Pledges can't cover NASCAR Hall of Fame loans for long

The NASCAR Hall of Fame has added three corporate sponsors since its May opening and now has enough money to begin repaying the $5 million it owes the city of Charlotte.

How long those payments last is another matter.

The hall now has $5.15 million pledged from sponsors over the next five years. It must pay the city $1 million annually from that total over the same period.

In addition, sponsorship dollars are to repay a $21.5 million loan from Bank of America and Wells Fargo/Wachovia that helped pay for construction.

The Charlotte Regional Visitors Authority, which manages the hall, said it will be able to make its city payments for the next two years.

But after fiscal year 2012 (which ends June 30, 2012) it doesn’t yet have enough sponsor money lined up to pay the $3 million the city is owed from 2013 to 2015. Nor is there money budgeted after this year for the larger bank loan.

Visitors Authority officials have struggled to line up corporate support for the $200 million hall, and they blame the economy.

Kimberly Meesters, a hall spokeswoman, said the facility could add to its sponsorship money by finding new sponsors or signing extensions with existing sponsors. Most of the hall’s current deals are between three and five years, she said.

The hall has 10 corporate sponsors: NASCAR Performance Group, Lowe’s, Mars, Belk, Food Lion, Sunoco, Bank of America, Wells Fargo/Wachovia, Coke and Panasonic.

When the hall opened in May, it had sponsorship commitments totaling $4 million.

The city took out $32 million in additional debt for the exhibits. The hotel/motel tax pays for most of it, and the hall and NASCAR are each adding $1 million annually for the next five years, the hall’s share coming from sponsorships.

If the hall can’t pay off the $21.5 million bank loan, the two banks have no way to collect. Taxpayers aren’t at risk, the city said.

Meesters said the hall will pay the banks whatever is left from sponsorship money this fiscal year, which would be about $1 million. The hall can also use money from the sale of commemorative bricks to pay the banks.

At that rate, the hall won’t make much progress on its bank debt. The interest on the loan – 4 percent – is about $860,000 this year.

NASCAR is allowed to take a 10 percent royalty fee from the hall’s sponsorship money, which could lower what the hall now has on hand to $4.6 million.

In addition, Just Marketing International, a firm hired to sell sponsorships, will be paid a $480,000 advance. It will also receive an 8 percent fee after it sells $6 million in sponsorships.

Meesters said the hall expected to pay off the loans in 10 to 12 years. But hall officials – and bankers – have concerns.

In February, when sponsorships were lagging, Wells Fargo/Wachovia banker John Tate sent hall officials an e-mail, expressing worries about the bank getting repaid.

Tate was concerned that the hall was considering sponsorships in exchange for too much promotional help, rather than getting cash that could be used to repay the bank.

“The hall gets the benefit while the banks take it on the chin re sponsorship $,” Tate wrote. “I applaud the activity … all I’m doing is raising the issue of what the ramifications are for the banks.”

In an interview this week, Tate said, laughing, that “I worry about all my loans.” He added that he is confident the NASCAR Hall will succeed, and that Wachovia/Wells Fargo would be repaid.

On April 7, a month before the hall opened, Steve Bagwell, an accountant for the Visitors Authority, sent city of Charlotte treasurer Scott Greer an e-mail that explored what would happen if the hall can’t pay the city back on time.

Bagwell wrote: “Does the unpaid balance roll forward to be paid from future Sponsor collections?

“Should the unpaid balance be met from any anticipated operating profits?

“Does the unpaid portion of the obligation ‘go away’?”

Ron Kimble, a Charlotte assistant city manager, told the Observer the hall must pay all $5 million no matter how long it takes.