Source: Charlotte Observer
March 07, 2006
Costs rise; deal may include uptown office tower
It's official: Charlotte is now the center of the NASCAR universe. Racing leaders awarded the city NASCAR's first officially sanctioned hall of fame Monday, paying tribute to the region's leading role in the sport's past, present and future.
Charlotte will build NASCAR a gleaming shrine to speed just a short distance from the hills where Junior Johnson ran moonshine, the dirt tracks where Richard Petty got his start, and the garage where Dale Earnhardt learned at his father's elbow.
"Charlotte, North Carolina, is where the hall of fame needs to be," NASCAR Chairman Brian France told a crowd of about 1,000 cheering people at the Charlotte Convention Center.
The cost of the hall to Charlotte has grown from last spring's initial bid of $137.5 million. The building and an attached banquet center will now cost $154.5 million, an increase that city officials blamed on the rising cost of construction materials.
NASCAR also secured an option to build -- at its own expense -- a 300,000 square-foot office tower on city-owned land as part of the hall project. France, though, said the sport's headquarters will remain in Daytona Beach, Fla., where his grandfather founded racing's sanctioning body 58 years ago.
Charlotte beat out Atlanta, the Southeast's business and tourism powerhouse, as well as Daytona Beach to become NASCAR's Cooperstown. Also-rans Kansas City and Richmond, Va., were eliminated late last year.
Atlanta leaders insisted as late as last week that NASCAR had told them no decision was made -- even as racing officials were ironing out of a 300-page contract with Charlotte.
Charlotte's triumph was greeted with some bitterness. Central Atlanta Progress President A.J. Robinson said his city's offer "matched or surpassed virtually everything that NASCAR was looking for.
"In the end," Robinson said, "the only other thing we could have done is change our city's name to Charlotte."
Charlotte's slogan, plastered across bright yellow billboards, T-shirts and bumper stickers -- and reinforced by local team owners and star drivers -- was a winner: "Racing was built here. Racing belongs here."
But city boosters also offered a lucrative financial package that none of the competitors matched, with more than $100 million in guaranteed public money from a hotel tax increase.
Critics of the deal had little chance to make their case Monday. Virtually all negotiating between NASCAR and the city took place behind closed doors, with the City Council unanimously approving the contract with racing less than four hours after the announcement was made.
"We keep making the wrong decision here and giving money to billionaires," said Jeff Taylor with the conservative John Locke Foundation. "NASCAR is a money-making machine. They don't need any public money. ...
"If Brian France wants welfare, he needs to get in line down at the Daytona food stamp office."
The hall's financial impact on the region's economy isn't expected to be huge. A study last year showed it would generate less annual tourism revenue than a single Nextel Cup race at Lowe's Motor Speedway.
But city leaders were determined to cement Charlotte's status in the racing world and secure a one-of-a-kind attraction that finally answers the question: What's Charlotte got that makes it different from any other city?
As Mayor Pat McCrory put it: Pasadena will always have the Rose Bowl. Nashville will always have country music. Augusta will always have the Masters. And now Charlotte will have NASCAR. "There's always going to be an association."
At least for the next 32 years. NASCAR's exclusive agreement for Charlotte to host the hall of fame expires June 30, 2038.
Trumping other cities
NASCAR started seeking a home for its hall of fame -- an idea first proposed by leaders in Atlanta -- in late 2004.Several cities were invited to pitch ideas, including Charlotte. Five communities submitted proposals in May, leading to a round of courting as NASCAR honchos visited the contenders.
Charlotte and Atlanta were considered leaders all along, with Kansas City as a strong dark horse if NASCAR wanted to look beyond is Southern roots.
The final threesome came down to Charlotte, Atlanta and Daytona Beach, with the last lacking both the population and commitment of public money needed to go the distance.
"When it came right down to it, I think the heritage of the sport meant a lot," Mark Dyer, NASCAR's vice president for licensing, told the Observer in an exclusive interview before the final announcement Monday. That helped Charlotte get the nod.
But so did the money that backed the bulk of Charlotte's bid: $102.5 million from a hike in the tax on Mecklenburg County hotel rooms. N.C. lawmakers passed the change last year, increasing the tax from 6 to 8 percent. None of the other cities offered that much guaranteed public funding.
"They put a big foot forward with that hotel tax," France said.
According to the contract approved Monday, the public will own and operate the hall, while NASCAR receives payments from ticket sales and other revenues for the use of its name, logo and merchandise.
The hall's projected budget calls for $1.8 million in payments to NASCAR in the hall's first year of operation. That amount varies year to year but isn't expected to fall below $1.2 million through 2019.
The contract -- made available for the first time at 4 p.m. Monday -- requires NASCAR to defer payments if the hall falls into the red. The projected budget shows some cash flow deficits starting in 2015 that are made up for the next year when ticket prices go up, as they will every two years.
Getting into the hall will cost adults $17 when it opens in 2010. Prices will go up to $25 by 2018.
Looking to the future
Charlotte officials said they're confident the hall will make money. They've projected crowds of 800,000 in the first year, dropping to 400,000 visitors by the sixth year and remaining steady after that.
They say no property tax money will ever be used to operate the hall or cover any losses. All the money to run the hall is expected to come from ticket sales and other revenue.
"The key factor all along, for NASCAR and us, was sustainability," said Wachovia bank executive John Tate, who helped assemble the financing plan.
Although the bulk of the construction funding comes from the hotel tax, Bank of America and Wachovia will cover about $25 million with below-market loans. The rest of the money comes from existing funds for the Convention Center.
"We're confident this is going to work," Tate said.
Several of racing's biggest names -- including some who will likely be among the hall's earliest inductees -- hailed Charlotte's selection Monday, saying it's the right place to honor their sport.
"There's a bond here," said three-time Winston Cup champion Darrell Waltrip.
Charlotte leaders said the hall finally gives them a long sought-after tourist destination that can serve as the center of their efforts to market uptown to conventions and tourists.
"The hall of fame is going to be our crown jewel," said Luther Cochrane, chairman of the Charlotte Regional Visitors Authority, which led the effort to land the hall of fame.
One question lingers, though, as the ink dries on NASCAR and Charlotte's new relationship: What happens to the annual all-star race at Lowe's Motor Speedway, which NASCAR has talked about moving in recent years and the region has fought to keep?
Dyer said the race is not part of the deal, although the May date -- a week before the Coca-Cola 600, also at the Concord track -- might provide an ideal time for induction ceremonies.
France, though, made it clear that there's no guarantee Charlotte won't have to start negotiating all over again.
"Right now, we're very happy with where it is," France said. "But anything's possible in respect to the all-star race."