A Bright, Shining Liability
The price of the NASCAR Hall of Fame's woeful financial performance
From the drop of the green flag, Charlotte knew it was taking a risk by wooing, and winning, the NASCAR Hall of Fame.
The city, with big assists from the N.C. legislature and its two banking giants, promised NASCAR more public money than any of the other cities pursuing the hall a decade ago—chiefly Atlanta, Kansas City, and Daytona Beach, Fla. That’s because Charlotte, more than the others, had something to lose by not getting it. The attitude was reflected in the slogan city leaders adopted for their pitch to the motorsports giant: “Racing was built here. Racing belongs here.”
The public and corporate leaders who run this city were desperate for an attraction in the city center that wouldn’t just draw tourists but would announce to the public that Charlotte had something distinctive, something no other city had. Then-Mayor Pat McCrory put the case this way: Nashville has country music. Pasadena has the Rose Bowl. Augusta, Ga., has The Masters. Charlotte, the largest city in the state where stock car racing was born, needed the Hall of Fame. It would have been galling for it to go anywhere else, a reinforcement of the notion that Charlotte was and always would be a second-tier American city.
That level of prestige, of course, comes at a cost.
Well, we now know part of the answer: at least $17.8 million (from the Biz Journal):
Add the NASCAR Hall of Fame to the bad loans made by Bank of America and Wells Fargo. On Monday, Charlotte’s deputy city manager outlined an agreement with the two banks to write off $17.8 million worth of loans and interest owed by the city, a concession that the racing museum is nowhere near generating enough sales to repay the debt.
City Council will vote on the proposal Jan. 12. Terms negotiated by the city, the Charlotte Regional Visitors Authority, NASCAR and the two banks call for several changes in the agreements among the major stakeholders. The city will make a one-time cash payment of $5 million to the banks, while NASCAR, which licenses the racing organization's name and logo to the publicly owned hall of fame, will forgo $3 million in deferred royalties and receive future royalties at a greatly reduced rate.
The $193 million hall of fame opened in May 2010. Projections made by the visitors authority, the operator of the uptown stock-car shrine, called for an $800,000 profit in the first year and attendance of 800,000. Instead, the hall of fame ran deficits from the start—$1.4 million to $1.8 million per year—and has yet to surpass 300,000 people in annual attendance.
“The whole goal is to bring the hall of fame into a break-even position,” said Ron Kimble, Charlotte deputy city manager.
The only solace here is that Charlotte didn’t commit any property taxes to the Hall of Fame, relying on a two-percent hike to the city hotel room tax to pay for the bulk of the project. Still, it stings—especially for the countless homeowners who will never see that kind of forgiveness extended to their mortgage loans. You can’t blame them for being angry. I would be, too.
Sadly, I don’t think there’s going to be any grand rejuvenation here, no point at which the reality will come close to the rosy earnings and attendance estimates. It’s a simple problem, voiced simply by one visitor a few years ago: “I mean, really, why go to a museum when you can see the real thing at a track?” Some investments work out; some don’t. The Uptown arena, Levine complex, and even the maligned Whitewater Center are justifying what the city put in; this one probably won’t. It happens when you take a calculated risk, as the bankers can tell you—sometimes you’re left with a bright, shining liability.