Charlotte Regional Visitors Authority chief Tim Newman says he has to spend money on potential convention clients to make money for Charlotte.
But an Observer review of expense account spending by the taxpayer-supported CRVA over four years reveals a practice of lavishing Charlotte business leaders, local public officials and themselves with thank-you gifts.
Gifts included free concert and sports tickets, pricey dinners and alcoholic drinks. One thank-you: $4,600 worth of New York Yankees tickets.
Board members who oversee the authority also receive thousands of dollars' worth of sports and concert tickets, as well as food and drinks on Newman's corporate credit card.
Newman, CRVA chief executive since 2004, said the spending is necessary.
"Hospitality is our business, and the more people we have educated and enthused about helping us sell Charlotte, the better off everybody in Charlotte is," Newman said.
Hospitality and tourism amount to a $4 billion industry for Mecklenburg and surrounding counties, and the cost of promoting Charlotte is "pennies on the dollar," he said.
The CRVA is a public organization, supported in part by a tax on hotel and motel rooms that generates about $23 million a year, as well as a 1percent tax on all prepared food and beverages in Mecklenburg County that raises $20 million.
Most of the prepared food and beverage tax comes from restaurants and bars and is paid by local residents.
The CRVA has had some high-profile successes recently, such as helping land the 2012 Democratic National Convention.
"Tim and his team have done a fantastic job not only for the hotels but for the community," said Sid Smith of the Charlotte Area Hotel Association. "I can't fathom any other team being able to pull that off."
But Newman has also had missteps.
-- Attendance at the CRVA-operated NASCAR Hall of Fame has been one-third of projections. The hall has so far lost more than $1.2 million in its first year. Newman, the hall's most public backer, was adamant in the weeks before the hall's opening that it would hit its estimate of 800,000 visitors annually.
-- The Observer reported last month that Newman allowed an employee to receive $100,000 in bonuses from the CIAA for helping with its annual basketball tournament.
-- Last fall, Newman acknowledged having a relationship with one of his employees, who has now left the authority.
After Mayor Anthony Foxx harshly criticized the CRVA over the lapses, the board on Wednesday hired PricewaterhouseCoopers to review the authority's policies and organizational structure. The consultants, who will be paid $25,000, will work with the authority through June 2.
'Put heads in beds'
The CRVA's unofficial motto is "put heads in beds."
That often starts with staff members who are expected to entertain potential clients with dinners and tickets, and show off Charlotte's facilities and entertainment options.
For example, the authority spent $1,100 on a party in its suite at Time Warner Cable Arena for the Bethunia, N.C.-based Christian Cheerleaders Association. To land the DNC, the CRVA took party officials to dinner several times, including a $733 outing in the arena suite in April 2010, and gave them other perks - such as more than $2,200 in tickets to the city's college football bowl game.
As the city's top salesperson, Newman sees his job as spreading enthusiasm about Charlotte and rewarding a large network of people who he says help sell the city - even if they aren't clients bringing a convention or an outside group to Charlotte.
A review of Newman's credit card expense reports dating to 2007 shows he spends up to $8,000 a month. Most of his expenses are often for clients - such as dinners with convention planners doing site visits - and for the CRVA's participation in trade groups of industry peers.
In 2009 and 2010, however, Newman used his corporate credit card to buy $4,600 of New York Yankees baseball tickets for himself, Johnson & Wales University President Art Gallagher and other guests, including the publisher of the Durham-based magazine Baseball America and a guest. Newman said in an email to CRVA officials that the tickets were purchased as a thank-you for bringing a U.S. Travel Association seminar to Charlotte.
The seminar wasn't a large event. A Johnson & Wales spokesperson said U.S. Travel Association President Roger Dow came to the school in 2009 to give a lecture to students. At the time, Dow held an endowed chair at the school.
In a CRVA email, Newman said he was thanking Gallagher because Newman was a speaker at the event, which generated a "lot of leads" for the CRVA.
Gallagher declined to comment directly. A spokesperson said he offered to pay for the tickets but did not.
Dinner for 4: $898.22
Newman has also rewarded other local business leaders and allies. Local supporters who have received CRVA-expensed concert tickets included NASCAR officials, employees at the Speed Channel and the Charlotte Knights, Newman's former employer.
In 2009, Newman treated Piedmont Natural Gas President Tom Skains and two other gas company employees to an $898.22 dinner at Del Frisco's steakhouse, a thank-you for helping the CRVA attract the Southern Gas Association. Newman said Skains helped the city create its proposal to land the group's convention.
In the case of the Del Frisco's dinner, Newman said it was rare to visit such an expensive restaurant, but it was worth it for the business that came to the city. He also said it's important for him to try different restaurants to know whether he can recommend them to potential clients who are visiting.
A public relations firm handling calls for Skains didn't return calls for comment.
The CRVA also treats other business leaders to expensive dinners and thank-yous.
Center City Partners, another publicly funded group whose mission is to promote Charlotte, has also benefited from the CRVA's generosity. The NASCAR Hall of Fame, which is operated by the CRVA, spent $411.35 on gourmet chocolates and wine as a thank-you to two Center City Partners employees for work they did to help open the hall. A Center City Partners spokesperson had no comment.
The Charlotte Chamber of Commerce was given other CRVA perks.
In fall 2008, Newman attended N.C. State University's opening football game against the University of South Carolina in Columbia and bought $278 worth of tickets for the chamber. Asked about the expense, Newman said the chamber was among several groups to lobby Atlantic Coast Conference athletic directors to bring the ACC football championship game to Charlotte.
But the conference had already announced in December 2007 that the game was coming to Charlotte in 2010 and 2011.
Natalie English, director of public policy for the Chamber, said she didn't do any lobbying on the trip.
"I went with a group of friends. Tim was involved. I went to N.C. State."
The CRVA later said in an email that others in the group were invited "to the game for the game itself and the national TV kickoff on ESPN."
Some distinctions made
Newman said the CRVA applies what he calls a "reasonableness" test to determine how much it should spend on clients and people in the community.
The CRVA's expense policy does appear to make a distinction between what's appropriate for clients and non-clients. The policy says alcohol won't be reimbursed, unless it's for a client.
Newman said that policy only applies to alcohol bought with cash, not credit cards. He referred the Observer to a section of the policy that deals with credit card reimbursements, though that section doesn't make a distinction between how cash and credit expenses are handled.
Jane Pinsky, director of the N.C. Coalition for Lobbying and Government Reform, said the thank-yous seemed excessive.
"This is like the Supreme Court and obscenity," she said. "I can't tell you what it is, but a meal for $900 means the line has been crossed."
Heywood Sanders, a professor at the University of Texas-San Antonio who tracks the convention industry, said free spending is common in the hospitality industry.
But he said some tourism officials have come under scrutiny for their expenses, or spending work time in bars.
Tourism executives face rising pressure to lure events because cities have expanded convention space, but demand has dropped due to the recession, he said. When tourism officials are spending heavily chasing conventions, spending on people who aren't clients can occur.
"If you stretch the rubber band and put enough pressure on salespeople, things are going to happen," he said.
Many of the CRVA's competitors in other cities also receive tax money but are organized as nonprofits. That means they must release to the public only minimal financial information.
Little past scrutiny
Until recently, the Charlotte City Council gave the CRVA little scrutiny, despite the fact that it's a subsidiary of the city and its board is appointed by the mayor and council members.
One reason is that the CRVA's tax dollars - from hotels, restaurants and bars - can only be used for tourism purposes. Because the city can't use the money for police or roads, council members have often taken a hands-off approach.
City Manager Curt Walton said the city doesn't conduct in-depth reviews of CRVA expenses. The city's finance department will review the CRVA's financial statements in draft form, which offer an overview of the authority's spending.
Newman said all of his credit card charges are audited by the CRVA's chief financial officer and chief operating officer Mike Crum.
Crum is the authority's second in command after Newman. As part of his responsibilities, Crum helps oversee the management of city-owned, CRVA-operated venues such as Bojangles' Coliseum, Ovens Auditorium and the convention center.
In April, the CRVA board voted to wait until the outside review of the organization is complete before deciding whether to renew employment contracts for Newman and Crum.
In summer 2009, a CRVA employee bought $308 worth of tickets to a concert by singer Keith Urban, which went to Crum for personal use, records show. There is no record of Crum having paid the CRVA back in 2009 or 2010.
The CRVA later said Crum had written a check for the concert in 2009 but the check "didn't clear." Crum reimbursed the CRVA in January after the Observer asked about the tickets. Crum couldn't be reached for comment.
In other instances, the CRVA has lost track of how its tickets were used. It bought $300 of tickets to see the Bobcats play LeBron James and the Cleveland Cavaliers in 2008 but doesn't have any record of who used them.
At the 2009 Quail Hollow Championship, where Tiger Woods competed, the CRVA bought $4,500 worth of tickets to the Overlook Club - which this year includes an "upscale buffet and beverages" as well as "access to executive restrooms." The CRVA said it doesn't know who used the tickets.
Newman said his expenses are also reviewed by auditors and the N.C. Local Government Commission.
A spokesperson for the N.C. Department of State Treasurer said the commission doesn't review detailed expenses. The CRVA is required by law to submit its audited financial statements to the State and Local Government Finance Division, which is the staff to the Local Government Commission.
But state treasurer spokesperson Heather Strickland said in an email that the finance division's auditor "provides an opinion about the statements, attesting to whether or not the statements materially represent the financial status of the CRVA at the report date. The State and Local Government Finance Division does not review individual expenditures in detail."
