The NASCAR Hall of Fame has been given approval to erase more than $20 million of debt off its books. In a 10-1 vote Monday night, the Charlotte City Council approved the plan for Bank of America, Wells Fargo and NASCAR to eliminate the debt in exchange for $5 million in payments from the city.
In 2005, NASCAR’s popularity was soaring. Other cities were vying for the hall of fame and all those tourists and tourism dollars that were sure to flock to the facility. Charlotte boosters projected some 800,000 visitors in the first year of operation. That didn’t happen.
“We all know that we fell on pretty bad times in '08 thru '12 and '13,” Deputy City Manager Ron Kimble told council.
In 2014, the hall only attracted around 170,000 visitors. And when the tourists didn’t show up another source of projected revenue didn’t show up as well.
“The sponsorship dollars have not come in at the rate we expected those sponsorship dollars to come in,” said Kimble.
It’s those sponsorship dollars that are at the heart of this deal.
Bank of America and Wells Fargo teamed up to loan the facility $20 million taking only future sponsorship, commemorative brick sales, and community donations as collateral. That loan has been left largely unpaid as the interest on it continued to grow. So after more than a year of negotiations, the banks have agreed to take a one-time $5 million payment and call it even. The city will use funds from a 2 percent increase in the hotel occupancy tax that was levied to pay for the hall.
As for NASCAR, it was owed too – for royalties.
“It’s about $3 million over a 4-year period,” said Kimble.
That, too, is now gone and NASCAR has restructured its royalty agreement so the hall won’t pay a dime to its namesake until it takes in $10 million or more in a single year.
This agreement, Kimble argued, was a sign of a public-private partnership working - a good news story of everyone sitting down at the table in an effort to make the NASCAR Hall of Fame a success.
“This is not a cause for celebration,” said council member Ed Driggs.
He was having none of it, especially after those rosy attendance projections.
“I think too often it feels like the city likes something, it wants to do something, and then the facts are sort of bent to make it work,” he said.
Even with these debt write-downs the NASCAR Hall of Fame won’t be immediately profitable or break even. Kimble says the Charlotte Regional Visitors Authority, which operates the hall of fame, will constrain expenses and beef up marketing. They hope to make the hall break even by June 2016.
