Smith spars for gas rights in Texas

The Charlotte Observer

Tuesday, Nov. 06, 2007

The low roar coming from Texas Motor Speedway isn't a race getting warmed up. There's also a rumble over who owns the mineral rights under the 1,450-acre facility -- rights that could ultimately be worth tens of millions of dollars.

For more than a year, the city of Fort Worth and Charlotte-based Speedway Motorsports have been in talks to determine which party has the rights to get paid for drilling beneath the property to tap the vast Barnett Shale natural gas deposits, people involved in the talks said last week.

Bruton Smith, whose Speedway Motorsports operates Texas Motor Speedway, said Friday that he is certain that his company, not the city of Fort Worth, holds the mineral rights for the land at the racetrack and the right to develop the natural gas under the property.

The Fort Worth Sports Authority owns the property and leases it to Speedway Motorsports, which has an option to purchase it.

Smith made it clear Friday that he considers the matter settled.

"We're not going to share our gas with anyone," he said, responding to a question about whether the company expected to participate in developing the property's natural gas reserves. "There's no doubt in my mind" that the company holds the mineral rights, he said.

Smith made his comments at a news conference at Texas Motor Speedway. Speedway Motorsports is a publicly traded company that reported a profit of $111 million last year on revenue of $567 million.

Smith is butting heads with local government leaders closer to home as well. After Concord's city council temporarily halted construction of a drag strip at Lowe's Motor Speedway in October, Smith said he would consider moving the track to another location in the metro area. Concord relented on the drag strip, but so far Smith says he hasn't stopped looking for another speedway site.

Back in Fort Worth, members of the Sports Authority have said they interpret their contract with the speedway as reserving the mineral rights for the city.

At stake is millions of dollars in lease bonuses and royalty payments that would be made over two or three decades.

The exact value is unclear because of divided mineral-interest ownerships at the property.

A spokeswoman for the city had no comment.

Councilman Sal Espino, president of the Fort Worth Sports Authority, said in a statement that the authority and TMS "have enjoyed an extremely fruitful relationship. To the extent that this relationship has been portrayed as contentious or litigious does not represent the sentiment" of the authority's board.

TMS President Eddie Gossage said that Smith's views on the mineral rights question represented "his heartfelt response" but noted that Smith has not attended any of the meetings between the speedway and the authority.

Gossage described those meetings as "very preliminary."

John Baen, a real estate professor at the University of North Texas and a mineral rights consultant, said he estimates that with 100 percent ownership of the mineral rights under all 1,450 acres and full access to drilling sites, the minerals' present value -- what they could be sold for today -- is about $60 million.

Baen said he expects documentation of the agreements between the authority and Speedway Motorsports will say who owns the mineral rights, but even that might not necessarily settle the issue.

Fort Worth controls drilling permits within city limits, he said, while the speedway has genuine claims to what constitutes acceptable use of the surface of the property.

And owners of minority portions of the mineral rights, he said, could further complicate the matter.

reprint or license