CHARLOTTE, N.C. -- Since the NASCAR Hall of Fame opened more than two years ago, monthly reports showed often disappointing attendance and financial deficits.
But the taxpayer-supported Charlotte Regional Visitors Authority no longer reports detailed monthly financial statements for the hall and other city-owned buildings. That makes it difficult to know whether the Charlotte Convention Center or the NASCAR Hall of Fame is making or losing money.
Instead, CRVA now lumps its operations together as part of what it calls its “One CRVA” approach.
Revenue is reported as a total for the entire organization, which primarily includes money from the city owned buildings it manages, like the NASCAR hall, Convention Center, Bojangles’ Coliseum and Ovens Auditorium.
Expenses are no longer reported by venue or organization. They are now listed as one of three areas: “Market,” “Manage” and “Maximize.”
CRVA chief executive Tom Murray said the new accounting system is designed to reflect his management philosophy, which is to increase efficiencies across the organization. He doesn’t want departments or buildings working in silos, and the new reporting system better represents shared resources, he said.
“The story is more about the CRVA and not the individual businesses,” Murray said.
In the last two years, the CRVA has been criticized over the performance of the NASCAR Hall of Fame, a $200 million racing museum the city built with hotel/motel occupancy tax dollars.
On the decline
The NASCAR Hall has fallen far short of attendance projections, and it has usually lost money each month.
In its first full year, which ended in June 2011, the hall attracted 272,000 people and lost about $1.4 million. Attendance was supposed to be 800,000. The hall’s attendance in fiscal year 2012 – which ended June 30 – was 197,410. The CRVA and the city had projected 400,000 people for that year.
The CRVA said the hall lost $1.86 million last fiscal year. A reimbursement from the city of Charlotte for building-related maintenance reduced the deficit to $908,507.
Other CRVA-managed venues have struggled.
The Convention Center usually runs an operating deficit covered by city payments. The CRVA has floated the idea of subsidizing construction of a 1,000-room hotel to generate more convention business.
The city and CRVA have grand plans for redeveloping CRVA-managed Bojangles’ Coliseum, which had struggled for the last two years. The city has proposed spending tens of millions of dollars converting the building into an amateur sports complex.
Under the new accounting system, which went into effect for fiscal year 2013, future decisions about the Convention Center or Bojangles’ could be made without a clear picture of how the buildings are doing financially.
Murray said the new reporting system is “still a work in progress” and some changes could be made.
“Our goal isn’t a lack of transparency – it’s more transparency,” Murray said. “We’re trying to show where the costs really are.”
Murray became CRVA’s chief executive in December, replacing Tim Newman. Newman had been demoted by his board in the summer of 2011, which was under tremendous pressure from Charlotte Mayor Anthony Foxx and some City Council members.
They had criticized Newman’s management style, and Foxx said he wanted to ensure that city owned buildings were performing as efficiently as possible. Foxx declined to comment about the accounting changes at the CRVA.
Murray said some additional information is already being reported for the NASCAR Hall of Fame.
What’s changing?
In the new accounting format, some of the NASCAR Hall’s expenses are listed separately, such as salaries for direct employees.
But other NASCAR Hall-related expenses – such as marketing – are reported in different categories, separate from the hall. And there is no separate listing for how much money the hall is making – only a rough bar chart that compares hall performance with the previous year.
Murray said the CRVA may have to give more information about the hall, in part to satisfy contractual agreements with NASCAR.
As part of its agreement with the city and the CRVA to operate the hall, NASCAR is supposed to receive royalty payments from tickets sold and other revenue. The royalties can be up to 10 percent of revenue generated. But the city and CRVA don’t have to pay the royalties so long as the hall is losing money.
Those royalties are being deferred and are likely in the hundreds of thousands of dollars. Murray said the CRVA’s accounting team decided it doesn’t have to record those deferrals because the tourism authority doesn’t expect the hall to make a profit in the near future.
Republican City Council member Warren Cooksey previously served as a board member for the Charlotte Convention and Visitors Bureau, a CRVA precursor. He said the more general accounting method isn’t a problem. He said he’s only concerned that the CRVA doesn’t ask the City Council for a bailout from its general fund. “The only metric I have is ‘Does the authority need to come to Council for an operating subsidy?’ ” Cooksey said.
The CVRA makes money from ticket sales and facility rentals. It also is subsidized by two countywide hospitality taxes – on hotel and motel rooms and a 1 percent prepared food and beverage tax.
An Observer investigation earlier this year showed that, for years, the CRVA made wildly inflated claims of visitor spending, usually for conventions. The Observer found the CRVA would sometimes overestimate the number of visitors at events by tens of thousands of people. It has switched to a more conservative spending formula that, if used earlier, would have erased tens of millions of dollars of purported economic impact.
The CRVA has hired an outside consultant to study the economic impact of the Democratic National Convention, which was held in early September. That report should be finished next month, Murray said.
