Mesa mega-park owners file for bankruptcy

Article originally posted on HERE on May 16, 2023

The owner of Mesa’s financially troubled Legacy Park, formerly known as Bell Bank Park, last week filed a petition for Chapter 11 bankruptcy in the U.S. Bankruptcy Court of Arizona.

Chapter 11 provides temporary protections from creditors while an entity attempts to reorganize in the hopes of returning to solvency. It is different from Chapter 7 bankruptcy, in which an entity’s assets are liquidated to pay off outstanding debts.

In a statement following the filing, park owner Legacy Cares said it intends to use Chapter 11 bankruptcy “to protect and support the park’s business operations and address Legacy Cares’ debt obligations while working towards an orderly and efficient possible sale of Legacy Cares’ assets in a manner that maximizes their value.”

In the filing, Legacy Cares states that it currently owes $366 million to bondholders, contractors and various service providers.

The filing says it currently possesses $242 million in assets, mostly from the $229 million it figures the structures and improvements at the 320-acre park are worth.

Its assets don’t include the land under the park, which Legacy rents from landowner Pacific Proving for about $300,000 a month.

Legacy reported it had $1.4 million in cash or cash equivalents as of late April and says it also owns $8 million in furniture, fixtures and equipment.

The filing shows that a considerable portion of the technological bells and whistles at the park’s fields are leased: $17 million in leased fixtures and equipment, including scoreboards and audio/visual equipment, are detailed in the filing.

Legacy said it “anticipates” finalizing a sale of its assets in the park by August 2023. Until then, the park “will continue to be open and operate in the normal course of business” during the bankruptcy case.

In the statement released following the filing, Legacy Cares said “all (employee) wages will be paid on time and in full” and all vendors doing business with the park after the filing will also be paid.

The organization said it is working on securing debtor-in-possession financing from its existing lender, subject to court approval, to support its day-to-day operations in the coming months.

Debtor-in-possession financing is a specialty loan for companies in Chapter 11 bankruptcy that takes priority over other debts and allows the organization to continue operating.

The bankruptcy filing requires Legacy to detail many of its expenditures during the year prior to the filing and the document reveals large compensation packages for the principals of the park.

The filing shows that Legacy Cares President Douglas Moss was paid $298,982 in salary and expense in the past 12 months.

It also indicates that Legacy Cares had a “fee agreement” for an undisclosed amount with a company Moss owns called Kingdog Enterprises in Scottsdale.

Legacy paid its Chief Financial Officer Lawrence White $641,012 in “professional fees” rather than a salary, according to the filing.

The nonprofit Legacy Cares owns the park, which was necessary for it to sell tax-exempt municipal bonds to investors through the Arizona Industrial Development Authority.

But it was managed until last month by Legacy Sports USA, a for-profit whose principals included Randy Miller and his sons Chad and Brett, the masterminds of Legacy Park.

According to the filing, Legacy Cares paid Legacy Sports $3.5 million to manage the park in the past year.

Last month, Legacy Cares announced a management change, ostensibly firing Legacy Sports and hiring a new manager, Elite Sports Group LLC, an entity formed just two months ago.

As the park has wrangled with its creditors over the past months, there had been talk of the senior bondholders requiring management changes if they were to continue forbearing on their rights under the terms of the loan default, but it’s not clear to what degree Elite Sports Group actually represents new management.

Elite Sports Group did not respond to request for more information about it and the names of its principals.

A document included in Legacy’s Chapter 11 filing lists Brett Miller as a managing member of Elite Sports Group, suggesting the Millers have not exited the park yet.

Online, Legacy Sports’ website redirects to Elite Sports’ website, which is very similar in look and design as the Legacy Sports website.

Legacy Sports’ social media feeds have also seamlessly transitioned to Elite Sports Group content.

Whatever Elite Sports Group’s connection to Legacy Sports, Legacy Cares said one of its own employees, Rodney Reese, would “oversee the day-to-day management.”

Reese previously worked at the park as director of sports business development under Oak View Group, a national sports and entertainment company that had a management agreement with Legacy Sports.

He left the park when the management change occurred last month.

The general manager and executive chef at the park under OVG are no longer at Legacy Park.

Legacy Cares’ bankruptcy filing fulfills a prediction made by an accountant in Rhode Island eight months ago at a time when people associated with the park were still puffing up the project and local officials eyed the promise of youth sports tourism filling up hotel rooms.

Griffin saw trouble brewing after he read about the park and caught the attention of federal agencies. He is assisting the SEC and others on fraud-related investigations.

Griffin said he doesn’t think the bankruptcy filing is anywhere close to the end of the story for Legacy Park and its developers.

“I think we are only in the second inning,” he said. “The bankruptcy process will be messy and lengthy. However, civil litigation will begin to fly in multiple directions.”

“In addition, regulators will step into the mix due the amount of the losses and nature of the securities (tax-exempt bonds) via a conduit such as the Arizona Industrial Development Authority,” Griffin continued.

He said the park’s primary investors are large institutional investors, including Vanguard and PIMCO, which  manage retirement accounts and pensions, Griffin said.

Vanguard and PIMCO “simply managed money for Main Street investors (like) retirees and widows,” he said. “$284 million is a sizeable amount to flush.”