Prospect Meadows, financially hindered by 2020 disasters, exploring ways to achieve ‘long-term sustainability’

Prospect Meadows, the softball and baseball complex near Marion considered an economic driver for Linn County, faced headwinds brought on by 2020 disasters within a year of its opening. But persistent lagging profits and looming debt are prompting it to urgently explore ways with local governments of boosting revenue and charting a path toward financial sustainability.

Local officials have touted the nonprofit complex, which opened in 2019, as a major regional attraction drawing in residents and visitors, and an economic engine that helped spur growth in housing, a hotel opening this year and other businesses.

Located at 1850 Prospect Dr. on Linn County-owned land, the complex is situated on 128 acres near Highway 13 and County Home Road and features eight baseball/softball fields and a Miracle Field for youth of different abilities.

But having opened shortly before the global spread of COVID-19 altered social gatherings and upended sporting events, Prospect Meadows’ earliest years were hampered by the pandemic.

“The public entities have really supported this from the beginning,” said Linn County Supervisor Ben Rogers, the only member who’s been on the Board of Supervisors since Prospect Meadows’ inception. “It’s an economic driver. It brings a lot of people into the community, but we’d also hope that they’d approach other stakeholders when they're discussing the future and sustainability of Prospect Meadows.”

The Gazette asked Prospect Meadows President and Chief Executive Officer Jack Roeder for an interview. However, Angela Jordan, the nonprofit’s communications and development director, followed up with an email instead, saying the complex “is in the midst of our best season yet in year six.” So far, it has hosted 733 teams — up from 664 last year. More than half come from out of state.

Prospect Meadows’ economic impact report released in January 2023 showed the complex saw 127,200 visitors from March through October 2022. Of those visits, 54.2 percent came from people who do not live in Iowa. The nonprofit fueled $11.08 million of new spending at businesses and more than 24,000 hotel room nights throughout Linn and Johnson counties, the report stated.

In Prospect Meadows’ six years in operation, Jordan said it has provided more than $40 million in economic impact to Cedar Rapids, Linn County and Marion. The next six years could see that grow to at least an additional $60 million, she said.

Much of the activity at the complex comes from Perfect Game, a nationally recognized youth baseball company and largest baseball scouting service in the United States. It was founded in Cedar Rapids but its headquarters now are in Sanford, Fla. Jordan said nine years remain on Prospect Meadows’ contract with Perfect Game, and the nonprofit is working with the company to potentially extend that to 12 years.

Other similar projects have taken off in Iowa in recent years as more communities invest in massive sports complexes as a regional attraction, Rogers said.

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Take, for example, Dyersville’s Field of Dreams, the 1989 “Field of Dreams” movie site that now hosts youth tournaments and an annual Major League Baseball game. The state has invested in it as a major tourist attraction. Bettendorf’s TBK Bank Sports Complex featuring indoor and outdoor sports fields opened in 2018.

“There’s a market for it, but these are complicated business ventures,” Rogers said.

Pandemic dampens nonprofit’s ‘ramp-up period’

Pummeled by the hurricane-force wind gusts of the 2020 derecho and the fiscal toll of COVID-19, Prospect Meadows faced major drags on revenue shortly after opening. The nonprofit has struggled to reap enough money to make initial projections.

“That ramp-up period for Prospect Meadows never really happened the way it was supposed to happen,” Marion City Manager Ryan Waller said.

Original plans called for Prospect Meadows to open all 16 ball fields by 2023. Only eight are open so far. Jordan said potential future expansion “will depend on market need and potential financial support for such a project.”

COVID-19 “severely disrupted Prospect Meadows’ plans for short-term financial stability and long-term sustainability,” the nonprofit wrote to Linn County, seeking a slice of federal pandemic money from the American Rescue Plan Act.

A dip in revenue was caused when tournaments and events were canceled, fewer teams and spectators showed up, concession and souvenir sales fell off and some donations were suspended, among other factors. Meanwhile, the complex saw increased expenses for cleaning, signage, legal fees and additional personnel.

Fundraising opportunities also dried up as the pandemic also took a toll on businesses and donors, according to Prospect Meadows, delaying the completion of additional restrooms, development of a facility maintenance fund and a shortage of funds for general operations. The nonprofit anticipated similar issues into 2023, estimating it could take up to three years to establish a full schedule of revenue-producing events.

Operating at a loss

A feasibility study presented to the Linn County supervisors in 2018 projected Prospect Meadows would see a net income of $245,068 in its 2019 opening year and ramp up to $936,052 by 2022, the end of phase one with the first eight diamond fields. In 2023, as Prospect Meadows was slated to enter the second phase, the study projected it would earn a net income of $1.456 million and climb to $1.911 million in 2025. The study was prepared by Sports Facilities Advisory in March 2018.

Those projections have not yet come to fruition.

In the nonprofit’s Form 990s filed publicly with the IRS, it reported 2019 revenues were $810,672. In 2020, the year the derecho and the pandemic hit — Prospect Meadows’ first full year in operation — it reported a $1.191 million loss. It continued to operate at a loss in 2021 of $862,433 before rebounding in 2022 with a positive $1.555 million.

Under an agreement with the city of Marion, Prospect Meadows must file quarterly financial reports showing its revenue, income and expenses. The full 2023 calendar year report shows Prospect Meadows didn’t meet its revenue targets, including gate admissions, souvenir sales, general concessions, hotel rebates and commissions or other operating revenue. Prospect Meadows budgeted for $1.371 million and fell more than $100,000 short, coming in at $1.267 million.

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The nonprofit did come in under budget for expenses, though, by more than $168,000, totaling $2.095 million. That did not encompass other expenses including $20,000 toward a U.S. Department of Agriculture loan and $373,215 labeled as “interest expense,” though the report did not specify the loan with which that was associated.

Prospect Meadows also nearly made its goal for other income including public grants, private and in-kind pledges, securing about $761,165, of which $508,167 came from public grants. Overall, net income totaled a loss of about $469,667, less than the $535,839 Prospect Meadows had budgeted to lose.

So far in 2024, the report spanning January through June shows Prospect Meadows is continuing to miss revenue goals — coming in at $536,482, which is about $96,797 under budget. Expenses have totaled $1.069 million, about $24,416 over budget. It’s operating at a steeper-than-projected loss of $711,266, far in excess of the budgeted operating loss of $505,545. This reporting period, however, stops short of the outdoor facility’s more lucrative summer operating months.

Unlike 2023, Prospect Meadows reported no public grants this year to compensate for other income lagging. Private pledges as of June totaled $13,994, well below the $100,000 budgeted.

“Most of the funds are raised in the last 6 months of our calendar year when we do our direct mail and Giving Tuesday campaigns,” Jordan wrote. “We are always looking for ways to involve our private stakeholders in our mission to sustain the economic impact we have on our local communities and the opportunities we provide for our youth in their sports activities. We anticipate reaching our fundraising goal in 2024.”

Marion, Linn County guaranteed debt

When the facility was established, both the city of Marion and Linn County backed a portion of Prospect Meadows’ debt. If Prospect Meadows defaulted, this debt would fall back on the municipalities.

Jordan said the nonprofit’s debt is not due until 2034 and all debt payments are current. She didn’t answer how much debt remains.

“Due to Covid and the Derecho setting us back, we want to be proactive on addressing the debt as any nonprofit or for-profit business would be, so that is why we are talking with our stakeholders,” Jordan wrote. “Addressing this is part of our planning process.”

Linn County and the Marion each were required to sign loan guarantees in 2018 with Cedar Rapids Bank & Trust for a $2.4 million loan the bank made to Prospect Meadows to build the facility. Each municipality was asked to guarantee $1.2 million to pay off the $2.4 million bank loan should Prospect Meadows be unable to make the payments.

Prospect Meadows requested $2.633 million in federal ARPA funds from Linn County in 2022 to assist in recovery from the toll COVID-19 took on the organization.

Half the Linn County ARPA payment was used to wipe out the county’s $1.2 million guarantee. The remainder of about $1.317 million was paid to Prospect Meadows on April 14, 2022. The Marion City Council awarded $500,000 in ARPA dollars to go toward paying the city’s guarantee.

According to the county, Prospect Meadows worked closely with bank staff to decide how the Marion and Linn County ARPA awards should be used, whether for operational expenses or to retire debt. Marion’s remaining share of the guarantee is about $460,000, Waller said. The Marion council would still have to approve paying the remainder.

Separately, in June 2019, USDA Rural Development in Iowa provided an 80 percent loan guarantee through its Business and Industry Guaranteed Loan Program to Cedar Rapids Bank & Trust for a $5 million loan toward Prospect Meadows. This program offers loan guarantees to lenders for loans to rural businesses.

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The county, as landowner, and Prospect Meadows as the tenant entered an assignment of ground lease agreement as collateral for the loan. Under that agreement, Cedar Rapids Bank & Trust would assume the assets if Prospect Meadows defaulted. But it is not an additional loan guarantee by Linn County.

“Our way of protecting the taxpayers was keeping the land in county ownership so that … it allowed us to decide what could go on that land, what the future of it could be if it needed to be redeveloped into something different,” Supervisor Rogers said.

Cedar Rapids’ support based on hotel stays

Cedar Rapids has tied its financial support for Prospect Meadows directly to the overnight hotel stays linked to the nonprofit.

Prospect Meadows has a deal with the city of Cedar Rapids to receive hotel-motel tax revenue. Funds are allocated based on a formula approved in a 2021 agreement.

The 10-year agreement spans Jan. 1, 2019, through Dec. 31, 2028. It provides up to $100,000 annually, not to exceed $1 million over the term of the deal. Cedar Rapids reported paying about $176,510 to Prospect Meadows through the 2023 season. Payments for 2024 are still to be determined.

Prospect Meadows partners with the Cedar Rapids Tourism Office to handle hotel room bookings for visiting teams, city Finance Director Abhi Deshpande said in a statement. Teams must work through the office’s platform to finalize reservations.

Prospect Meadows provides the Cedar Rapids Tourism Office with a number of teams coming from outside a 60-mile radius. Regardless of the hotel in which the teams stay, the tourism office cross-checks this information and calculates the payment based on the following formula:

This formula is used even if a team stays outside the city of Cedar Rapids or Linn County limits, Deshpande said.

“There is also a slight chance that some hotel room bookings may bypass the Cedar Rapids Tourism Office process, with the potential result of a minor (insignificant) loss in revenue for Prospect Meadows,” he said.

Terms of the agreement have not changed since its approval in 2021, Deshpande said, though Prospect Meadows in its ARPA request to the county said it would try to renegotiate in 2022-23.

“Our focus has been on our existing contract with Prospect Meadows,” Cedar Rapids Community Development Director Jennifer Pratt said. “We have gotten some updates and we're just focused on what is our current commitment to them and making sure that Prospect Meadows is positioned to be successful into the future.”

How will Prospect Meadows move forward?

Local officials said they are urging Prospect Meadows to diversify funding streams and become less reliant on taxpayer dollars. The nonprofit is exploring a variety of steps to boost revenue and bring in new funding sources.

While the complex is a major regional asset, Marion Mayor Nick AbouAssaly said, “we don't want the government entities to be the only source of assistance in helping them.”

The three local governments have met with Prospect Meadows and the bank to discuss potential contributions from the municipalities, Waller said, but there’s been no formal request for additional funding.

“I've been very candid with all the parties involved in this that it's got to extend beyond just the three communities,” Waller said. “And I've also shared that this is a tremendous opportunity for our region to take some steps to improve upon our collaboration as a region.”

Asked if Cedar Rapids officials would consider making contributions beyond the current deal, Pratt said the city recognizes the economic impact of Prospect Meadows driving overnight stays in area hotels.

“That's why we created our participation in that manner is because there's a clear connection,” Pratt said, referring to the hotel-motel tax agreement. “We're very comfortable with that and certainly do see how they bring people into the region.”

Rogers said local governments are increasingly limited in being able to fund amenities like Prospect Meadows, in part because of legislation lawmakers passed last year restricting the growth in property valuation communities can capture in taxes.

Should Prospect Meadows seek additional support, Rogers said the county would have to “really look at all of our current and future obligations and be able to prioritize these appropriately” and consider if there is enough private sector participation.

Launching a capital campaign is one of the items being discussed, Jordan said, but Prospect Meadows has not made a final decision yet.

As Prospect Meadows staff continue to plan Jordan said staffing is “always a topic of the planning process,” but “no decisions have been made about any changes in this area. We are proud of our staff and the efforts they bring each day to our organization.”

Prospect Meadows also has taken steps to bump gate revenues and anticipates success on the years ahead by raising the price of admission, adding additional events, increasing field usage by adding United States Specialty Sports Association tournaments and increasing field rental fees, Jordan said.

“As any nonprofit would attest, it is hard to maintain long-term sustainability,” Jordan said. “Rest assured we are constantly working hard on this. That is why we talk often with our stakeholders to be able to maintain the strong economic engine we are for our local communities and the kids we serve.”

Comments: (319) 398-8494; marissa.payne@thegazette.com