A review of the NASCAR Hall of Fame’s commitments for sponsorships shows projected revenue is declining significantly, dropping from $1.5 million in 2012 to $110,000 for the fiscal year starting in July.
The loss of sponsorship revenue could further explain why Bank of America and Wells Fargo recently agreed to a deal in which they would forgive $17.6 million in interest and principal from a Hall-related loan in exchange for a $5 million payment.
The reason: The banks’ chances of getting their money back were more grim than the city outlined to City Council.
When the city made a presentation to council members in January, Deputy City Manager Ron Kimble said it would take about 40 years to pay off the $19.1 million loan, at the present rate of sponsorship revenue, which he said was about $500,000.
The $19.1 million loan was to be paid back from the sale of commemorative bricks and sponsorships, and the banks had no other source of collateral.
But unless the Hall is able to increase sponsorships, that 40-year window outlined by the city would have been a mirage.
At the rate of $110,000 a year, the Hall would have fallen further and further behind because of accumulating interest.
In addition, the Hall also has financial obligations to its sponsors, which include free facility rentals and tickets. In fiscal year 2014, that cost the Hall just less than $93,000.
Tom Murray, chief executive of the Charlotte Regional Visitors Authority, said the Hall now is focused on selling new sponsorships to help its bottom line. Under the deal reached with the banks, all sponsorship money in the future can go to pay the Hall’s bills.
But he said it will be a challenge.
“We don’t think we will be selling sponsorships at the $1 million range,” Murray said during an interview. “The sponsorship world in general is challenging today. (Businesses) are looking for more of a return on their investment.”
Some of the Hall’s initial sponsors, such as Belk, Sunoco and M&M, have let sponsorships expire.
Two of the biggest Hall of Fame sponsors were Bank of America and Wells Fargo, which each paid $150,000 last year. Under the deal reached with the city, the two banks will continue to sponsor the Hall but won’t have to pay.
Kimble told council members that the agreement that sponsorship money will support Hall operations – along with royalties that no longer have to be paid to NASCAR – will help the Hall come close to breaking even.
“It can almost bring the Hall to a break-even proposition,” Kimble said.
For the sport overall, Sprint announced last year that it would end its sponsorship of NASCAR’s premier Cup series after the 2016 season.
Aside from that decision, NASCAR just completed a search for another sponsor, announcing a 10-year deal in September for Comcast’s Xfinity brand to sponsor its second-tier series beginning this season, replacing Nationwide Insurance.
Nationwide elected to direct its involvement in the sport to the Cup series, where it will sponsor the sport’s most popular driver, Dale Earnhardt Jr., in several races this season.
In addition, Camping World, which sponsors the Truck series, recently announced it had extended its partnership with NASCAR through the 2022 season.
Overall, NASCAR officials say corporate sponsorship is up 11 percent over last season.
There have been several new sponsorship announcements during this week’s Charlotte Motor Speedway Media Tour, but some high-profile teams, such as Roush Fenway Racing and Richard Petty Motorsports, still need sponsorship for some of their primary drivers. Staff writer Jim Utter contributed.