Originally created 03/12/06

Hall of Fame deal all about the branding



CHARLOTTE, N.C. - In a sport famous for slapping sponsor names on every available inch of sheet metal and fire-retardant racing suit, it appears NASCAR has finally found something it doesn't want to sell.

The historic moment comes deep on the 63rd page of a contract between NASCAR and the city of Charlotte to build a NASCAR Hall of Fame in the city's downtown by the end of the decade.

"Neither party shall sell any naming rights or presenting sponsorship for the HOF (e.g. 'The XYZ Company NASCAR Hall of Fame' or 'The NASCAR Hall of Fame presented by ABC Company') without the other party's prior approval."

Yes, it's true. The folks who this year will bring you the "Banquet 500 presented by ConAgra Foods" and the "Bass Pro Shops MBNA 500" don't want a bunch of corporate names getting in the way of the clearly stated "NASCAR Hall of Fame."

"We think that would probably go beyond the bounds of good taste," said Mark Dyer, NASCAR's vice president of licensing.

It's a twist on the naming rights game of publicly funded sports stadiums. Instead of selling out to a corporation willing to pay big bucks to adorn a building with its name, Charlotte - which will build and pay for the hall - will pay NASCAR for the right to put its wildly popular name above the door. The city is counting on that name to draw NASCAR's famously loyal fans, who will be asked to pay $17 a ticket.

"We didn't want to have a particular corporate name on it, because we wanted the purity of the NASCAR name," said Tim Newman, who heads the Charlotte Regional Visitors Authority, which will own and operate the Hall of Fame.

The deal, reached after a week of final negotiations that had officials in Atlanta futilely sweetening their offer by tens of millions of dollars in a last-ditch effort to win the hall, contains dozens such clauses, each spelling out exactly how the NASCAR name and brand may be used to promote and market the $107.5 million Hall of Fame.

"It is a licensing deal," Dyer said. "Although I wouldn't call this a standard licensing deal."

Indeed, some have likened the pending partnership to a marriage, and the agreement between the city and the stock-car association often reads like a prenuptial agreement.

- The only outdoor advertising allowed at the hall when it opens in 2009 will be that of exclusive NASCAR partners.

- Indoor advertising may be sold to non-NASCAR sponsors, but only if their names are not associated with NASCAR. So if XYZ Airlines wants to sponsor the trophy room and is not a NASCAR sponsor, the room may be called the "XYZ Airlines Trophy Room" - but not the "XYZ Airlines NASCAR Trophy Room."

- The Hall of Fame logo will belong to NASCAR, but must include the word "Charlotte." In the event things go sour and the parties end up divorcing, NASCAR gets custody of the logo - but Charlotte is allowed to retain the rights to its own name.

- NASCAR will provide archival material and has final approval over all exhibits at the hall, which will be run by the Charlotte Regional Visitors Authority, the public agency that also operates the city's convention center, a 1950s-vintage arena and a civic auditorium.

By its standards, NASCAR isn't getting much for the use of its name. Officials estimate royalties and other payments will add up to $1.8 million in the hall's first year, and NASCAR has agreed not to take a payment in any year when the fee would cause the hall to lose money. Outside the licensing fees paid to NASCAR, any operating profits are to be reinvested in the museum.

But a late addition to the deal gave NASCAR the right to development a 300,000-square-foot office tower as part of the Hall of Fame. With NASCAR paying just $1 annually to lease the land under the tower, and with the downtown Charlotte real estate market currently booming, that could be hugely lucrative.

"It's a very attractive option for us and we'd like to see that we could make that happen," Dyer said. "We think it could make quite a statement for us to be able to receive visitors and clients in a building connected to a world-class Hall of Fame. That's not an insignificant part of the deal."

When word went out in 2004 that NASCAR was looking for a home for a Hall of Fame, Charlotte and four other cities - Atlanta, Daytona Beach, Fla., Richmond, Va., and Kansas City, Kan. - eagerly submitted bids. While there's no shortage of racing museums throughout the Southeast, the cities were entranced by the idea of hosting the first officially endorsed by NASCAR.

Charlotte's bid was particularly enthusiastic, with billboards bragging, "Racing was built here. Racing belongs here." The few nay-sayers were easily ignored; just two people spoke in objection to Charlotte's deal with NASCAR at a city council meeting held just hours after the contract was signed Monday. No one on the council voted against it.

"Charlotte is apparently in the business of marketing a particular firm and industry," said John Hood, head of the John Locke Foundation, a Raleigh-based conservative think tank that had a representative speak against the deal. "The city is basically a business partner.... It's not obvious to me why the city of Charlotte should put its thumbs on the scale and encourage people to enjoy NASCAR at the expense of basketball, music, theater."

But from Gov. Mike Easley to city tourism officials, who agreed to raise the county's hotel tax by 2 percentage points to pay for the public's share of the bill, supporters say the hall is crucial to developing Charlotte as a tourist destination. Newman calls it a "destinational, definitional asset" for the city.

"We're putting our eggs in this basket," he said, noting he and others hope the Hall of Fame will become a starting point for tours of nearby race shops and Lowe's Motor Speedway. Mayor Pat McCrory has dubbed the concept "NASCAR Valley," comparing it to wine tourism in San Francisco and the nearby Napa Valley.

But Hood, one of the few critics, doesn't think the hall will attract many outsiders who aren't already in Charlotte for the annual May and October races at the speedway - no matter whose name is on the marquee.

"Very few people will actually fly in and come to the museum," he said.

Provisions of the Hall of Fame agreement between NASCAR and the city of Charlotte

Provisions of the agreement among the city of Charlotte, NASCAR and the Charlotte Regional Visitors Authority governing construction and operation of a NASCAR Hall of Fame:

- "NASCAR desires that the city/CRVA has the ability to use all possible NASCAR intellectual property.... City/CRVA is hereby granted the exclusive right and license in the territory to use NASCAR core marks and goodwill related thereto in the category, including the development, design, construction of the Hall of Fame to be located in Charlotte, North Carolina, at the HOF site, and further including the exclusive right to brand the HOF with the NASCAR core marks."

- "The parties agree that the primary word mark to be used with the NASCAR Hall of fame shall always be the 'NASCAR Hall of Fame.' The parties will mutually design and develop a primary NASCAR Hall of Fame logo to be used in the promotion and advertising of the NASCAR Hall of Fame, which shall incorporate the designation 'NASCAR Hall of Fame' together with the geographic designation 'Charlotte.'... Upon expiration and termination of this agreement, NASCAR reserves the right to use such Hall of Fame marks and related logo(s), except for the word 'Charlotte' and any regional identification developed by the city/CRVA...."

- "City/CRVA acknowledges that if any aspect of the services promoted and marketed by it hereunder were of inferior quality in design and workmanship, the goodwill which NASCAR has established and now possesses in the NASCAR marks, NASCAR Series marks and the NASCAR trade dress would be impaired. City/CRVA agrees to maintain the quality of services offered in connection with the NASCAR marks, NASCAR series marks and the NASCAR trade dress at a high level."

- The agreement requires the city to hold two annual events at the hall: "A private formal banquet honoring the HOF inductees, which shall... correspond to the overall impression of the banquet held in honor of participants of NASCAR's premier racing series that is currently held each year in New York City in terms of entertainment, food, beverage, decor and general ambiance.... A public ceremony which shall take place on the grounds of the HOF and correspond to the overall impression of the Pro Football Hall of Fame's annual induction ceremony in Canton, Ohio...."

- "NASCAR retains the sole and exclusive right to control the nomination and election process of HOF inductees."

- Also: the city agrees to provide NASCAR each year with 300 annual Hall of Fame passes, 500 "day" passes and 100 additional passes to be used for promotional purposes; also 350 tickets to the hall banquet and 300 tickets to a VIP seating area at the induction ceremony.

- The city and CRVA get 20 annual NASCAR "hard cards" - credentials that get their bearer into the garage area during all Nextel Cup practices and races; the city and CRVA also get 10 single-event credentials for each Nextel Cup series event and an additional 40 credentials for all NASCAR-sanctioned championship points events held in the Charlotte area.

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Source: Copy of agreement provided by city of Charlotte.