Business

Businesses reel from NBA’s decision to pull 2017 All-Star Game

AP

Local businesses have started adding up the losses following the NBA’s decision to move the 2017 All-Star Game from Charlotte, and developer Johnny Harris says the long-term impact could be even worse.

Out-of-state companies are more reluctant to consider relocating to Charlotte, Harris told the Observer. Hotels are scrambling to market rooms and event spaces they assumed would be booked in February. The Charlotte Hornets have lost out as entertainers cancel shows at the arena they run. Future sports events might stay away, and local business owners like custom clothier William Wilson are smarting from the lost possibilities.

“I don’t know what’s going on in Raleigh, but it’s having an effect here,” said Wilson. He’s run a high-end custom men’s clothing store in South End for seven years, and counts professional athletes among his clients. Wilson was planning to host an event for prospective clients during the All-Star Game in his shop, and had lined up sponsors. He estimates he could have brought in $100,000 in new business had the event been a success.

Wilson’s lost chance is just one of many from an event that was supposed to be the biggest Charlotte had hosted since the 2012 Democratic National Convention. The NBA’s decision to relocate the game came months after the N.C. General Assembly passed House Bill 2, which limits municipalities’ ability to pass anti-discrimination ordinances protecting LGBT people and mandates transgender people use the bathroom that corresponds to the gender on their birth certificate.

It clearly has a negative impact. Anyone who thinks it doesn’t is wrong.

Developer Johnny Harris on House Bill 2

While the NBA has pulled out for 2017, the league said it will hold the 2019 All-Star Game in Charlotte – if the law is changed. Meanwhile, the NCAA on Friday said cities looking to host future championship games must submit details by Aug. 12 about how they will protect participants from discrimination, a move that could hurt North Carolina’s chances of landing future games.

And the PGA of America said it will still hold the 2017 PGA Championship at Quail Hollow Club, but would be reluctant to return after that for a major event.

“Our willingness to consider coming back to the state of North Carolina will be severely impacted unless HB2 is overturned,” the organization said in a statement that strongly opposes the bill. “We remain hopeful that the law will be changed.”

Long-term worries

Harris is one of the city’s most influential real estate developers and a key architect of growth in the SouthPark area. As president of Quail Hollow, he played a critical role in bringing the PGA Championship to Charlotte, the city’s first golf major.

When Harris played at a golf tournament in California last month, North Carolina’s new LGBT law quickly became the main topic of conversation, he said.

“Everybody wanted to talk to me about what had happened in North Carolina,” said Harris. “What are they doing? They used to be the most progressive state in the South. Now, they’re going the other direction.

“It clearly has a negative impact. Anyone who thinks it doesn’t is wrong. I’ve been saying to anyone that would listen to me from the very first day that it’s a train wreck.”

The legislature passed HB2 in late March, in the wake of the Charlotte City Council approving its own local ordinance that extended nondiscrimination protections to LGBT people and would have allowed transgender individuals to use the bathroom matching their gender identity.

While he said he’s not convinced the original Charlotte ordinance was necessary, Harris said the N.C. General Assembly went too far with HB2.

“Anytime you find yourself or allow yourself to get into a position where discrimination against any human being is part of any legislation, you’ve made a mistake,” Harris said Friday.

Although the fallout from losing the NBA All-Star Game loss is more immediate, Harris said he worries more about the long-term damage to Charlotte’s reputation and ability to lure new businesses. Harris is developing the Capitol Towers office buildings in SouthPark.

“The impact on companies relocating ... is way more significant,” said Harris. “For every one that’s still coming, there are probably 10 that aren’t.”

Hotel sellouts, concert difficulties

Combined with normal travel, the All-Star Game was expected to sell out the Charlotte region’s 33,000 hotel rooms, said Sid Smith, executive director of the Charlotte Area Hotel Association. The local hospitality industry has been “in limbo,” Smith said, waiting for a decision from the NBA. Now, thousands of hotel rooms are going back on the market, along with event spaces and ballrooms that would have been booked for parties.

“They’ll do the best they can,” said Smith. “You’ll make up some, but you’re certainly not going to make up all of it ... Almost all rooms were going to be consumed.”

The current environment hasn’t just cost us the (All-Star) Game. It’s cost us in other areas as well. We’ve lost a number of shows.

Pete Guelli, Charlotte Hornets’ chief sales and marketing officer

Past All-Star Games have brought huge crowds. Almost 55,000 visited New Orleans in 2014, for example. The city of Charlotte estimated the game would generate a local economic impact of more than $100 million, including direct spending by visitors.

Spokeswoman Laura White of the Charlotte Regional Visitors Authority said the NBA had contracted for a block of 27,000 hotel room-nights across the city. She said the organization and individual hotels are still working out how to unwind the NBA’s contract and what fees could be assessed.

“We are figuring out what we need to do as it pertains to the room block and what those next steps are,” she said. “That’s not immediately known.”

Meanwhile, the Charlotte Hornets are feeling the pinch not just from the loss of All-Star Weekend. Under the team’s arrangement with the city of Charlotte, the city owns Time Warner Cable Arena while the Hornets manage the facility and book acts. In addition to basketball games, that includes dozens of concerts and shows such as monster truck rallies and professional bull riding each year.

Some musical artists, such as Demi Lovato and Nick Jonas, have canceled, while others have decided not to book shows in the first place, said Pete Guelli, the Hornets’ chief sales and marketing officer.

“The current environment hasn’t just cost us the (All-Star) Game. It’s cost us in other areas as well,” he said. “We’ve lost a number of shows. What we really can’t quantify is how many shows just aren’t booking. So it’s had an impact on our business well beyond the (All-Star Game).”

Nine committees of Hornets employees have met weekly to plan for the game over the past months, Guelli said.

“We invested a tremendous amount of human capital and planning for the 2017 All-Star Game,” he said. “Our hope is that it won’t be wasted, and that we’ll have an opportunity to fly that for 2019.”

To put on the All-Star Game, the Hornets worked with the CRVA to sign on 15 sponsors, from Bank of America to Novant Health, to fill the approximately $1.5 million private-sector funding gap that existed when Charlotte was awarded the game last June. For their investment, sponsors were to be part of a six-month marketing campaign that consisted of print, digital and TV ads, as well as access to tickets to the weekend’s events.

“We are deeply disappointed that Charlotte will not have the opportunity to host this event in 2017,” Novant said in a statement. “However, we are hopeful for 2019.”

Beyond the game itself, Harris said he worries that Charlotte and North Carolina are losing their reputation on the national stage.

“The state was known for higher education, for having the most progressive institution in the South,” said Harris. “Everybody envied us. There’s very little envy for North Carolina these days.”

Observer staff writers Rick Rothacker, Deon Roberts and Katherine Peralta contributed.

Ely Portillo: 704-358-5041, @ESPortillo

North Carolina repealed HB2 in 2017 but left intact some of its provisions. But with Charlotte’s reputation tainted, the city is still paying to market itself to visitors.

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