Reflecting the soft economy that nearly all pro sports are feeling, the publicly owned company that owns nearly one-third of the tracks visited each year by NASCAR’s Sprint Cup stock car racing series reported a less than stellar first quarter. Speedway Motorsports, Inc. (SMI), reported a 34 percent drop in first-quarter net income to $20.3 million from $30.9 million a year ago. Total revenue for Concord, N.C.-based SMI fell to $133.6 million from $155.2 million a year earlier.
In the world of NASCAR, the only entity with more influence is NASCAR itself: NASCAR is a privately held company owned by the France family, which controls publicly traded International Speedway Corporation (ISC). ISC owns 12 of the 22 Sprint Cup racetrack venues, which translates into 19 of the 36 points-scoring races. SMI owns seven tracks, comprising 12 of the 36 events. In NASCAR’s post-season playoffs – the final 10 races of the year – three of them are at SMI venues.
Only Pocono Raceway, Dover International Speedway and the Indianapolis Motor Speedway – representing five races – are not under the control of either SMI or ISC.
As reported by Triangle Business Journal, which covers businesses in North Carolina, SMI attributed the lower net income to three things: the ongoing effects of the recession; overhead and interest expenses associated with recently purchased Cincinnati-area Kentucky Speedway (which currently does not have a Sprint Cup date, though an ongoing four-years-and-counting lawsuit between the original owners and NASCAR may change that eventually); and the fact that one of NASCAR’s minor league series, the Camping World Truck Series, held a race at one of its tracks last year at this time but not this year.
One of SMI’s merchandising subsidiaries, Motorsports Authentics, a joint venture with ISC, is reported to have said that reduced consumer discretionary spending and decreased attendance at NASCAR races has resulted in “hampered” sales.
It’s no secret that NASCAR’s TV ratings are down and where there once was a time when tracks had no problems selling out, the order of business these days is holding the line – or even slashing – ticket prices. Central Florida TV station WFTV reported this week that, “For the first time in 27 years there will be no ticket price increases for [the] Daytona 500. Daytona International Speedway [owned by ISC] announced that ticket price-cuts – introduced for the 2009 race – will remain in place.”
SMI’s Q1 report is bringing into question O. Bruton Smith’s whole empire. Smith is the chairman and chief executive officer of SMI (since its organization in 1994), as well as the CEO of SMI-owned Lowe’s Motor Speedway (i.e., Charlotte Motor Speedway). More germane is that he is also chairman and CEO of Sonic Automotive, which owns 140 car dealerships. The economy has killed auto sales and Sonic has been reported to be on the ropes, with Chapter 11 as a possibility. Some of Sonic’s debt is backed by 5 million shares of SMI. Triangle Business Journal reported that “SMI shareholders are asking what impact Sonic Automotive’s problems could have on the motorsports company.”
