Economy does not deter Hall of Fame officials (cont'd)

High hopes for attendance

Kelley said the estimates for Hall of Fame traffic were formulated by a city consultant who used the Rock and Roll Hall of Fame and the Country Music Hall of Fame in Nashville as comparables. Those attractions, which draw 400,000 to 500,000 visitors a year, are in cities that more closely resemble Charlotte, Kelley said, whereas the traditional sports halls of fame are in smaller markets -- Canton, Ohio (pro football), Springfield, Mass. (basketball), and Cooperstown, N.Y. (baseball).

The most recent tax return available for the Rock and Roll Hall of Fame revealed a little more than $22 million in revenue for 2007. In the same year, the Baseball Hall of Fame reported revenue of $20 million.

The Hall of Fame will bring NASCAR's history to life and preserves that history in the appropriate environments. The facility will allow fans to have the opportunity to relive the sport's greatest moments.

• More on the Hall of Fame

The NASCAR Hall of Fame's first-year projection of 831,000 visitors takes into account an anticipated first-year spike in attendance, and it is expected to settle in at about 400,000 visitors annually in subsequent years. In comparison, the football, basketball and baseball halls each draw 200,000 to 300,000 visitors a year.

"It's a tough time to be starting anything right now, but hopefully next year will be a good time for the NASCAR Hall to open," said Dave Motts, vice president of marketing for the Pro Football Hall of Fame. "Sometimes you can get those big [attendance] numbers, but trying to predict can be a little crazy. In Charlotte, they've got great weather, they're in a great spot for the fans and hopefully the economy will get better by then."

NASCAR's revenue from the Hall of Fame will come from royalties designated by its licensing contract with the city. Admissions will be the No. 1 revenue generator, Kelley said, even though prices have not yet been established. NASCAR will receive 10 percent of all admissions revenue.

The next-most prolific revenue area will be rentals of the building by third parties, food and beverage, and rental from retail and restaurant partners. NASCAR will take 5 percent of the restaurant revenue, 7.5 percent from catering and 10 percent from retail revenue.

The city is contractually obligated to negotiate first with NASCAR's restaurant and retail partners. Talks with the Cordish Co. for the restaurant broke down and the city has issued an RFP (request for proposal). Similarly, the city couldn't come to an agreement with HMSHost to run the embedded store, so an RFP has been issued for that as well, Kelley said.

Other streams of revenue for the Hall of Fame, of which NASCAR takes a 7.5 percent to 10 percent cut, include special events, sponsorship and any other miscellaneous income. The city also will contribute a minimum of $100,000 annually to the NASCAR Foundation.

"We're still working on the budget," said Kelley, who anticipates a full-time staff of 25 to 30 employees and 15 to 20 additional part-timers.

"There are just some more areas where we need more specifics. Toward the latter part of this year or early next year, we will have more specific revenue and expense streams. Insurance on the building, insurance on artifacts, maintenance, paper towels, toilet paper, we're continually refining the numbers."

Will sponsors buy in?

Sponsorship remains one of the most significant variables in the NASCAR Hall of Fame's revenue equation and one of the reasons the project has taken somewhat of a conservative outlook. So far, none of the 10 founding partner positions has been sold -- the asking price is $300,000 to $500,000 apiece.

The Hall of Fame's marketing partner, Just Marketing International, Indianapolis, is leading the sales effort.

Construction costs are being covered by a city arrangement that includes loans from Hall of Fame banking partners Wachovia/Wells Fargo and Bank of America, hotel/motel taxes and private funds. Sponsorship revenue will be used to pay back about $20 million in loans from the banks.

"The Hall faces an uphill battle due to the overall competition for sponsor dollars, specifically in this sport," said Brian Corcoran, executive vice president of Fenway Sports Group. "More teams, tracks, media and NASCAR are all fighting for a smaller pie. The Fortune 500 companies currently involved in the sport are happy with their existing investment, but many are not willing to spend more on activation assets such as the Hall."

Just Marketing has run into myriad obstacles to selling sponsorship, not the least of which is the unfavorable sales environment. But the feedback from sponsorship prospects goes deeper than the recession.

First of all, the Hall of Fame doesn't open until May 2010, so prompting sponsors to write a check ahead of time has been difficult. The Hall of Fame and Just Marketing are just now entering the selling period for 2010 sponsorship, even though they've been on the street with it for well more than a year.

"We're pounding the streets and there is interest," said Zak Brown, CEO of Just Marketing. "But no one is selling much of anything right now. Certainly, we've had to recalibrate our estimates [of sponsorship revenue]. They were obviously higher before the economy crashed."

Racing -- 24/7? Possibility exists ...

The NASCAR Media Group is not even two years old, but nowhere is the sanctioning body spending more money or more carefully plotting its future. ... Whether those plans include a NASCAR network remains to be seen, but it's clear that the sanctioning body is at least positioning itself to go in that direction.

• Complete story

There's also a sense of entitlement among the sport's most enduring sponsors. Companies that have been among NASCAR's biggest spenders over the past several years believe they're entitled to a place in the Hall of Fame, through their visibility on cars and at the track.

For a company such as Sprint -- that's already spending $80 million a year to be the title sponsor of NASCAR's top series -- is it going to fork over another million or so for a place in the Hall of Fame? And what Sprint doesn't know yet is how much of a presence it will have in the Hall of Fame, just as a series sponsor.

Are its marks so ubiquitous throughout the sport that it will be well-represented on the walls of the Hall of Fame anyway, even without buying sponsorship? Does it need to spend that extra money? Those are questions the brand is contemplating.

"That's a big additional investment to make to get your brand in front of the same fans who they're in front of 38 weeks a year already," said Mark Coughlin, vice president of Octagon Racing, the agency that represents Sprint. The wireless carrier is considering sponsorship options, but no decisions have been made.

There also is a restriction written into the contract between the city and NASCAR that hamstrings the sales effort. Any Hall of Fame partners that are not NASCAR official partners cannot use the Hall of Fame marks outside of the actual building, unless NASCAR grants permission.

For example, if UPS, a NASCAR official partner, declines to sponsor the Hall of Fame and Just Marketing then sells a deal to FedEx, FedEx will enjoy a significant presence in the Hall of Fame, but it won't be able to use the NASCAR Hall of Fame marks outside of the building. NASCAR said the restriction protects its official sponsors.

"It's a delicate balancing act," Kelley said. "With us being a licensee, we have to be respectful of NASCAR's officials. It's a factor [in the sales process]. But it's a restriction that we've known about since day one."

Despite the glacier-like pace of sponsorship sales and the lack of tenants in the new office tower, Hall of Fame officials are moving full speed ahead toward the opening next May. The grandiose vision for NASCAR's new epicenter hasn't dissipated.

"I remain as optimistic about the Hall of Fame as the day it was announced in March 2006," Kelley said. "Every bit as optimistic."