BottleRock Napa Valley 2014 lineup.

While tens of thousands flooded the Napa Valley Expo last May for five days of music, gourmet food, wine, comedy and parties, and most of them went home happy, the two men who organized the inaugural BottleRock Napa Valley — without previous festival experience — lost millions and racked up millions more in debt.

Vendors weren’t paid, nearby residents complained about noise and lawsuits were filed.

That the festival is happening for a second year can be considered a miracle. And that it’s still being run by locals, without the support of established production companies like Live Nation, Goldenvoice and Another Planet Entertainment, is a testament to what it meant to the community in 2013.

“BottleRock, last year, was the most-amazing experience I have had socially as a Napa resident,” said David Graham, one of four Napa residents who bought the rights to hold the festival, dubbed BottleRock 2.0. “It puts Napa on the map in a different way.”

Graham, a Napa native, went as a fan last year, and saw an opportunity when he found out the festival was dead in the water with debt. Since graduating from UCLA and Columbia in New York, he’d been an entrepreneur, always in business for himself. He’s started and run two previous companies, an app development and investment capital firm for startups, and another that helped kick-start clean energy tech companies.

Last year, he started Latitude 38 with fellow Napa residents Justin Dragoo, Jason Scoggins and Joe Fischer.

Scoggins, who co-founded a digital automotive media group, is handling business development and corporate sponsorship for the music festival. Dragoo, an “academic” who worked for IBM before running a Napa winery for several years, is the chief operations officer. Fischer, the chief financial officer, is a bankruptcy expert. That’s an important key, given the tangled financial web of the group that ran the festival in its first year.

“L38 is really a start-up,” Graham said. “The only difference is that it has hindsight. It has the benefit of being able to see what worked and what didn’t.”

He and his partners don’t know or have not met last year’s producers. Latitude 38 was motivated to take over the flailing festival because they wanted to help out the community and keep BottleRock locally owned, and they saw an opportunity to make money.

“We’re big music fans, but…we didn’t do it because we wanted to be in the music industry,” Graham said. “Some of the mistakes that were made (last year) were elementary, as far as business rules apply….We felt confident doing this by bringing in the right people.”

L38 has already been busy picking apart what transpired last year, choosing to keep what they liked and kicking the rest to the curb. The group has also had its hands full from the beginning — which, really, was less than three months ago.

One of the most difficult tasks was booking a lineup. Artists take a long time to make decisions, are reluctant to play one-offs if they are not already touring, and have likely signed radius clauses preventing them from performing in the Bay Area if they already had shows nearby.

“Normally, you would start (booking bands) eight to 12 months prior to a festival,” Graham said. “We started, roughly, on January 27. When you have a month and a half to book 40-plus bands, it is no small task. “

The group arranged for The Cure to make their only American appearance of the year (so far) on Friday, brought Outkast’s reunion tour Saturday, and country phenom Eric Church on Sunday, among about 45 other artists over three days.

Nearly 20 of the artists have their origins in the Bay Area, including popular indie acts like Thee Oh Sees and The Stone Foxes.

“BottleRock is showing what it means to be a great neighbor,” said Shannon Koehler, drummer and vocalist with The Stone Foxes. “We will bring them a cup of sugar, they will let us have a slice of the pie. We can’t thank them enough for giving us their support and giving all the Bay Area bands a platform to show what they can do. We promise to put on a hell of a hootenanny for ’em in return.”

Another mountain to climb was the bad blood created between last year’s producers, vendors and stagehands, many of whom had payments delayed, or are still waiting to be paid.

Although L38 is not affiliated with the producers of the 2013 BottleRock festival, and last year’s producers remain responsible for paying back their debt, about $8 to $10 million, Graham said his company felt it was in everyone’s best interest to rebuild bridges. He estimates L38 has made about $5 million in cooperation payments to “mission-critical vendors” and stagehands. Others have been offered additional work to make up some of the difference.

“We felt it would be the right thing to do, to make a bad situation less bad, by helping to eliminate some of the debt that the former producers created,” he said.

Last year’s producers made an emphasis on charity, and selected dozens of organizations that were going to split the proceeds from drink sales, and it’s unclear how many of them received their shares. Graham said helping others will be a focus of BottleRock, just not in 2014, while the operators are concentrating on eliminating debt and setting the festival’s future.

Finally, Graham and his Latitude 38 team are addressing the concerns of downtown Napa residents about noise, environmental impacts and traffic. Concertgoers will notice stages in different places, stricter amplified sound rules and different traffic routes and bus drop-off locations to deal with last year’s complaints. The Napa City Council went as far as to issue a notice of support for the festival.

This year’s festival will also have fewer VIP tickets issued but additional nicer amenities, such as more private bathrooms, special viewing areas and exclusive food and drink options.

Graham said this will turn into a better festival experience for everyone upset last year at the time it took to get in and out of the festival grounds.

And while the line-up is smaller and the festival is shorter this year, Graham said a wider variety of genres will be represented while allowing his group to be fiscally responsible.

“There will be something there for everyone,” he said. “We felt like it was unnecessary to spend money for bands on Wednesday and Thursday, and that most festival goers showed by Friday, Saturday and Sunday.”

Follow editor Roman Gokhman at Twitter.com/RomiTheWriter.