CHARLOTTE, N.C. -- When Winston Kelley talks about the NASCAR Hall of Fame, his eyes light up and he positively beams with pride. Kelley, the executive director of the Hall, especially likes to talk about how so many visitors to the gleaming new facility, opened just last May, rave about it after they leave.

He just wishes there were more of them.

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Just over five months into its existence, and just two weeks after the grand announcement of its second class of inductees, the Hall is running far behind projections of first-year attendance and is facing as much as $3 million in budget cuts to stem its losses. Kelley and others put the blame mostly on the economy. But they also candidly admit now that the first-year projection of 800,000 in attendance was over-the-top optimistic, designed in part to ensure that Charlotte would hold the winning bid over other cities who had hoped to land the Hall.

"I think the one thing we would all do differently is every company has a range of goals and a range of targets. And in our case, we talked about the high-end target that was developed in 2005, 2006, 2007, as opposed to the range of targets, and I'm talking about the 800,000 number," Kelley said.

How bad is it? Well, that depends. Taking all factors into account, Kelley would argue that there is more good news than bad. He points mainly to overwhelmingly positive customer reviews and hopes for an economic upturn.

"We were very optimistic when we opened -- and are still optimistic over the long haul," Kelley said.

But as far as raw numbers, attendance for the first four months since the Hall opened last May 11 totaled just 119,515. If the figures continue to track that way, the Hall will draw roughly 358,500 in its first year of operation -- or less than half what was originally projected.

There are other alarming numbers attached to the lower attendance figures. Hall documents recently turned over to the Charlotte Regional Visitors Authority, which helps manage the facility, revealed that in the first two months of the new fiscal year, July and August, attendance was only 54,965 and admissions revenue covered just 37 percent of the budgeted amount. Overall budgeted revenues for the two months were $3.31 million -- but actual revenues totaled only $1.43 million. Even though actual expenses for the two months were below budgeted expenses because of smaller crowds, the Hall still lost $280,509 during the month of August alone.

The lower-than-projected attendance combined with difficulty in bringing in sponsorship money -- that revenue stream was running at 63 percent of its budgeted amount in July and August -- has led the CRVA to ask the Hall to cut as much as $2.5 million to $3 million from its original annual budget to balance costs. Kelley said he hopes to be able to do so without laying off any of his full-time or part-time staff. The Hall currently employs 27 full-time staff and 100 part-timers -- which Kelley insisted was far below the 90 or more full-time employees many other sports halls of fame employ.

"So we already are very lean in terms of staff, there is no question about that. We budgeted before we opened -- and we believed, as most folks did, that the economy would have taken more of a rebound by 2010," Kelley said. "But we built flexibility into the budget to the extent that we could, so with attendance not being what we projected, we've had to look at expenses. There is no secret about that.

"There have been no talks about layoffs. We have talked about how we can better manage part-time hours -- but there have been not talks about layoffs of any full-time staff or part-time staff."

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A fan lines up a picture at the NASCAR Hall of Fame, getting up close and personal with old vehicles.

A bad number

Tim Newman, who is chief executive officer of the CRVA that oversees operation of the NASCAR Hall, has admitted repeatedly in recent weeks that the 800,000 projection for first-year attendance was tossed out at least in part to help make certain Charlotte landed the Hall and the adjacent NASCAR Plaza, a 19-story office tower that sits mostly empty and is encountering plenty of financial problems of its own.

"We wanted to cement NASCAR as an industry here in this region, and the Hall of Fame is one of the things that helps us cement NASCAR in this region," Newman said.

He admits now that the 800,000 figure "was wrong. We should not have been talking in those numbers."

But the projection was not pulled out of thin air, he is quick to add. At the time when the bidding process for the location of the Hall was being decided, the economy was better and the general mood of everyone involved was one of unbridled optimism about the future. He said many factors were taken into consideration, including not only past first-year attendance figures at other sports-themed attractions but also at facilities such as the Rock and Roll Hall of Fame in Cleveland, the Georgia Aquarium in Atlanta and the Country Music Hall of Fame in Nashville, Tenn.

"If you'll recall, the competition for the Hall of Fame was a very public competition that involved Charlotte, Atlanta, Daytona Beach, Kansas and the Kansas City area, and Richmond [Va.]. We had a wide variety of folks who advised us that a good first year number would be 800,000," Newman said.

"As we got into budgeting for the year we are now in, the economy certainly had drastically changed, and we simply missed the mark on those assumptions. And I think we had what you might call 'deal excitement frenzy' at the time, when we were publicly vying for the Hall of Fame. And what we're doing now is dealing with the reality."

The reality is that the projected attendance figures -- the foundation on which the Hall was won and its initial operating budget was built -- was deeply flawed. And if any officials involved in the bidding process knew it or even merely suspected it as time passed, they weren't about to let on.

"We tried to come up with a reasonable benchmark of what might be expected," Newman said. "The numbers we originally settled on were about 400,000 a year. And then, as the design went along and it became a public competition, there was a view that we would probably lean more toward being an entertainment attraction type of hall of fame, like the Country Music and Rock and Roll halls -- both of which had done north of one million [in attendance] during their first years of operation.

"And if you're in competition for something and one city comes in and says we'll do 600,000 and another comes in and says, hey, we'll do a million ... you come up with a number that everybody can be comfortable with from a bid standpoint. Even after we won the business, we were comfortable with the 800,000 figure in the 2007 time frame. Then 2008 came, Charlotte lost a corporate headquarters, we know what's going on with the economy generally, and we open in an environment that is one of the most challenging environments ever. We had backed off from a budgeting standpoint from 800,000 to 600,000 for the first full year of operations -- and based on the numbers we're experiencing right now, that looks absolutely like it will be unachievable."

Asked if he regretted the 800,000 projection ever being made so public, Newman paused before answering.

"Regret is if you knowingly did something wrong. Do I wish we hadn't thrown out those numbers? Sure, because then I wouldn't be having to spend all this time talking about those numbers and I could spend more time trying to bring people into the building and trying to sell our city, which is my foremost desire and professional responsibility," Newman said.

The good news, Newman said, is that the financing of the hall was done "with no expectation of the operations of the building paying for the building. So we have a very sound financial model that will serve us very well as we right-size the operation."

Roughly $156 million of the original cost to build the hall was financed through a 2-percent increase in the local hotel/motel occupancy tax. An additional $32 million loan was taken out to enhance the exhibit experience, with CRVA and NASCAR obligated to pay the city of Charlotte $1 million each over the first five years of its operation through sponsorship and royalty agreements.

"We will have the resources to make those payments," Newman said.

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The Hall of Fame says its financing is on solid ground despite slower fan flow to see things like Richard Petty's memorabilia.

Rave reviews

Meanwhile, those who were recently voted into the Hall of Fame as part of the second class of inductees can't seem to say enough about it. They seem grateful and almost overwhelmed that their racing legacies are to be immortalized and preserved for all time in such a fine, fancy resting place.

"I'm really thankful that NASCAR and the people of Charlotte and everybody got together and gave us this beautiful Hall of Fame," former team owner Bud Moore said. "I think the Frances, and the drivers, and all of us who have been involved in NASCAR are proud of it. There were a lot of [other motorsports halls of fame] out there -- and a lot of us were pretty much already in most or all of those -- but it's great to know we now have this in Charlotte. It's great to know everybody is supporting it. I'm really thrilled and I think all of the drivers and crews and everybody is really happy to have it."

“

That makes it even more meaningful to be part of it, knowing the work that went into it. It's something that I treasure very, very much.

”

-- NED JARRETT

Along with Moore, the second class recently announced included drivers David Pearson and Bobby Allison, driver/car owner Lee Petty and driver/pioneer broadcaster Ned Jarrett.

"As far as I'm concerned, it put the cap on my NASCAR career, there is no doubt about that," Jarrett said. "As Bud has said, I've been fortunate enough to be elected to just about every other [motorsports] hall of fame there is out there. ... But this one is so different And I appreciate what went into building this Hall of Fame. It didn't happen overnight. There was a planning process over a long period of time involving a lot of people.

"One of the reasons we were so late getting it -- and I say late without really knowing what the time frame should have been -- was because they spent the time and did the research that they did before they built it so they could get it right. I appreciate that they did that. That makes it even more meaningful to be part of it, knowing the work that went into it. It's something that I treasure very, very much."

When he hears compliments such as those and reads positive customer survey feedback, Kelley can't help but smile and forget all about attendance figures that aren't meeting projections and budget cuts. But only for so long.

"It means a tremendous amount. From a personal standpoint, these are my childhood heroes," Kelley said. "But we've got a business to run. We've got to do the right things fiscally."

And even from a business perspective, Kelley said there are many positives taking place that make for a brighter fiscal future.

"There are several things that make me incredibly encouraged," Kelley said. "First and foremost is our customer feedback. There are very, very few 5-month-old operations that have the quality of feedback that we do. We've done written surveys, e-mail surveys. ... On the quality of experience, year-to-date, 98 percent of the people have rated us as meeting or exceeding expectations. On a five-point scale, we're averaging 4.80. That's phenomenal. If you look at the value, they're rating us 96 percent in the top two boxes; in customer service, they're rating us about the same in terms of friendliness and helpfulness and knowledge about the facility.

"So we've clearly got a quality facility. As Bobby and Ned and Bud have said, we did it right. One of our challenges is we're so much more than a car museum. We're starting to realize that many casual fans think you've got to be a hard-core NASCAR fan or a car fan or you're just going to a car museum. And that's not what we are. When you go through there, you see how interactive it is. Non-race fans are giving us as much good feedback as race fans. They may like different things, but they all like it."

Kelley said surveys have shown that the facility nearly always surprises those who come to visit with the numbers of and variety of exhibits.

"The most common comment we get from people is that there is far more in here than we expected," he said. "So a lot of it is just building the brand, getting the word out that it's not a static museum, it's not a car museum. There are all kinds of interactives as well as the historical components."

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Seeing old cars isn't all the Hall has to offer, Winston Kelley said. He's working on building the brand to draw in new visitors.

What's next?

The greatest challenge now, according to both Kelley and Newman, is to start attracting more visitors from the 100-mile radius in and around Charlotte itself. Research data has shown most of the current visitors are coming from out of town.

"That's what we're trying to do now on a daily basis -- just look at the reality of the attendance patterns, and look at where we can move the needle. We think the biggest opportunity to move the needle is with the Charlotte regional market. We've had great support from the convention market; we've had great support from the race fans who come in for the races (at nearby Charlotte Motor Speedway). But our average attendee has been from more than 300 miles away, from the data we've seen so far," Newman said.

Kelley added: "We've had visitation from all 50 states; we've got [Legends Club] members from 44 of the states and five countries now. We just haven't tapped into that local market."

He said he has some theories on why that has been so.

"With the economy like it is, we are a very discretionary and postpone-able experience," Kelley said. "If you think about a concert, if you wanted to see Paul McCartney, you had one night to go unless you wanted to fly somewhere. If you wanted to go see Sugarland, you had one night to go. If you want to see NFL football, you've got eight regular-season home games a year you can go to. We're open 362 days a year -- and for those who are still evaluating where they are in their jobs, or if they don't have a job at all, we're easier to put off to another day. We've had people say they're waiting to come until the crowds die down. They want to get there, but they have no sense of urgency about it."

Kelley said he hopes to change that through a wide range of promotions, including one this Halloween weekend when all children 12 and under will be permitted to get in free as long as they're wearing a costume. Kimberly Meesters, External Relations Manager at the Hall, added that all locals need to do is give the place a chance. And everyone who is worried about the numbers that don't add up to earlier projections need to give it some time, she added.

"We're building a brand. We're a start-up company. I tell people that all the time," Meesters said. "How many start-up companies, especially in a tough economy, are just through-the-roof, off-the-charts successful the day they throw open their doors?"

Meanwhile, taken in other contexts, the current numbers aren't so gloomy. The Baseball Hall of Fame and Museum in Cooperstown, N.Y., drew 289,818 in 2009 -- the first time in 12 years attendance there was below 300,000. The Pro Football Hall of Fame in Canton, Ohio, is projected to draw about 195,000 this year and has never drawn more than 247,203, which it did in 1972 shortly after a major expansion project.

So maybe the NASCAR Hall of Fame isn't on par with the Georgia Aquarium, the Country Music Hall of Fame or the Rock and Roll Hall of Fame in terms of initial attendance and immediate widespread appeal. Perhaps it never will be. But in many ways, the NASCAR Hall of Fame is more than holding its own in a challenging economy.

"In the Great Depression, they didn't have companies opening up like this -- and we're in the worst recession since the Great Depression," Kelley said. "Are we where we want to be? No. But given how good and how successful we have been -- and I keep going back to the survey results, where we consistently have good feedback from all types and ages of visitors -- that's what makes me bullish and optimistic about the long haul."

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The Class of 2011 was announced inside the Hall of Fame, and Winston Kelley is optimistic there are many more to come.