Trust leases that property to Notes CS I MT, LLC, a wholly owned subsidiary of Venu (and the “master
tenant” for the property) pursuant to a “master lease”, which in turn leases the property to Sunset Amphitheater
LLC under a ground lease having substantially the same economic terms to that of the master lease. Sunset Amphitheater, LLC is the
guarantor of the ground lease. Pursuant to that ground lease, Notes CS I MT, LLC pays master tenant annual base rent of $3,222,000
(subject to escalation), which is paid monthly, and base rent is then remitted to the Trust and distributed pro rata to the holders
of its beneficial interests.
●
Operations Leases : In connection with the operations
of the Ford Amphitheater located at the property, Sunset Amphitheater LLC entered into an operations lease (which was amended on
September 24, 2024) with Notes Live Foundation (a non-profit organization and operating under the trade name Venu Arts & Culture
Foundation), a foundation formed, in part, to accommodate certain “public use” requirements of certain municipalities
or quasi municipality entities and of which Venu is the sole member (the “ Foundation ”), and in turn, the Foundation
has entered into an operations sublease agreement with SunsetOps, as such operations sublease was amended on September 24, 2024.
During the term of that operations sublease, SunsetOps pays to the Foundation (a) annual base rent of $3,222,000.00 (subject to annual
2% annual increases), plus (b) a per-ticket amount to be determined by SunsetOps, multiplied by the total number of tickets sold
for entry into “public events” at Ford Amphitheater, not to exceed $50,000 in total unless agreed to in writing by SunsetOps
to be paid annually (the “ Charitable Trust Contribution ”), plus (c) $5.00 multiplied by the total number of tickets
sold for entry into “public events” at Ford Amphitheater (“ Event Fees ”). In turn, under the operations
lease, the Foundation remits all payments under the operations sublease to The Sunset Amphitheater LLC, except for the Charitable
Trust Contribution (if any). Event Fees that get remitted to Sunset Amphitheater LLC ultimately are the source of the “rental
profit” described above that is distributed by The Sunset Amphitheater LLC to its Class B members and the remainder of the
payments received by The Sunset Amphitheater LLC under these operation leases and subleases are used to pay the base rent payments
due to the master tenant and the Trust.
Bourbon
Brothers Holdings LLC (“ BBH ”) is a holding company designed to own and manage each of Venu’s operating entities.
In addition to the entities organized under BBH currently, Venu expects BBH will own 100% of future restaurant and event center operating
companies for entertainment campuses that Venu may to develop around the country.
Venu’s
current goal is that by 2028, it will have brought entertainment venues to a dozen markets where it will be operating up to ten entertainment
campuses (including its campuses in Colorado Springs, Colorado and in Gainesville, Georgia) and three or more additional open-air amphitheaters.
When developing a new entertainment campus or venue in a new market, Venu generally forms an operating company under BBH to manage the
venue’s operations. The land and building for the venue is typically leased to the operating company by a landlord entity that
Venu (or one of its subsidiaries) either wholly owns or acquires an interest in.
24
Long-Term
Debt Obligations
To
fund certain of its operations and property acquisitions Venu has, at times, borrowed funds from third-party lenders. The table below
sets forth the outstanding current debt obligations (other than ordinary course obligations) of Venu or its subsidiaries as of March
31, 2025.
Debt Type
Date of Issue
Borrower
Lender
Principal Amount
Interest Rate
Maturity Date
Mortgage Loan
05/06/2022
GA HIA, LLC
Pinnacle Bank
$ 4,204,473
3.95 %
05/26/2043
Mortgage Loan
07/01/2021
Hospitality Income & Asset, LLC
Integrity Bank & Trust
$ 3,196,188
5.5 %
07/10/2031
Loan
05/04/2020
Venu f/k/a Bourbon Brothers Entertainment, LLC
U.S. Small Business Administration
$ 500,000
3.75 %
05/04/2050
Convertible Promissory Note
01/17/2024
Venu and NLRE
KWO, LLC
$ 10,000,000 (1)
8.75 %
02/28/2027 (2)
Loan
08/16/2024
Venu f/k/a Notes Live, Inc.
Texas Economic Development Fund
$ 8,000,000
0 %
08/16/2032
Loan
01/14/2025
Venu and The Sunset Amphitheater in McKinney, LLC
McKinney Economic Development Corporation
$ 25,000,000
0 %
(3)
Convertible Promissory Note
02/28/2025
Venu and NLRE
3 rd Party Investors
$ 6,000,000 (4)
12.0 %
02/28/2028
(1)
As
set forth in the promissory note and special stipulations thereto, dated January 17, 2024, payable by Venu and Venu Real Estate,
LLC (together, the “ NL Borrowers ”) to KWO, LLC (the “ KWO Note ”), the funds borrowed by the
NL Borrowers from KWO, LLC (the “ KWO Loan ”) were to be advanced to the NL Borrowers at any time between March
1, 2024 and May 31, 2024 in multiple draws (each, a “ Draw ”), the sum of which shall not exceed $10,000,000. As
of the date of this filing, the KWO Note is fully drawn on and the $10,000,000 Draw amount is outstanding. The outstanding amount
is convertible debt and obligations can be satisfied through the conversion to Venu shares at a value of $10.00 per share.
(2)
The
maturity date of the KWO Note is February 28, 2027, the date that is three years after the NL Borrowers first received funds pursuant
to the first Draw on the KWO Loan. It was extended for two years after the one year mark after the draws on the KWO Note occurred
on (i) March 1, 2024, in the amount of $3,860,582.40; (ii) April 10, 2024, in the amount of $3,738,030.37; and (iii) May 10, 2024,
in the amount of $2,401,387.23.
(3)
Upon
obtaining a Certificate of Occupancy, the Company will be reimbursed by MEDC for all purchase monies paid by the Company to MEDC,
up to the purchase price, and the Company and the guarantors will be released from their respective obligations under the deed of
trust, note, and personal guaranties.
(4)
The
maturity date of the convertible promissory notes is three years from the date of issuance. The interest rate is 12% per annum and
paid quarterly in shares of Venu’s common stock at the conversion price. Principal is paid at maturity in cash, or at the Company’s
option, in-kind through the issuance of shares of Company’s common stock at the conversion price. Conversion price is defined
as 100% of the average daily closing sale price of the Company’s common stock during the 10 consecutive trading days immediately
prior to the applicable payment date. The notes are secured by the Company’s interests in various of its real estate assets,
interests, and projects.
25
Public-Private
Partnership Obligations
Venu
evaluates which markets to expand to and to purchase properties to develop venues on according to a set of rigorous criteria that maximizes
Venu’s potential for success and profitability. One of the key factors in Venu’s market-expansion assessment is the ability
to leverage public-private partnerships, which are driven by local municipalities that demonstrate an interest in the development of
entertainment venues as a way to catalyze economic development, attract community investment, and improve the community that the local
government serves. Venu was able to acquire many of the real-property assets in its portfolio through public-private partnerships. In
a public-private partnership, a local government or quasi-governmental entity, such as a local economic development corporation or redevelopment
authority, offers financial incentives to Venu that enable Venu or one of its subsidiaries to acquire land on terms that are more favorable
than Venu would be able to negotiate in a private sale on the open market.
The
financial incentives that a local municipality may offer Venu in a public-private partnership include, for example: (i) granting land
to be used for Venu’s construction of amphitheaters, entertainment venues, and parking; (ii) granting parking facilities to be
used at Venu’s venues and, in some cases, allowing Venu to monetize parking; (iii) providing public financing for Venu’s
venue-development projects; (iv) providing sales-tax abatements and/or refunds; (v) providing property-tax abatements and/or refunds;
or (vi) publicly funding the construction of parking facilities, entry and exit roads, and utilities required to support the development
and operation of Venu’s venues. In exchange for the financial incentives offered by the local municipality, Venu agrees to develop
and operate one or more music and entertainment venues and restaurants in the community that Venu has partnered with, which advances
Venu’s market-expansion objectives, drives local economic growth, and attracts other community investments.
Although
purchasing properties through public-private partnerships is a key component of Venu’s acquisition and financing strategy, the
agreements that Venu negotiates when partnering with a local government or quasi-governmental entity typically subject Venu to burdensome
conditions, restrictions, obligations, and covenants with respect to Venu’s ownership, use, and development of the land acquired
from the municipality. Those restrictions are typically incorporated into ancillary agreements entered into by Venu and the local government
that it is partnering with (such agreements, the “ Restricting Agreements ”), which may include, for example, a Development
Agreement, a Parking Agreement, or a Facilities Use Agreement.
The
Restricting Agreements typically require various levels of political and governmental approval, such as by the local city council, an
economic-development council, or the secretary of state. The process of obtaining all required governmental approvals, permits, and entitlements
can be time-consuming and costly for Venu. Even after obtaining those approvals, Venu’s ability to continue owning, holding, and
developing the real-property asset that it acquires from a local municipality in a public-private partnership depends on its compliance
with the restrictions and conditions set forth in the Restricting Agreements. Typical restrictions include requirements to satisfy minimum
capital-investment obligations, to meet various project development and construction deadlines, to hold a minimum number of events per
year once the venue is operating, or to sell a minimum number of tickets per season.
If
Venu is unable to comply with the conditions, restrictions, and obligations set forth in Restricting Agreements, Venu may be subject
to monetary penalties, lose the tax or economic incentives that initially induced Venu’s partnership with the municipality, or
cause the land that Venu acquired in the public-private partnership to be recouped by the municipality. Project and construction delays
that cause Venu to fall behind the timeline specified in a Development Agreement could cause the project to be terminated or obligate
Venu to pay a fee.
Venu’s
expansion into Gainesville, Georgia, Broken Arrow, Oklahoma, McKinney, Texas, and El Paso, Texas involve public-private partnerships.
26
A
summary of our public-private partnerships, including our investment commitments, purchase prices for land and/or assets, and associated
deadlines for each, is provided below.
Public-Private Partnership
Investment
Commitment
Purchase Price for Land
and/or Assets
Deadline for Making Investment
or Purchasing Land/Assets
Broken Arrow, Oklahoma
Minimum Capital Investment: $70 million
Purchase Price:
$577,314.62
The closing and payment of Purchase Price occurred on May 23, 2024.
McKinney, Texas
$200 million
Purchase Price:
$35 million, payable either (i) in full, in cash, or (ii) in $10 million
cash and $25 million in a promissory note secured by a deed of trust and personally guaranteed. Upon obtaining a Certificate of Occupancy,
the Company will be reimbursed by MEDC for all purchase monies paid by the Company to MEDC, up to the purchase price, and the Company
and the guarantors will be released from their respective obligations under the deed of trust, note, and personal guaranties.
The closing and payment of the Purchase Price occurred on January 14, 2025.
El Paso, Texas
Minimum Qualified Expenditures: $80 million
Purchase Price: None—The land will be conveyed by the city for no cost.
Venu must submit documentation to the City of El Paso within 36 months after Entitlement, verifying the expenditure of a minimum of $80 million in Qualified Expenditures. Entitlement and Venu’s closing on its purchase of the El Paso property is expected to occur by April 30, 2025.
Public-Private
Partnership in Gainesville, Georgia
In
connection with its development of the BBP GA indoor music hall and the BBST GA restaurant in Gainesville, Georgia, GA HIA, LLC (a subsidiary
of Venu that Venu exercises total voting control over) partnered with the Gainesville Redevelopment Authority in January 2022. In addition
to the Purchase and Sale Agreement that GA HIA negotiated with the GRA, which enabled GA HIA to purchase approximately 1.7 acres from
the GRA for less than the fair-market value of the land, GA HIA and the GRA entered into a Development Agreement, a Parking Agreement,
and a Facilities Use Agreement. The Development Agreement required GA HIA to develop and construct the BBP GA and BBST GA venues according
to a detailed construction schedule and in conformance with the architectural renderings and budget submitted when GA HIA applied for
funding through the City of Gainesville’s tax-allocation district redevelopment program (the “ TAD Program ”),
to provide the City of Gainesville with construction and interim-progress reports, to satisfy various other reporting requirements related
to GA HIA’s development of the venues, and to maintain the BBP GA and BBST GA properties in good repair and operating condition.
GA HIA applied for and was approved to receive approximately $1.9 million in funding under the TAD Program, which is payable by the City
of Gainesville in the form of reimbursement for costs incurred by GA HIA over up to a 15-year period. GA HIA’s eligibility to receive
any TAD Program funding is conditioned on its maintenance of the property as a tourism attraction used for the operation of a restaurant
and entertainment venue. GA HIA’s breach of the Development Agreement could result in the Development Agreement being terminated,
GA HIA having to return all of the funds received from the GRA, the GRA pursuing injunctive relief against GA HIA, or GA HIA incurring
other penalties to remedy any harm suffered by the City of Gainesville.
27
Pursuant
to the Facilities Use Agreement, GA HIA’s use of the BBP GA venue is partially restricted by the City of Gainesville’s rights
to use the venue up to seven Sundays and five weekdays per calendar year for any city-sponsored event. GA HIA must provide the City of
Gainesville with access to a shared event calendar, and upon at least 45 days’ notice, the City of Gainesville can reserve any
unreserved date on the calendar. In turn, the City of Gainesville is required to use GA HIA as its exclusive vendor for all food, beverage,
catering, hospitality, and related services at events hosted at BBP GA.
Similarly,
pursuant to the Parking Agreement entered into by GA HIA and the City of Gainesville, GA HIA was given certain rights to use a city-controlled
park adjacent to the BBP GA and BBST GA venues for purposes of additional event parking up to sixteen times per year without charge.
However, GA HIA’s parking rights are expressly subject to the priority and exclusive parking rights of the Gainesville Arts Council,
which has the right to use the park up to sixteen times per year when parking is needed for Arts Council events.
Public-Private
Partnership in Broken Arrow, Oklahoma
In
October 2023, Sunset BA, a subsidiary that Venu currently owns a majority equity interest in but anticipates owning a minority equity
interest in, and that Venu currently exercises and will continue to exercise total voting control over, entered into an Economic Development
Agreement with the City of Broken Arrow, Oklahoma (“ Broken Arrow ”) and the Broken Arrow EDA with the intent to develop
The Sunset BA, a 12,500-capacity amphitheater that will be constructed on approximately 13 acres of land adjacent to the 165-acre Broken
Arrow Events Park. The Economic Development Agreement required the approval of the Broken Arrow City Council. To incentivize Sunset BA
to enter into the public-private partnership, Broken Arrow agreed to sell at least 13 acres but up to 20 acres of land to Sunset BA at
a price of $38,462 per acre. Additionally, Broken Arrow committed approximately 30 acres of land from the adjacent Event Park to be used
for parking and infrastructure needs for The Sunset BA and agreed to make $17.81 million in capital improvements to the Events Park infrastructure
(the “ Project Improvements ”), which will be funded using TIF Bonds issued by the Broken Arrow EDA that will be paid
using a portion of the sales and use tax, hotel tax, and other tax revenues that comprise the Tax Increment generated within the Increment
District established by Broken Arrow.
In
exchange for the financial incentives that Sunset BA is receiving under its public-private partnership with Broken Arrow, the Economic
Development Agreement imposes various obligations and restrictions on Sunset BA’s ownership and development of the land it is acquiring
from Broken Arrow. Under the terms of the original Economic Development Agreement, certain mutual conditions precedent were required
to be completed by the parties by January 31, 2024 (the “ Conditions Precedent Deadline ”), but the Conditions Precedent
Deadline was extended to June 30, 2024, through a series of amendments to the original Economic Development Agreement, including a First
Amendment dated January 31, 2024, a Second Amendment dated February 21, 2024, a Third Amendment dated March 5, 2024 (the changes under
which were unrelated to the extension of the Conditions Precedent Deadline), and a Fourth Amendment dated March 5, 2024. All of the mutual
conditions precedent have been satisfied. Pursuant to the Purchase and Sales Agreement between Sunset BA and Broken Arrow, dated March
6, 2024, the closing of the sale was originally set to occur on April 10, 2024. However, the closing date was subsequently extended and
Venu closed on the property on May 23, 2024.
Additionally,
Sunset BA is required to: (i) make a minimum capital investment of $70 million towards the development of The Sunset BA; (ii) host a
minimum of 45 scheduled events per calendar year; (iii) provide the Broken Arrow with periodic updates to The Sunset BA’s site
plan and design documents; (iv) construct and maintain The Sunset BA in accordance with standards applicable to a first-class entertainment
venue; (v) charge an additional 1% special assessment on all taxable sales directly associated with The Sunset BA venue; and (vi) provide
Broken Arrow with monthly consolidated reports listing taxable transactions (such as ticket sales, concessions, and merchandise sales)
completed by Sunset BA and/or its contract vendors. Furthermore, Sunset BA is required to complete its construction of The Sunset BA
amphitheater by December 31, 2025, subject to the timely completion of all obligations owed by Broken Arrow and the Broken Arrow EDA.
If Sunset BA fails to timely construct The Sunset BA amphitheater, it must pay Broken Arrow a fee of $10,000 per month for each month
that the venue remains unfinished.
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Sunset
BA also faces certain risks related to the completion of the Project Improvements that Broken Arrow agreed to make. The costs of the
Project Improvements will be funded using TIF Bonds issued by the Broken Arrow EDA. The payment of the TIF Bonds directly depends on
Sunset BA’s success in developing and operating the Broken Arrow Amphitheater in a manner that generates sufficient Tax Increment
revenue. Accordingly, Sunset BA agreed to timely remit, and to use commercially reasonable efforts to make its contractors timely remit,
all legally required ad valorem and sales taxes. If Sunset BA fails to operate the Broken Arrow Amphitheater in a manner that generates
sufficient Tax Increment revenue to pay the TIF Bonds, Broken Arrow would be unable to pay for the Project Improvements, and Sunset BA
would not receive the benefit of one of the material financial incentives that induced its entry into the public-private partnership.
Public-Private
Partnership in McKinney, Texas
In
March 2024, Venu formed a public-private partnership with the City of McKinney, Texas (“ McKinney ”) with plans to construct
The Sunset McKinney, a 20,000 seat, open-air amphitheater and entertainment complex. Pursuant to the Chapter 380, Grant, and Development
Agreement that Venu entered into with McKinney, the MEDC, and the McKinney Community Development Corporation on April 16, 2024 (the “ McKinney
Development Agreement ”), Venu will construct The McKinney Complex on a 46-acre tract (the “ McKinney Tract ”)
that MEDC has agreed to sell to Venu for an aggregate purchase price of $35,000,000 to be paid at the closing of the sale at Venu’s
option either (i) in full, in cash, or (ii) with $10,000,000 paid in cash (the “ McKinney Cash Payment ”) and $25,000,000
represented by a secured promissory note to MEDC (the “ McKinney Note ”), which will bear no interest, be subject to
prepayment without penalty, be secured by a Deed of Trust conveying a first-priority lien on the McKinney Tract (the “ McKinney
Deed of Trust ”), and be personally guaranteed by our Chairman and a third party shareholder (such guaranty, the “ McKinney
Guaranty ”). Closing was required to occur within 30 days after the entitlement of the McKinney Property (the “ Entitlement
Date ”) and took place on January 14, 2025.
On
October 15, 2024, the parties amended the McKinney Development Agreement to, among other things: (i) eliminate the “Letter of Credit”
payment concept and instead provide for payment of the McKinney Purchase Price either fully in cash or with a combination of the $10,000,000
McKinney Cash Payment and the $25,000,000 McKinney Note, to be secured by the McKinney Deed of Trust and personally guaranteed by the
McKinney Guaranty; (ii) require MEDC, if not paid fully in cash, to invest the McKinney Cash Payment in a public investment pool or other
investment instrument, which will initially accrue interest at a rate of 4.75% (such interest, the “ Accrued Interest ”),
all of which MEDC must pay to Venu until the earlier of December 15, 2027, the date the McKinney Cash Payment has been reimbursed to
Venu, or the date the McKinney Cash Payment has been retained by MEDC following a default under the agreement by Venu; (iii) require
Venu to repay all Accrued Interest to MEDC through a temporary adjustment to the ticket fee payable by Venu to MEDC; (iv) expand the
list of permitted operators that Venu can enter into the required Operator Agreement with; (v) require Venu to use reasonable efforts
to acquire right-of-way or easements required to install qualified public infrastructure for the McKinney Complex; and (vi) require Venu
to modify its plans to construct The Sunset McKinney to include the construction of an enclosed stage, a sound-attenuating wall attached
to the parking garage, sidewalks, an internal fire lane from the amphitheater, a barrier wall along the southern perimeter of the McKinney
Complex, a redesigned “Owner’s Suite,” and an additional suite, as specified in the amended development plans.
The
McKinney Development Agreement was amended for a second time on December 3, 2024, to: (i) extend the date by which Venu must enter into
the required Operator Agreement to September 15, 2025; (ii) provide that Venu will be deemed to have committed an event of default under
the McKinney Development Agreement if it defaults under the Operator Agreement, such Operator Agreement is between Venu and one of its
wholly-owned subsidiaries, and such default remains uncured beyond any applicable notice and cure period (such default, an “ Operator
Agreement Default ”); (iii) state that if Venu commits an uncured Operator Agreement Default, Venu will not be entitled to receive
any of the contributions or incentives set forth in Section 9.8 of the McKinney Development Agreement; (iv) expand the list of permitted
operators that Venu can enter into the Operator Agreement with to include a wholly-owned subsidiary of Venu; and (v) require that Venu
to provide any required notices under the Operator Agreement to McKinney, MEDC, and MCDC if a wholly-owned subsidiary of Venu becomes
an operator under the Operator Agreement.
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One
of the primary financial incentives offered to Venu through its public-private partnership with the McKinney Parties is the potential
reimbursement of the McKinney Purchase Price that Venu must pay for the McKinney Property. If Venu receives a Temporary Certificate of
Occupancy (a “ TCO ”) within the 36-month period following the Entitlement Date, or if Venu receives a Certificate of
Occupancy (a “ CO ”) if it has not received a TCO within 36 months from the Entitlement Date, then within 30 days of
Venu’s receipt of the TCO or the CO, MEDC will reimburse Venu for the McKinney Purchase Price, and Venu and the guarantors will
be released from their respective obligations under the McKinney Note, the McKinney Deed of Trust, and the McKinney Guaranty. If Venu
meets the conditions for reimbursement and paid the McKinney Purchase Price through a combination of cash, a promissory note, a deed
of trust, and personal guaranties, then MEDC will reimburse Venu for the McKinney Cash Payment and will release Venu and the personal
guarantors from their respective obligations under the McKinney Note, the McKinney Deed of Trust, and the McKinney Guaranty. If Venu
fails to receive a TCO and to begin operations within 36 months from the Entitlement Date, Venu may still be reimbursed for the McKinney
Purchase Price, but such reimbursement will be reduced by liquidated damages of $5,000 per day, which will accrue until Venu receives
a TCO.
Venu
is subject to a robust list of deadlines under the McKinney Development Agreement, as amended, pursuant to which Venu was obligated,
among other things, to: (i) conduct a site plan and submit it to McKinney within 120 days of March 6, 2024; (ii) conduct a noise study
and final traffic study of the McKinney Complex ingress and egress not less than one month before any public meetings regarding the required
site plan for the McKinney Complex; (iii) submit the Preliminary Base Complex Plan (as defined in the Development Agreement) by July
15, 2024; (iv) provide McKinney with a financing plan, including projected sources and uses for financing proceeds, by September 1, 2024;
(v) submit the Final Base Complex Plan (as defined in the Development Agreement) by December 15, 2024; (vi) enter into a fully executed,
binding Operator Agreement, which must have a term of at least ten years with two, five-year renewals exercisable by and at the option
of Venu, by September 15, 2025; (vii) receive a TCO and begin operations within 36 months from the Entitlement Date; and (viii) receive
a CO within 42 months from the Entitlement Date.
As
part of their public-private partnership, Venu and McKinney must prepare and adhere to a Complex Budget, which budgets the total costs
of developing the McKinney Property and constructing the McKinney Complex. The anticipated Complex Budget is $220,000,000, subject to
any increase or decrease in Venu’s sole discretion, provided that the McKinney Complex Budget cannot be reduced below $200,000,000
without McKinney’s consent. Venu is responsible for securing its portion of the McKinney Complex Budget required for the planning,
development, and construction of the McKinney Complex and all Project Improvements. Venu will be responsible for the payment of any Cost
Overruns in excess of the Complex Budget, provided that Cost Overruns will not include any excess costs and expenses that result from
any acts, failures to act, or omissions of the McKinney Parties. Accordingly, any additional costs that result from Venu’s failure
to adhere to the Project Construction Timeline would be borne by Venu.
Venu
also must adhere to the Project Construction Schedule, the initial version of which is attached as Exhibit E to the Development Agreement,
which specifies various timing expectations for steps in the construction process of The Sunset McKinney. Throughout the construction
timeline, Venu must meet monthly with representatives of the McKinney Parties and other contractors to discuss the status of Venu’s
efforts to comply with the foregoing conditions and must provide written monthly reports to a representative of McKinney regarding the
status of Venu’s construction of the McKinney Complex and any material changes to the Project Construction Schedule or the Complex
Budget.
Once
construction of the McKinney Complex is complete, Venu is required to present at least 45 commercial events per year at The Sunset McKinney
amphitheater. Venu or its operator must pay McKinney a ticket fee equal to $1.00 per manifested ticket sold (the “ Ticket Fee ”),
subject to adjustment as set forth in the First Amendment to the Chapter 380, Grant, and Development Agreement. If Venu hosts at least
45 commercial events annually, with a paid attendance of at least 400,000 manifested tickets annually, McKinney or a related party will
pay Venu the list of financial incentives and contributions set forth in Section 9.8 of the Development Agreement (the “ McKinney
Incentives ”), almost all of which will not be paid, and will be subject to repayment through subsequent-year reductions, in
any year in which less than 45 commercial events are held. Accordingly, Venu faces the risk that it will not receive the material financial
incentives that partly induced its entry into the public-private partnership with McKinney if it fails to meet the 45-event requirement
each year.
30
If
Venu fails to meet the foregoing deadlines, and there are no reasonable excuses for the delays, the McKinney Parties can exercise various
remedies set forth in the Development Agreement. Depending on the cause of Venu’s breach, certain remedies that are exercisable
by McKinney may result in Venu becoming ineligible to receive, or receiving a reduced amount, of McKinney Incentives. Upon the occurrence
of any of the events listed below (an “ Event of Default ”), Venu will be subject to the penalties described with respect
to each Event of Default, including:
(i)
If
Venu fails to enter into an Operator Agreement by September 15, 2025, Venu will become ineligible to receive any of the McKinney
Incentives.
(ii)
If
Venu fails to obtain a TCO within 36 months from the Entitlement Date, Venu will become ineligible to receive any of the McKinney
Incentives other than the reimbursement of the McKinney Purchase Price, subject to such reimbursement being reduced by $5,000 per
day until Venu obtains a TCO.
(iii)
If
Venu fails to obtain a CO within 42 months from the Entitlement Date, then until Venu obtains a CO, Venu will be ineligible to receive
any of the McKinney Incentives, other than the reimbursement of the McKinney Purchase Price, and Venu will be required to pay liquidated
damages in the amount of $5,000 per day in the form of a reduction to, at the McKinney Parties’ option, one or more of the
McKinney Incentives, which damages will accrue until Venu obtains a CO.
(iv)
If
Venu becomes bankrupt, insolvent, subject to involuntary dissolution, subject to an assignment of all or substantially all of its
assets for the benefit of creditors, or subject to similar actions involving bankruptcy or creditors’ rights described in the
Development Agreement, the McKinney Parties may terminate the Development Agreement, Venu will become ineligible to receive any additional
McKinney Incentives, and if Venu has already purchased the McKinney Property but has not been reimbursed for the McKinney Purchase
Price by MEDC, then MEDC will retain the McKinney Purchase Price, including any amount of the McKinney Purchase Price already paid
to MEDC, and may exercise any remedies provided by the McKinney Deed of Trust, Development Documents (as defined in the McKinney
Deed of Trust), or applicable law.
(v)
If
Venu breaches the Development Agreement by failing to keep, observe, or perform any of the terms, covenants, or agreements that it
is required to keep, observe, or perform under the Development Agreement (other than those referred to in clauses (i) through (v)
above), and fails to cure such breach within the time periods specified in Section 23.1.1(e) of the Development Agreement, or if
Venu defaults under an Operator Agreement between Venu and one of its wholly-owned subsidiaries and such default remains uncured
beyond any applicable notice and cure period, then Venu must pay liquidated damages in the amount of $5,000 per day in the form of
a reduction to, at the McKinney Parties’ option, one or more of the McKinney Incentives, which damages will accrue from the
date Venu is notified of its default until Venu has cured such default; provided, that if such default is not cured within 180 days,
Venu will thereafter not be entitled to receive any McKinney Incentives.
While
Venu’s public-private partnership with McKinney gives Venu the potential to receive several material financial incentives, Venu
may forfeit those incentives or received reduced incentives if it fails to comply with the various deadlines and expectations set forth
in the Development Agreement. Any reduction or forfeiture of the McKinney Incentives would result in Venu paying for more of the costs
of purchasing the McKinney Property and constructing the McKinney Complex than it anticipated when it entered the Development Agreement
with the McKinney Parties.
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Public-Private
Partnership in El Paso, Texas
On
April 30, 2024, Venu executed a non-binding term sheet with the City of El Paso, Texas, which was approved by the El Paso City Council
by a vote of 6-1. The term sheet defined a more detailed, negotiated Chapter 380 Economic Development Agreement and Purchase and Sale
Agreement (the “ El Paso Definitive Agreements ”) between Venu and the City of El Paso. The El Paso Definitive Agreements
were executed in June and July 2024, pursuant to which a public-private partnership was established between Venu and the City of El Paso.
The Chapter 380 Economic Development Agreement defines the terms for the construction of The Sunset El Paso, a 12,500-person amphitheater
to be developed by Venu. Pursuant to the El Paso Definitive Agreements, the City of El Paso will provide various financial incentives
to Venu, including the conveyance of approximately 17 acres for the site location on the terms set forth in the Purchase and Sale Agreement,
the guarantee and/or funding of all parking facilities, the waiver of all fees for the building permits and inspections required to develop
The Sunset El Paso, and the provision of annual rebates on real and business personal property, sales and use, and mixed beverage taxes
over up to a 20-year rebate period as part of an incentives package that will total approximately $30.9 million. Additionally, the City
of El Paso expects to contribute $8 million in cash towards construction of the amphitheater via an eight-year, zero-interest, forgivable
promissory note, which will be forgiven if Venu completes construction of The Sunset El Paso within 36 months from Entitlement and hosts
a minimum of 25 events per year in years 3-5 of the rebate period. The Purchase and Sale Agreement was amended on August 29, 2024, October
28, 2024, January 27, 2025, and March 3, 2025, and in each case to extend the inspection period. Venu expects to close on its purchase
and acquisition of the El Paso property on or before April 30, 2025.
As
part of its proposed public-private partnership with El Paso and in exchange for El Paso’s incentives package, Venu must, among
other obligations: (i) invest at least $80 million in the acquisition, development, carrying costs, construction, and business personal
property costs associated with developing The Sunset El Paso; (ii) commence construction of The Sunset El Paso within 90 days following
Entitlement; (iii) obtain a Temporary Certificate of Occupancy no later than 36 months after Entitlement; (iv) secure a venue operator
to operate the amphitheater for a 10-year term with two, five-year extensions prior to obtaining a Certificate of Occupancy; and (v)
host a minimum of 40 events per year. If Venu defaults under the terms of the term sheet or the Definitive El Paso Agreements and fails
to timely cure such defaults, Venu must repay any rebates it received from El Paso pursuant to a recapture schedule to be defined in
the Chapter 380 Economic Development Agreement.
Competition
The
following factors contribute to the competitive environment that Venu faces in the live-entertainment and hospitality industry:
●
Within
the live-entertainment and hospitality industry, Venu will compete against other live-music venues in the states in which Venu has
expanded or plans to expand to, such as the Red Rocks Amphitheater in Morrison, Colorado, and the Toyota Music Factory near the DFW
area of Texas.
●
The
offerings in the live-entertainment and hospitality space are diverse. Not only does Venu compete against other music venues for
bookings and ticket sales, Venu also competes against companies that offer other forms of media and entertainment, including sporting
events, music festivals, theaters, and other live-entertainment venues.
●
Despite
general trends indicating that consumers are willing to spend high-dollar prices to see their favorite artists perform live, many
Americans are cutting back on their entertainment spending due to recessionary fears and exorbitant, inflationary costs.
●
Many
of Venu’s planned venues are a drivable, though less convenient, distance from larger cities that commonly attract big names
in entertainment, which could create an oversaturation of entertainment offerings and make it more difficult for Venu to route those
artists to its venues. With an assortment of venue options, touring acts may be more inclined to perform at older, more established
venues despite the updated features and amenities that Venu’s venues offer.
●
Given
that Venu is less than a decade old, it may not have the brand recognition that other venues do, which could make it difficult to
break into new markets. Venu may also have difficulty competing against larger companies that can allocate greater resources to marketing,
technical operations, and brand recognition than Venu can.
●
Venu
operates in an industry that is affected by seasonality. The industry is frequently affected by external factors that are beyond
Venu’s control but that may challenge Venu’s ability to operate, compete, and remain profitable. Those external factors
may include weather incidents, natural disasters, geopolitical events, or public-health risks, all of which could lower attendance
at Venu’s venues or disrupt Venu’s concert lineup.
Despite
those factors, Venu believes it can compete in the live-entertainment and hospitality.
Venu’s
approach to market expansion is subject to regimented criteria and a methodical site-selection plan for developing new properties and
establishing itself in new markets. Venu only enters a new market that it believes it is relatively barren of other live-entertainment
offerings or venues that would compete against Venu. Venu also seeks markets that its management team or real-estate leads have ties
to, which facilitates Venu’s ability to raise capital and build relationships within the communities it is expanding in. For more
information on Venu’s site-selection process and expansion strategy, see “Venu’s Mission and Strategy — Site-Selection
Strategy .”
Additionally,
even where there are existing live-music and entertainment venues in the general vicinity of where Venu plans to expand to, part of what
is expected to attract audiences to Venu’s venues is that they are newly designed and updated venues with modern, premium features
that older venues do not deliver.
Lastly,
management believes that the strategic partnerships that Venu enters into give it a competitive edge. Venu partners with both public
municipalities and other companies. By partnering with local governments that see the long-term value of Venu’s entertainment assets
and choose to invest local resources into the construction and development of Venu’s venues, Venu positions itself as a potential
top entertainment competitor within the local market. Through its private partnerships with other companies, Venu seeks to ensure that
its venues are operated as efficiently and effectively as possible. This is demonstrated, for example, by Venu’s strategic partnership
with AEG to operate Ford Amphitheater in Colorado Springs, Colorado.
Government
Regulations
Venu
is subject to an array of federal, state, and local laws. As part of the entertainment and hospitality industry, Venu is subject to substantial
governmental and regulatory oversight. The laws and regulations that Venu is subject to govern matters such as:
●
Zoning
and land use, which dictates where Venu can build venues, how its venues can be used, and what types of events can be hosted in them;
●
Infrastructure
and safety standards, which require Venu to comply with building codes that ensure the soundness of the design, construction, and
structural integrity of Venu’s venues and protect the public health and safety of Venu’s occupants by setting occupancy
limits and imposing fire-safety standards;
●
Noise
levels, which require Venu to comply with local noise ordinances to minimize disruptions to neighborhoods and businesses in close
proximity of Venu’s live-music venues;
●
Labor
and employment practices, which require Venu to adhere to labor laws regarding wages, work hours, working conditions, employee rights,
and workplace safety;
●
Alcohol
sales, service, and consumption, which regulate the licenses of each of Venu’s venues to serve alcohol, impose age restrictions
for alcohol consumption, and ensure Venu upholds responsible alcohol-service standards;
●
Intellectual-property
rights, which Venu must respect when booking, marketing, and hosting live-music concerts and when entering into sponsorship agreements
with various companies and brands;
●
Privacy
rights, which require Venu to protect sensitive and personal information collected from its customers or artists at its venues;
●
Bribery
and corruption, including the Unites States Foreign Corrupt Practices Act, which prohibits Venu and is agents and intermediaries
from illegally paying, promising to pay, or receiving money or anything of value to or from any government or foreign public official
for the purpose of directly or indirectly obtaining or retaining business;
32
●
Health
and sanitation, which establish standards for the cleanliness and sanitariness of Venu’s restaurants and venues and require
Venu to implement various precautionary measures to mitigate the spread of infectious diseases;
●
Food
and beverage service operations, which govern Venu’s handling, preparation, and service of food and drinks, the hygiene of
Venu’s food-handling personnel, Venu’s upholding of various food-safety regulations, and the cleanliness of Venu’s
kitchen facilities;
●
Ticketing
practices, which regulate Venu’s compliance with laws concerning primary ticket sales, ticketing resale services in secondary
ticket markets, pricing and refunds, pricing transparency, scalping practices, and imposing ticket-related fees;
●
Venue
accessibility, which requires Venu to comply with the Americans with Disabilities Act of 1990 and other laws or regulations concerning
accessibility;
●
Environmental
protection, which govern Venu’s use of materials when designing and constructing venues and impose requirements related to
energy efficiency, waste management, and pollution control;
●
Federal and state securities laws, and other regulations, that pertain
to the offerings (such as firepit suite sales) conducted by Venu subsidiaries for certain of Venu’s amphitheater and development
projects; and
●
Marketing
activities, which limit Venu’s telephone and online marketing practices.
Venu
believes that it is materially in compliance with all of the rules, laws, and regulations that it is subject to. From time to time, federal,
state, and local authorities or individuals may commence investigations, inquiries, or litigation with respect to Venu’s compliance
with applicable consumer protection, environmental, advertising, unfair business practice, antitrust (and similar or related laws) and
other laws, particularly as related to noise levels, venue construction and development, and primary and secondary ticketing sales and
services.
Employees
and Human Capital
As
of March 15, 2025, Venu has 50 full-time employees and 178 part-time employees. Venu’s compensation philosophy focuses on attracting
and retaining top talent who contribute to its mission of revolutionizing the entertainment and hospitality industry, providing world-class
service, and delivering exceptional entertainment experiences. Venu is able to accomplish its compensation philosophy by offering incentive-compensation
awards to employees, consultants, or directors who are designated by the Board or its committees under the Company’s Amended and
Restated 2023 Omnibus Incentive Compensation Plan or other forms of equity compensation warrants. Incentive-compensation awards can consist
of compensatory warrants (issued outside of our Incentive Compensation Plan), incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, restricted stock units, and performance awards. In addition, prior to the adoption of our Incentive
Compensation Plan, Venu historically has granted compensatory warrants to employees and service providers.
Venu
anticipates increasing hiring activity as it continues to expand to new markets and open new venues.
Intellectual
Property Portfolio
Venu
filed an application to trademark the name “Notes Live” with the U.S. Patent and Trademark Office (“ USPTO ”)
on April 14, 2022, which it revised on March 7, 2023. The USPTO registered the trademark on August 8, 2023 (Registration No. 7130383).
Venu
filed an application (U.S. Serial No. 97759523) to trademark the name “Sunset Amphitheater” with the USPTO on January 18,
2023. The USPTO published the pending trademark application for opposition on January 23, 2024, which allows the public the opportunity
to oppose the trademark’s registration. The USPTO issued Venu a Notice of Allowance on March 19, 2024, and Venu was required to
file a Statement of Use or an Extension Request within six months of that date but filed for an extension related to that obligation.
The status of this trademark application is still pending.
33
Venu
filed an application (U.S. Serial No. 98186179) to trademark the name “VENU” to use in printed and online magazines in the
fields of live music and hospitality on September 19, 2023. The USPTO published the pending trademark application for opposition on February
11, 2025, which allows the public a 30-day period to oppose the trademark’s registration. If no objection is filed, the USPTO will
register the trademark.
Hospitality
Income & Asset, LLC (“ HIA ”), which is a majority-owned subsidiary of Venu, filed an application to trademark the
name “Bourbon Brothers” with the USPTO on February 23, 2013, which was registered by the USPTO on September 30, 2014 (Registration
No. 4614527).
Venu
also registered three trade names with the Colorado Secretary of State by filing a Statement of Trade Name of a Reporting Entity on:
(1) February 19, 2019 (File No. 20191101304) for “Boot Barn Hall at Bourbon Brothers,” a trade name for Bourbon Brothers
Presents, LLC; (2) August 8, 2022 (File No. 20221772018) for “Notes,” a trade name for 13141 Notes LLC; and (3) May 29, 2024
for “VENU Holding Corporation,” a trade name for our former Company name, Notes Live, Inc.
In
June 2024, Venu filed seven additional trademark applications with the USPTO to register the following trademarks:
●
BUY
IN. ROCK ON., Application No. 98/585,965, filed on June 5, 2024;
●
BUY
THE STOCK THAT ROCKS, Application No. 98/585,902, filed on June 5, 2024;
●
INVEST
IN THE STOCK THAT ROCKS, Application No. 98/585,955, filed on June 5, 2024;
●
OWN
THE STOCK THAT ROCKS, Application No. 98/585,964, filed on June 5, 2024;
●
STOCK
THAT ROCKS, Application No. 98/585,953, filed on June 5, 2024;
●
FAN
FOUNDED. FAN OWNED., Application No. 98/587,942, filed on June 6, 2024; and
●
VENU,
Application No. 98/605,958, filed on June 18, 2024, which was published for opposition for a 30-day period on February 4, 2025, and
will be registered by the USPTO if no objections are filed.
On
July 2, 2024, Venu filed the following four Statements of Trademark Registration of a Reporting Entity with the Colorado Secretary of
State to register the trademark “VENU” in four classes: (i) File No. 20241713474 (Class No. 016); File No. 20241713521 (Class
No. 036); File No. 20241713551 (Class No. 037); and File No. 20241713564 (Class No. 041).
On
February 28, 2025, Venu filed trademark application (Application No. 99/062,206) to register LUXE FIRESUITES.
Available
Information
Our
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to
Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the Securities
and Exchange Commission (the “SEC”). These reports and other information we file with or furnish to the SEC are available
free of charge at https://investors.venu.live/financials/sec-filings as soon as reasonably practicable after they are electronically
filed with or furnished to the SEC. In addition, the SEC maintains an internet site that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
We
use our website (www.venu.live) and various social media channels (e.g., VENU on LinkedIn) as a means of disclosing information about
Venu and our projects and products to our customers, investors, and the public. The information posted on our website and social media
channels is not incorporated by reference in this Report or in any other report or document we file with the SEC. Further, references
to our website URLs are intended to be inactive textual references only. The information we post through these channels may be deemed
material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings, and public
conference calls and webcasts. Although our executive officers may also use certain social media channels, we do not use our executive
officers’ social media channels to disclose information about Venu or our products or projects.
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