NASCAR hall turns 1 next month but faces deficit and disappointing attendance

Charlotte is just weeks away from celebrating the NASCAR Hall of Fame’s first birthday May 11.

But it remains to be seen whether the more than $190 million project is being hamstrung by the recession or is one of the city’s biggest boondoggles.

What’s not up for debate: The hall has fallen short of expectations and continues to struggle financially.

The Charlotte Regional Visitors Authority, a public organization that is funded through hotel, restaurant and bar sales taxes and manages the hall, says a little more than 250,000 visitors are expected in the venue’s first year of operation, far below the original attendance goal of 800,000.

That’s not the only figure causing heartburn.

For its first year of operation, the hall is expected to have a roughly $1.28 million deficit, said Kimberly Meesters, external relations manager for the hall. The shortfall will be covered by the CRVA, with the money coming from the agency’s reserve funds.

In January, in light of the deficit and sluggish attendance numbers,  the CRVA approved a cut of $4.7 million to the hall’s $15.3 million budget, Meesters said. The biggest spending cuts will come from exhibit contract services, which will be cut by nearly $1.3 million, and marketing and promotions, which will be cut by $826,292, reducing the number of radio, television and billboard ads, Meesters said.

Meesters said no hall staff members have been laid off as a result of the budget cuts, but hours have been reduced for some part-time employees and the filling of some part-time positions has been postponed.

Also, the hall will delay updating some of its exhibits, such as the “race week” area, as a cost-cutting measure. And thanks to the hall’s economic troubles, NASCAR, which licensed the hall, won’t take its 10 percent cut of revenues until the hall starts to turn a profit.

It all adds up to a tough first year that’s in stark contrast to the high hopes and fanfare the hall experienced when it opened nearly a year ago.

‘Looking in the rearview mirror’

Winston Kelley, the hall’s director, said he doesn’t want to spend much time “looking in the rearview mirror” at what could have done differently.

“We take information as it comes in, learn from it and use that to figure out what to do, whether in marketing or operations,” he said.

Still, he wishes that when the attendance projections were released, more emphasis would have been placed on the range — 400,000 to 800,000, projections that came from an outside consultant — rather than the 800,000 figure.

Those projections were made in 2005, when the economy was booming, he said.

“People seized on that high number as the expectation,” he said.

Charlotte fought hard for the hall, and its $135 million bid for the facility would best bids from other cities, including Atlanta, which offered $102 million, and Daytona Beach, Fla., which bid $105 million.

Charlotte spent $195 million in building the facility.

A.J. Robinson, president of Central Atlanta Progress, which led his city’s bid for the hall, said he was surprised at the big bucks Charlotte shelled out for the hall.

“We scratched our heads at that one,” he said. “When the original bids came out, Charlotte spent a lot more money on a much more ambitious project than we or any other city proposed. I mean, $195 million? We were going to spend about half that. But I guess they (Charlotte) figured what they were proposing was feasible.”

But so far that hasn’t been the case. Still, many who have been critical of the hall say they believe that over time CRVA and NASCAR Hall of Fame officials will do a better job of attracting visitors and boosting revenue.

Decisions in question

Charlotte City Councilman Andy Dulin has spoken out against some of the hall’s operating decisions. For one, he took issue with it being closed for Thanksgiving when uptown was crowded with parade-goers. But Dulin said he has faith that the CRVA can turn things around.

“They’ve done a pretty good job of not panicking,” he said. “It’s an iconic building, and it’s going to be around for a long time. And the word is getting out there that it’s not only a unique attraction to visit, but also a great place to rent for various functions. So if the city and the CRVA keep working the plan, I believe the revenue numbers will start to creep up.”

But even if the hall’s financial situation doesn’t improve, he said it’s too early to consider pulling the plug.

“It’s on the list of possible scenarios,” he said. “But it’s way down on the list. We would have to come up with another solution first and work something out.”

Councilman Warren Cooksey, who wasn’t on the council when it voted to support the hall of fame, said it was good decision. The building is a long-term investment, and it still makes sense for the city to support it, he said.

But the question of whether the hall should remain open should be revisited if the CRVA can’t handle the operating expenses with its own revenues, or if the hospitality industry starts questioning whether the additional 2 percent hotel room tax to fund the construction of the hall is worth it, or if the City Council is asked to restructure the hall’s debt at a cost to taxpayers, he said.

Councilman David Howard said it’s too early to dismiss the hall as a failure. Over time, it will become a valuable asset to the city, he said.

“Entertainment and leisure across the globe have taken a hit because of the economy,” he said. “When that improves, and we start doing a better job of marketing ourselves as a tourist destination, the problems at the hall should work themselves out.”

New marketing strategy

Hall of fame officials admit that marketing of the project has not been easy.

Meesters said the hall consistently receives high marks in guest surveys. The problem, she said, has been in communicating what the hall is.

“We realized we weren’t being effective in communicating what’s in the building,” she said. “A lot of people thought it was a very historic, museum-like static space. We’ve worked to change the message in our branding that this is a fun, interactive family entertainment venue. It’s not all history.”

The strategy has started to pay off, she said, adding that 24 groups rented the facility in March for special events, more than any other month since it opened. Still, attendance numbers continue to lag, and the hall posted its worst month to date in February, when only 12,391 people visited the attraction, compared with 35,090 in May, its best month.

“We’re more than a sports hall of half of fame and car museum,” Kelley said. “We’re an entertainment attraction with over 50 interactive exhibits. The job now is to get that word out.”

Kelley said the hall is implementing promotional programs this year, included one it launched the weekend of April 15 targeting kids on spring break and their families. The hall is also doing special promotions to tie in with Food Lion Speed Street in May, an uptown festival the week of the Coca-Cola 600 at the Charlotte Motor Speedway.

“We’ll continue to do new promotional programs and look at what works and what is not as successful,” Kelley said. “We’re a new startup organization, and we certainly haven’t done everything perfectly. But I think we’ve done a tremendous amount more correctly than incorrectly, and we’re continuing to learn and evolve.”

‘They’ll figure it out’

Despite all the struggles the hall of fame has been through, Robinson doesn’t bad-mouth the project.

“I think it’s a great facility to have,” he said. “Charlotte won it fair and square. I don’t know why they’re not reaching attendance projections, but my guess is they’ll figure it out.

“It just may take some time to work out the issues and get their numbers right. I’m sure part of it is because of the economic environment we’re in today.”

Robinson said the project would have been more successful in Atlanta.

“Atlanta is a bigger city in a bigger region with more people and attractions,” he said. “So I think attendance would have been better here. But this is not about sour grapes. I think it will do well in Charlotte. You just have to give it some time.”

Sam Boykin can be reached at [email protected].