Charlotte officials have struck a deal to forgive roughly $20 million in debt the city owes for the NASCAR Hall of Fame. Billed as an economic boon, the facility has never broken even since it opened in 2010, and has failed to pay off its original loans.
Visitor attendance projected as high as 800,000 a year when the project was proposed has actualized at less than 200,000. Sponsorship money supposed to repay loans from Bank of America and Wells Fargo has fallen well short, and royalties owed to NASCAR have accrued.
“The whole goal is to bring the Hall of Fame into a break even position, so it can cash flow itself,” deputy city manager Ron Kimble told the city council last night.
The terms of the deal:
- The city pays the banks $5 million up front. The money comes from a hotel tax increase approved in 2006 to pay for the hall.
- The banks wipe out the remaining $17.6 million they’re owed.
- In return, the Charlotte Regional Visitors Authority—which runs the Hall of Fame—gives the banks free advertising and sponsorships in the building for five years.
- In addition, NASCAR waives the about $3 million in royalties the city owes, and substantially reduces its royalty cut moving forward.
“Each party has a responsibility in this negotiation and in this solving of this equation,” Kimble said.
Nor are the banks simply relieving the city of the loan purely from kindness, Councilman Ed Driggs pointed out. The loan agreement only requires the city to pay back its debt through sponsorships; that was part of the sales pitch.
“The bank was basically looking at a bad loan at this point,” Driggs said. “This is not a $14 million gift from the banks. It’s a valuable accommodation and we appreciate their role in the discussion, but they were looking at what was probably uncollectable.”
The deal still won’t get the Hall of Fame into the black—the visitors authority projects it will continue to subsidize up to a half million dollar annual deficit. But officials says revenues are growing and, while it’s a far cry from the original lofty goals, the deal at least brings that break even point into view.
The city council will vote on the deal next Monday.
