The NFL uses ultra-conservative financial rules in part to keep its teams from getting ensnared in loan and bankruptcy lawsuits. So when GT Real Estate (GTRE), the developer of the now-scuttled Carolina Panthers training facility owned by team owner David Tepper, filed for bankruptcy, a natural question was how did that turn out? behaved within the league’s financial restrictions.
“GTRE is not part of the club’s shareholding group,” the league said June 1 in its Chapter 11 filing. “GTRE does not own any football-related assets, and no football-related assets have been put pledged in any way for costs incurred to date or for any remaining obligations.”
That claim, however, is under heavy fire as a major creditor in court filings and, in a marathon hearing on Wednesday, challenged the distinction between the Panthers and GTRE. Essentially, an attorney for contractor Mascaro/Barton Malow, whose court filing opposing Chapter 11 says he’s owed $80 million, described GTRE as a front company with the real money and the influence from Tepper and the Panthers.
“Virtually every aspect of this matter is tainted by the control of Tepper and the Carolina Panthers,” the entrepreneur wrote in his petition opposing a proposed loan to GTRE from a Tepper-controlled entity, DT Sports. Later, the entrepreneur wrote that there was an “obscure and suspicious structure which is the Debtor/Tepper/Carolina Panthers company”. The debtor refers to GTRE.
In fact, the contractor raised the “likelihood that Debtor’s affiliates and other insiders (such as the Carolina Panthers) are likely targets for bankruptcy assets,” meaning the team itself could be dragged into bankruptcy court.
Mascaro, whose claim is supported by other creditors, argues that GTRE is an integral part of the Panthers. GTRE’s main point of contact before the bankruptcy was Panthers COO Mark Hart, Mascaro argued. And the Panthers directly paid $163.5 million of the $283 million spent on the Rock Hill, SC development before Tepper shut it down.
Tepper broke his agreement with the city of Rock Hill in April, walking away from an ambitious project that was to be completed in 2023. The Panthers announced in March that they were suspending construction of the facility after Rock Hill n issued $225 million in bonds to pay for public infrastructure associated with the project.
GTRE filed for bankruptcy on June 1 after initially suspending the $800 million project in Rock Hill, located about 25 miles south of the team’s downtown stadium and headquarters in Charlotte. The Panthers had big visions for the 240-acre site, telling South Carolina politicians it would bring jobs and businesses — retail stores, restaurants and a hotel — to the area. Construction began in 2020 and the steel frame of the future state-of-the-art headquarters is visible from Interstate 77as well as work on a new interstate exchange funded by the state of South Carolina.
Tepper, the Forbes-listed hedge fund manager with a net worth of $16.7 billion, invested the $163.5 million in the Panthers draft, and another $55 million through DT Sports, Jonathan Hickman, responsible for the restructuring of GT, testified on Wednesday.
The hearing focused on whether the court would approve $20 million in funding from DT Sports to GTRE, but the undercurrent was the thin lines between Tepper’s sports holdings and the real estate company, which share all the same address in Charlotte.
“Given the history of insider trading prior to this matter, including but not limited to the fact that the Carolina Panthers have admittedly and directly paid the vast majority of development costs to date ( most certainly due to the grossly undercapitalized front company that is the debtor), rigorous consideration must be given to the proposed financing,” Mascaro said in court documents.
These newspapers criticized Tepper as “one of the most seasoned and astute players in the struggling market space. He has made his career by taking advantage of distress situations to his advantage.
A GTRE spokesperson declined to comment on Wednesday.
Attorneys for Mascaro, Rock Hill and York County creditors spent so much time cross-examining Hickman, much of it on Tepper’s corporate ties, that the hearing lasted over seven hours and will end on Thursday.
GT’s corporate documents with the North Carolina Secretary of State show Tepper as the owner, but nothing on DT Sports or the Panthers.
Asked about the Panthers’ alleged ties to GTRE, an NFL spokesperson replied, “I don’t know about the creditor’s claim or if it’s accurate.”
(Photo by David Tepper: Bob Donnan/USA Today)