Darlington Raceway Gets $114,000 State Tax Break

July 19, 2011

Investigative Reports

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The NerveSouth Carolinians – regardless of whether you are fans of NASCAR, start your taxpayer engines.

A new marketing partnership, in which the publicly funded Myrtle Beach Area Chamber of Commerce promotes an out-of-state racetrack, has prompted the creation of a new tax favor for South Carolina’s crown jewel of the NASCAR world.

The carve-out rebates up to $114,000 in state admissions tax to the Darlington Raceway this fiscal year. The tax is 5 percent of ticket prices. It applies to “places of amusement” such as golf courses, bowling alleys and batting cages.

The $114,000 of the admissions levy to be rebated to the Darlington Raceway would otherwise go into the state’s coffers to pay for essential services like the Highway Patrol and public schools.

In the form of a proviso (90.23), the tax refund is part of the current 2011-12 state budget.

Gov. Nikki Haley, who generally intones against special tax favors, did not veto this one.

As a proviso, it expires at the end of the fiscal year unless it’s renewed.

Provisos are essentially the state equivalent of federal earmarks. The state budget is loaded up with provisos every year, and many if not most of them are carried forward as a matter of course.

The Darlington Raceway proviso, however, is new this year.

Sen. Shane Martin, R-Spartanburg, says he co-sponsored the measure with Sen. Gerald Malloy, D-Darlington, to counteract the new promotional agreement between the Myrtle Beach chamber and the Charlotte Motor Speedway.

Through the partnership, Myrtle Beach becomes “the official vacation destination of Charlotte Motor Speedway,” the chamber said in a news release announcing the team-up in February.

The arrangement includes “a number of cross promotions throughout 2011,” the release says.

Exemplifying its public funding, the Myrtle Beach Area Chamber of Commerce reported nearly $10 million in government grants in 2009, according to federal tax records the chamber must file because it is a nonprofit tax-exempt organization.

For its part, the Charlotte Motor Speedway’s role in its marketing deal with the chamber includes offering an opportunity “to win a vacation for two to Myrtle Beach” by purchasing tickets to an event at the speedway.

Both the Charlotte facility and Darlington Raceway, which is located in Darlington County about 75 miles east of Columbia in the Pee Dee region of South Carolina, are prominent stops on the annual circuit of the National Association for Stock Car Auto Racing.

NASCAR TicketRunning a little more than 1.36 miles, the Darlington racetrack opened in 1950.

“It is still remembered as the original superspeedway and as one of the pillars of the NASCAR establishment,” the NASCAR website says. “There is no other sporting facility in the world more steeped in history and tradition than Darlington Raceway, which has aged gracefully over the years but retained its feisty charm.”

Martin says he and Malloy backed the budget proviso this year to help Darlington maintain its NASCAR position whilst the Myrtle Beach chamber promotes an out-of-state competitor.

“Darlington needs to be able to compete and market itself in order to keep that race,” Martin says of the track’s marquee Sprint Cup Series event, and others, “and we just felt like they could do a better job (than the S.C. Department of Parks, Recreation and Tourism) of marketing and competing against the threat from Charlotte.”

The senator says he isn’t being critical of PRT, a cabinet department responsible for promoting the state as a tourist destination. Rather, Martin says he and Malloy simply believe that the raceway knows its market better than the state agency.

Efforts to reach Malloy on Monday were unsuccessful.

Martin pegs the economic impact of the Darlington Raceway at about $65 million per year.

Jake Harris, a spokesman for the raceway, confirms that number, attributing it to a 2009 study the track commissioned. “And that’s economic impact on the entire state, not just Darlington County or the Pee Dee region,” Harris says.

The Florida-based Washington Economics Group conducted the study, he says.

About 45 percent of Darlington Raceway’s patrons are from out of state, Harris says, adding that the facility will use the $114,000 in rebated state admissions tax this year to try to grow its attendance.

More specifically, Harris says of how the money will be spent, “I would say to broaden the reach of our marketing initiatives, whether that’s in state or out of state.”

In that regard, Martin says he plans to follow up on the proviso to see if it has the desired effect. “There may not be justification to do it again,” he says. “I want to see what the effects of our proviso are. I’m hoping for some good results on that.”

While there are a variety of racing sites in South Carolina, including 12 paved drag strips and seven paved oval tracks, the budget proviso clearly is designed to benefit Darlington only.

The measure is limited to a facility “with at least sixty thousand permanent seats” in order to “keep a NASCAR race.”

Darlington, with a seating capacity Harris puts at a little more than 60,000, is the only such motorsports complex in the Palmetto State.

“We didn’t want every little go-kart track coming up and trying to jump on the bandwagon,” Martin says regarding the specifics of the proviso.

No word on whether that’s – um – driving the other tracks crazy.

Reach Ward at (803) 254-4411 or eric@thenerve.org.