Talking Stick seeks end of Legacy sponsorship

Aug. 28—Last February, No. 3 professional pickleball player Federico Staksrud took the gold medal in the Carvana Arizona Grand Slam pickleball tournament at Mesa's Legacy Park, at the time still known as Bell Bank Park.

The name and logo of Talking Stick Resort loomed above Staksrud and other players with the Professional Pickleball Association vying for five-figure cash prizes — high for the emerging sport of pro pickleball.

Under the terms of a 10-year agreement with the Salt River Pima-Maricopa Gaming Enterprise, which owns the entertainment destination outside Scottsdale, Talking Stick is the "presenting sponsor" of Legacy's covered pickleball stadium.

The Salt River Gaming Enterprise said in a recent court document that it wanted to enter the deal to associate itself with "family-oriented sporting events ... to build goodwill within the community while simultaneously advertising its resort and casinos."

But now, amid Legacy Park's financial troubles and efforts to seek a buyer while it reorganizes under Chapter 11 bankruptcy protections, the tribal gaming enterprise is fighting to end payments to Legacy Park and remove its brand names from the 320-acres sports park's pickleball stadium and other locations via signs and broadcast on digital displays for 3 minutes an hour.

In recent court filings in Legacy Park's ongoing Chapter 11 bankruptcy case, the Salt River Pima-Maricopa Indian Community Gaming Enterprise asks the court for relief from the bankruptcy's automatic stay on litigation so that it can pursue the termination of its sponsorship.

The Gaming Enterprise says it wants out in part due to disappointing park performance and allegations of financial malfeasance by the U.S. Trustee overseeing Legacy's bankruptcy case.

Reporting on Legacy's ongoing financial woes has increased public awareness of allegations of impropriety.

"For obvious reasons, gaming enterprises never want to be associated with fraud and financial irregularity of any kind," the filing states.

Salt River Gaming Enterprise also argues that it expected its sponsorship "would give it visibility and marketing opportunities to the projected 4.5 to 5 million visitors that were supposed to be visiting the park each year.

"As the Court is aware, however, the park has not performed anywhere close to its lofty projections."

Attorneys for Legacy Cares argued that none of the conditions for termination in the sponsorship deal have been met and its agreement is an "estate asset that any buyer of the park will insist be assigned to it as part of a sale."

"There is no 'character clause' in the agreement," Legacy's response states. "Likewise, the sponsorship agreement does not set any attendance or financial benchmarks for the Park."

"If (Salt River Gaming Enterprise) 'expected' these protections, it should have negotiated these specific terms. It did not," the response adds.

Talking Stick is slated to pay $362,000 for the pickleball stadium signs and various other sponsorship rights at Legacy. The fee rises each year to over $500,000 annually in the later years of the deal.

Its next $90,000 payment is due Sept. 1.

Sponsorships have been an important part of Legacy Park's revenue stream since opening in early 2022.

In late 2022, sponsorships were bringing in $462,000 a month, or about 20% of revenue. In the summer months, the revenue from sponsorships surpassed food and beverage, and sponsorships cost the park less to earn than sports and concessions.

Another benefit of sponsorships for the park is they provide a steady stream of revenue spread across the year, whereas facility use fees and food and beverage sales have proven to be highly seasonal.

The loss of sponsors would likely diminish the park value's as Legacy Cares seeks a buyer.

That could be bad for park creditors who are collectively more than $300 million. The creditors include investors who purchased $282 million in municipal bonds to fund the creation of the park and contractors who say they have $30 million in unpaid bills from work performed on the facility.

Shortly before Legacy Cares filed for bankruptcy in May, naming sponsor Bell Bank terminated its agreement with the park. A replacement sponsor has not been announced yet.

The Salt River Gaming Enterprise also argues that its sponsorship deal shouldn't have been included among Legacy Cares' assets in its May bankruptcy filing because its deal was signed with terminated park manager Legacy Sports USA, not the bankruptee Legacy Cares.

Both parties acknowledge that the deal allowed Legacy Sports to assign the agreement to another party with control over the park without Salt River Gaming Enterprise's consent.

But Salt River Gaming says Legacy Sports didn't formally assign the sponsorship agreement to Legacy Cares or new manager Elite Sports Group prior to the bankruptcy filing.

Legacy Cares says that is irrelevant since the agreement was eventually assigned formally to current manager Elite Sports Group.

"Any default based on (Legacy) Sports' termination has been cured," Legacy Care's reponse concludes. "Elite, as the current manager of the Park, plainly has the ability to continue performing under the sponsorship agreement (as Elite has been doing since it took over management of the Park)."