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Hornets Deal: Council questions naming rights, tourism fund and more

The City of Charlotte is counting on a lucrative naming rights deal to help pay for a new practice facility for the Charlotte Hornet
The City of Charlotte is counting on a lucrative naming rights deal to help pay for a new practice facility for the Charlotte Hornets, at a new transit center
Published: Jun. 6, 2022 at 6:03 PM EDT
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CHARLOTTE, N.C. (WBTV) - The City of Charlotte is counting on a lucrative naming rights deal to help pay for a new practice facility for the Charlotte Hornets, at a new transit center for CATS. It’s one of the linchpins of a $275 million deal between the city and the Hornets to upgrade the Spectrum Center and keep the team in the Queen City through 2045.

During a council committee meeting Monday, elected leaders expressed excitement and reservations about bargaining with corporate America to name entertainment districts and practice facilities in return for revenue. The money would help pay for $60 million of construction for the Performance Enhancement Center, a practice facility for the Hornets that would exist in part of a new Charlotte Transit Center.

Related: City to pay $275 million to renovate Spectrum Center, fund new practice facility

Without the $60 million in naming rights revenue, Charlotte Economic Development Director Tracy Dodson said the city would have to identify different sources of revenue to pay for the project.

The money will come from Charlotte’s Tourism Fund, which is revenue from hospitality taxes like hotels and rental cars. Councilmembers continued to bemoan the city’s lack of transparency when it comes to other projects that are counting on funds from the same source.

The City has been working with Innovative Partnerships Group to identify how the city could make money from naming rights. The city has proposed creating an entertainment district around the Spectrum Center and a new CTC/practice facility and selling the naming rights to a company.

A rendering provided by the City of Charlotte showing what the new Charlotte Transit Center and...
A rendering provided by the City of Charlotte showing what the new Charlotte Transit Center and Hornets practice facility on Brevard Street could look like.(City of Charlotte)

IPG’s Jeff Marks said his company has helped other cities reach similar deals in Phoenix, Dallas and Nashville.

Marks estimated Charlotte could earn “a couple million per year” for naming rights and branding opportunities from an entertainment district. He also listed the practice facility, ground floor clinic at CTC, mobility assets such as busses and space as additional branding and naming rights opportunities.

The city would essentially sell naming rights for the district, and then borrow money based on that revenue to pay $60 million for the practice facility construction.

A rendering from the City of Charlotten of what an entertainment district on Brevard Street...
A rendering from the City of Charlotten of what an entertainment district on Brevard Street could look like.(WBTV)

A new deal would have no impact on naming the arena. Spectrum’s deal for naming rights is with the Charlotte Hornets. Dodson said it would stay that way even with the new agreement, with the city not receiving any of that revenue.

Councilmembers Dimple Ajmera and Victoria Watlington shared excitement about the opportunities that could provide.

“What do we see for this district as a whole? That can help drive who we want as a partner and how does it fit with what we’re trying to do,” Councilmember Watlington said.

Councilmember Ed Driggs shared his reservations about a partnership between the city and company that exchanges cash for name recognition.

“I don’t think going down this road is without pitfalls,” Driggs said.

“We need to be careful about who the city forms its partnerships with.”

Councilmember Braxton Winston asked why this plan would spur development for the area if the arena construction didn’t in the first place.

Dan Barrett with CAA Icon said that the success of the proposed entertainment district would be contingent on the construction of the new CTC.

“What’s critical is redevelopment of the CTC. That’s what’s going to spur development around the arena,” Barrett said.

City staffers also laid out proposed designs for the CTC, which can be viewed here. If the practice center and CTC end up not working together, the practice facility would be built on a nearby gravel lot.

Barrett said the $275 million of taxpayer investments is about keeping the city and venue competitive for attracting events.

“Regional competitors are investing in their buildings, and you have to stay competitive,” Barrett said.

There are other local projects competing for city money from the Tourism Fund. Revenue from the funds comes from hospitality taxes. The Tourism Fund, specifically, helps fund museums, arts and culture and smaller stadiums.

Council members brought up the needs of Discovery Place and arts funding as reasons for getting more transparency from the city about what projects are on the docket and their timelines.

“It feels sometimes like we’re in one of those carnival booths, just throwing money around,” Winston said.

Mayor Pro Tem Julie Eiselt said she wouldn’t vote in favor of the Spectrum deal until she received more specifics on how the city plans to fund its new arts initiatives. A graph provided by the city shows there is no room to add more debt to the Tourism Fund until 2026 if the Spectrum deal goes through.

“From this, it looks like we wouldn’t have a source of funding for Arts and Culture,” Eiselt said.

In an interview with WBTV, Dodson said the arts and culture plan is new and says she isn’t sure if the funding source for that has been identified yet and isn’t on the Tourism Fund list of projects yet.

On Discovery Place, Dodson said that the timing of Covid delayed the project. WBTV asked Dodson why she hasn’t released a list of projects, which has been previously requested by council members.

“It’s not that we have this big master list necessarily of projects,” Dodson said.

“We look at projects as they come to us. We look at where we are with other projects, how it fits into a broad scope.”

Dodson said she also informed Councilmembers about the upcoming need for negotiations on Spectrum Center at their annual retreat in 2020. WBTV still has a copy of that presentation and there was no mention of the cost. Even under the old lease, the City would have been required to contribute $173 million to Spectrum Center upgrades from the Tourism Fund.

Dodson says the urgency of the Hornets deal is because of Covid slowing down the progress. She said the Hornets are ready to get to work on the project in their offseason but said she’s open to continuing discussion with council if they need more time than their planned June 13 vote.

To have your voice heard on the Spectrum/Hornets deal visit the project website.

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