Have I really never mentioned the subsidy deal that Charlotte entered into in order to become home of the NASCAR Hall of Fame? Well, better late than never, so how’s that working out, anyway?
As it turns out, the $192 million Nascar Hall of Fame, with vintage cars dating to the 1940s, is drawing fewer than half the visitors forecast when it opened in 2010, leading officials last month to use $5 million of public funds to settle bank loans. The move is raising questions about how North Carolina’s largest city has financed economic development.
Alrighty then!
Here’s how the deal went down: Charlotte sold $137 million in bonds in 2009 to help pay for the monument to fiery death, to be repaid by a 2 percent tax on hotel and motel rooms. Unfortunately, the Charlotte Regional Visitors Authority also agreed to run the place, and instead of bringing in lots of new visitors, it’s been losing money hand over fist, making necessary last month’s bailout.
Bloomberg News draws the obvious conclusion, which is that sports and tourist enterprises are risky investments for cities, but there’s another lesson as well, which is: Keep your eye not only on the up front costs, but on the operating expenses. Handing over hotel/motel tax money for a venture like this was bad enough, but agreeing to cover operating losses was just doubling down on the risk. I know that tourism bureaus think it’s their job to throw money at crazy ideas in hopes that people from all over will come to town and lavish the local economy with out-of-town currency, but shouldn’t somebody be thinking this through more than “We have the money, we might as well spend it on something, what the hell, let’s see if this works?”
“The $5 million isn’t money that can pay for streets or anything else,” [city councilmember Vi] Lyle said. “It’s paid by people who stayed in our hotels.”
Apparently not. Carry on!
Just as a matter of interest, do we know which other world class cities were bidding against Charlotte to host this monument to stock car racing?
Paris, France? Monaco? London?
Atlanta, Kansas City, and Daytona Beach were all in the running. If it had been in Atlanta, it would have been across the street from me. I’d be looking at out my window right now. Glad we dodged that bullet. I think NASCAR wanted it to go to Charlotte from the beginning but used Atlanta, KC, and the other cities bidding for it to increase how much they were able to extract from Charlotte. Think Atlanta used the funds they were going to pour into the NASCAR HOF for the College Football HOF instead.
Like realtors, economic development people have never met a project that isn’t a win-win. Even though the place is losing cash hand over fist, they still insist it was a boon because it drew “convention” business. While no doubt, event space is important, I’m not sure its had a 132 million impact. The best part? NASCAR will gain the revenue for “royalties” as soon as the museum clears 10 million. Like their pro sports compatriots, NASCAR is the house that never loses.
Every single one of these deals should require clawback provisions. They all give us conservative estimates that we’ll surely meet, and then we rarely meet those estimates.
Since the groups seeking these subsidies are so certain that they’ll meet all the conservative estimates, what’s the harm in insisting on clawbacks? I mean, other than that those demanding the subsidies will go away.
NASCAR… snicker. Why didn’t they hand the money over the NFL like they are supposed to? Chumps.
Doesn’t anyone ever ask if the kind of people who visit an “attraction” of this type are the kinds of people you want in the first place? Other than that, I can’t think of why anyone would want to visit this twice. A quick look at their webshite indicates a “viewing party” for the Daytona 500 in 8 days and the next event is in June. Hell, the event calendar doesn’t work either.