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Sponsorships lagging for NASCAR Hall of Fame
The Charlotte Observer, May 08, 2010
By Kerry Singe and Steve Harrison
The NASCAR Hall of Fame has struggled to attract corporate sponsors and sell commemorative bricks, its ways of paying off $26.5 million of the debt the city of Charlotte assumed to help build and launch the racing shrine.
The Charlotte Regional Visitors Authority, which manages the Hall of Fame, had hoped by summer 2009 to have sold about $10 million in sponsorships and $4million in bricks. To date the CRVA has sold $4 million in sponsorships and $634,000 in personalized bricks, which are being placed in a plaza outside the hall’s entrance.
No other American sport is as closely tied to its sponsors as stock car racing, in which tracks, cars and driver’s uniforms are covered with corporate logos. It’s unclear whether the hall’s difficulty in selling sponsorships and bricks is due solely to the severe recession, or whether city and tourism officials overestimated the appeal of the $200 million hall, which opens Tuesday.
The city, the CRVA and the Hall of Fame say they aren’t concerned, and that sales will pick up. Taxpayers aren’t at risk, they say.
Paying off the sponsorship and brick loans “may take longer than we thought,” said Ron Kimble, a Charlotte assistant city manager. “But it’s going to work.”
The loans are just one part of the debt the city has taken on to build the racing shrine. Most of the money is to come from a 2 percent hotel/motel room tax levied for the hall. The city said that despite a slump in hotel bookings, the tax revenues are in line with its original projections four years ago. It said it has enough money in reserve to cover a continued hospitality slump.
When Charlotte’s bid beat out several other cities’ for the right to the NASCAR Hall of Fame in 2006, the national economy boasted a historically low unemployment rate, and stock car racing was one of the country’s fastest-growing sports.
Then the recession and banking crisis hit as the hall was being built. Employers shed jobs; tourism dollars disappeared. Attendance at NASCAR races has fallen, and, of perhaps greater concern, TV ratings have declined since 2006.
To pay for the hall, the city took on roughly $100 million in debt backed by the hotel/motel tax. In 2008, it took on $32 million in additional debt for exhibits and construction cost overruns, which was also backed by the tax.
The city also took out two loans totaling nearly $42 million from Bank of America and the former Wachovia. One loan is to be paid from corporate sponsorship and brick sales; the other is backed by the sale of five parcels of state-owned land created by the reconfiguration of the Interstate 277 interchange with South Boulevard and Caldwell Street.
The big Charlotte banks will let the city pay only interest — the rate is 4 percent — or get extensions if it is struggling with payments.
“I feel we are in very good shape,” Cathy Bessant of Bank of America said of the sponsorship and brick sales. “The motivation of the banks to take on what is clearly very favorable financing is based on the importance of the hall economically to the region, and therefore to the vibrancy of our banking businesses. And the entire deal is structured so that taxpayers aren’t at risk.”
Organizers say they’re pleased with the $4 million raised so far from sponsorships and that they expect more advertisers will sign on after the hall opens next week.
But UNC Charlotte associate professor of economics Craig Depken said it’s unclear whether corporate sponsors will return.
“It is entirely possible that firms will discover that not having their name on a sports venue does not mean their doom,” he said, “in which case, the value and number of sponsorships would be expected to fall over time.”
A case of ‘bad timing’
The hall has signed three sponsors and is in talks with six more for a total of $4 million, said the hall’s executive director, Winston Kelley.
Committed sponsors are the candymaker Mars, Mooresville-based home improvement chain Lowe’s and NASCAR Automotive Group.
“I would sum it up in two words: Bad timing. The sponsorship industry has been severely damaged over the past couple of years, and NASCAR is no exception,” said William Chipps, a senior editor at the IEG Sponsorship Report.