Race Fans Drop Fewer Dollars on Local Businesses

BY DANIEL GILBERT
AND MAC MCLEAN

Twice a year, the NASCAR races at the Bristol Motor Speedway swell area roadways, restaurants and motels, raining tax dollars on the localities best situated to accommodate race-goers.

The Food City 500 in March continued the speedway’s fabled streak of 54 consecutive sellout crowds, in sunny defiance of the grim economy. But race fans dropped fewer dollars on the localities that usually see a bump in tax revenues during race months, a Bristol Herald Courier analysis shows.

That speedway spending tracks a widespread economic downturn comes as no surprise to speedway and local officials. The economic potential of BMS, as the region’s largest single-event attraction, is not in question, even as the economy limps along.

But the data pack a few surprises on closer inspection, revealing unexpected triumphs and sobering losses in specific localities. In an overall decrease, it turns out, there are winners and losers.

The economic impact of a NASCAR race, as drawn by tax data, centers in Bristol and fans out in all cardinal directions, registering in the financial records of Kingsport, Johnson City and Abingdon.

The newspaper compared reported taxes in March with average hauls from race months during the past two to three years. Of the eight localities that usually see an increase in March and August, five experienced overall decreases in sales, lodging and meals taxes this spring.

Bristol Tennessee, usually the biggest beneficiary of the speedway stimulus, raked in about $900,000 – or some $100,000 less than the average of the past three years. The city’s lodging tax revenues in March fell by more than 16 percent compared with the average.

To the south, Johnson City saw lodging tax revenues fall by 11 percent. To the west, Kingsport reported a 3 percent decline in lodging taxes.

Heading north of the state line, Bristol Virginia garnered 13 percent less in lodging revenues, but more than made up for the loss with an increase in meals tax – at $450,000, a
substantial increase from the two-year average for a race month.

Washington County, Va.,  saw a small decline in sales tax. Sales in Sullivan County – excluding the independent cities it encompasses – increased slightly.

Overall, among the seven counties that in the past have experienced discernible increases in tax revenues during race months, the number fell by $250,000. Inside this economic picture, one locality has managed to leverage new restaurants to its benefit; another, in the very shadow of the speedway, is frustratingly unable to convert it into an economic boon.

THE DINING BOOM

Abingdon’s Main Street is 20 miles from the world’s fastest half-mile. Not too far, evidently, for hungry race fans.

Meals tax revenues, said town treasurer Mark Godbey, have been holding their own in the economic tailspin. In March, they represented a $46,500 increase over the 2006-07 average for a speedway month. The latest figures do include a 1 percent increase in meals tax, to 7 percent, approved in 2008.

As to the increase, Godbey offered a verbal shrug, and mentioned, as an afterthought, that the town had several new restaurants open in the past year.

In fact, five new restaurants have opened, said Myra Cook, director of the Abingdon Convention and Visitors Bureau.

“I bet it’s because of having the new restaurants,” she said of the increase. Among the new eateries opening their doors: Willa Jacks, House on Main, Tuscan Grill, Ellis Soda Shoppe and Gages Restaurant.

Cook hasn’t heard from the new restaurateurs about their business, but anecdotally, she’s observed packed dining rooms, she said.

Cook was not aware of another touristic event in March that could account for an increase in tax revenues. “I’m confident that it was for the race,” she said.

Amine El Alami, owner of the Tuscan Grill, agreed with Cook’s assessment.

“I would say yes, especially after [the race] let out, definitely people were stopping by,” he said. “We weren’t at capacity, but we definitely saw a noticeable change,” he said of customer traffic in March.

How could he be sure his diners came from the races?

Race caps, jackets, souvenirs and a flotilla of campers parked in the parking lot, he said. “You can just tell.”

At the Pop Ellis Soda Shoppe, employee Nikki Rogich was less sure of a speedway stimulus in March.

“The race in March wasn’t that big of a change for us,” she said.

NASCAR, Rogich suspects, is less of a boon to the old-timey ice cream and food joint than its stamp of presidential approval.

“During the election, it did pick up a whole lot,” Rogich said. “We still have people coming in here who heard [President Barack] Obama came.”

“BY THE SKIN OF OUR TEETH”

As geography goes, Bluff City sits close enough to the giant race track for residents to hear the jet-like roar of stock car engines and the cheers of a crowd more than 160,000 strong.

But when it comes to converting its proximity into a financial boon, city officials are hamstrung by a worsening economic climate.

“In my opinion, we are making it by the skin of our teeth,” Mayor Todd Malone said Thursday.

Malone and City Recorder Judy Dulaney expect their total sales tax collections for this fiscal year to reach $207,000, which is $88,000 less than what they had budgeted. That
deficit alone represents a tenth of the city’s general fund; a sum that would cover all of its employee health insurance costs.

In recent years, the NASCAR races have helped lift the tiny Bluff City economy. Sales tax collections in March 2006 came out to $68,000.

But three years hence, the city is hemorrhaging tax collections, banking just $29,700 from March sales amid a quickening slide toward insolvency.

That slide stems from a series of business failures beginning in December 2007, when the Corner Cupboard, one of Bluff City’s two grocery stores, closed its doors and dented both sales and beer tax collections.

It has continued with the shuttering of the 84 Lumber hardware store in April 2008, as well as an antique store, a motorcycle shop and Malone’s former business, RaceScan Communications.

“People just don’t have any money like they once did,” Malone said. “They hold back and don’t make any big purchases. That’s what I’ve had to do.”

With the shrinking sales tax revenue, city officials have drastically cut spending, even as they burn through cash from their own reserves and other accounts to cover operating expenses. The tight financial situation has halted city officials from spending the $1.5 million it would take to run sewer lines down the right side of U.S. 11E from Rock Lane to the Piney Flats Crossroads – an area with development potential, given its proximity to the speedway.

“It would be nice to get the infrastructure down there,” Malone said. “But the city just cannot spend any more than our everyday expenses that are needed for the city to run.”
Not that the city hasn’t tried to latch on to the NASCAR money train.

In December 2007, Bluff City annexed the LakeView RV Park. The original goal was to amend the city charter to enact a lodging tax on the park. The Board of Mayor and Aldermen failed to ratify the charter change when it came back from the Tennessee General Assembly in May 2008, but will revisit the charter change again this year.

Still, annexing the RV park – whose owner sells beer to campers – has added between $3,000 and $4,000 a year to the city coffers with a beer tax.

“It’s not a great deal [of money], but when you’re a small city like Bluff City, everything’s a big deal,” Dulaney said.

The spike in beer sales, she and Malone said, also could be a sign of the times.

FORWARD-LOOKING STATEMENTS

At the epicenter of the speedway’s economic impact, the Bristol Tennessee city manager has made a series of calculations.

Sales taxes collected in March are down about 7 percent from last year, Jeff Broughton said.

“What that tells me is the economy has affected to some extent the travel of race fans,” he said. “I’m not a prognosticator when it comes to being able to understand the complexities of NASCAR and its events. We all understand where we are with this current economic cycle,” which he described as being “within 12 months of bottoming out.”

Yes, Broughton still expects the NASCAR races to be the largest single-event stimuli to the local economy. But the speedway’s most crucial financial contribution to the city is fixed, not fluctuating: That’s the $2 million a year the track pays in property taxes.

“They’re going to be a primary part of our economy as far as I can see,” Broughton said.

BMS, for its part, is again promoting available tickets to keep its sellout streak alive – a tactic unthinkable just a year ago for the ticket famously known as easier to inherit than to buy.

Despite the full house in March, “extracurricular spending” – on concessions and souvenirs – was down, said BMS spokesman Kevin Triplett. A spokesman for Speedway Motorsports Inc., the corporate parent of BMS, would not provide specifics.

“I don’t think we were surprised by that,” Triplett said of the tighter spending. “Those are decisions you make in times like these.”

The speedway is still reeling from the decision of corporate ticketholders who have cut down on how many seats they reserve. Corporations that whittle down their reserved blocks have freed up tickets never before available, and spurred the speedway to market a commodity that has always been scarce.

Because corporate blocks have traditionally been larger for the Sharpie 500 in August, this might be the first year that it is easier for an individual to buy a ticket for that race than the March race.

“Certainly, right now, it’s not harder,” Triplett said.

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