Track owner braces for revenue dip
Parent company of Lowe's Motor Speedway hopes cheaper tickets, payment plans will keep fans coming.
Thursday, Mar. 12, 2009
The economy is so uncertain that Speedway Motorsports was wary of even offering an outlook for 2009, executives said during a conference call with analysts.
“We were actually perplexed as to what we should even say about that,” said William Brooks, the Concord-based company's vice chairman and chief financial officer. “We've not been faced with how truly variable some of our expenses can be.”
The gloomy forecast came as Speedway Motorsports reported a fourth-quarter loss of about $4.9 million, up from a $20.2 million loss a year earlier. For the year, the company – which owns six other tracks – earned about $80 million, more than double its 2007 profit of $38.4 million. Revenues for 2008 were $611 million, up 9 percent.
Most of those gains came from the addition of races at New Hampshire Motor Speedway, which the company bought early in the year, as well as better sales at Motorsports Authentics, a joint merchandising venture with International Speedway Corp. That outfit created a big drag on income in 2007.
Speedway owners now are wrestling with such unknowns as how many fans will show up to races and how much they're willing to pay for tickets. To that end, cash-strapped NASCAR fans are being greeted by cheaper tickets, payment plans and lower room rates at area hotels – all aimed at keeping crowds from receding in the recession.
Track owners already have seen fans wait longer to buy tickets, holding out for a better deal. Tickets are still available for the March 22 Sprint Cup race at Speedway Motorsports' Bristol, Tenn., track – usually a top draw that sells out well in advance.
“None of our events are selling as they did,” Brooks said.
To cut costs, Speedway Motorsports has negotiated lower prices with vendors at tracks, he said, and also is cutting staff at events, especially when crowds are expected to be smaller. So far, though, crowds haven't dropped off significantly, executives said.
Lower prices are a reason, said Marcus Smith, Speedway Motorsports' president and chief operating officer. But so is the passion of race fans, whom Smith called “bullish” and “avid.”
After dropping more than 20 percent in early trading, shares in Speedway Motorsports closed Wednesday at $9.39, down 9 percent. The company's stock has lost 67 percent over the past year.
The company projected revenues for this year ranging from $480 million to $520 million, which would be down at least 15 percent from 2008. Brooks noted that last year's gains were boosted by New Hampshire Motor Speedway, which hosted two NASCAR Sprint Cup races and other events. Without those, Brooks said, admissions revenue would have declined from 2007.
The economy's toll on revenues is better reflected in the fourth quarter, he said, when there were no events in New Hampshire. At $130.6 million, revenues were down more than 7 percent from a year earlier. Admissions revenues dropped more than 17 percent to $36.1 million.
Motorsports Authentics also will be pressed to repeat its performance in 2008, when it bounced back from big losses in 2007 after several drivers – most notably Dale Earnhardt Jr. – announced plans to change teams and sponsors. That resulted in a large inventory of unsold items.
In 2008, sales of Earnhardt merchandise grew significantly after he switched teams. International Speedway Corp. reported in late January that Motorsports Authentics posted a $3.2 million profit last year, compared with a $19.6 million loss in 2007.
Yet even that venture hasn't been immune to cuts.
Smith confirmed that Motorsports Authentics has laid off several employees in recent weeks, although he declined to say how many. The economy is one reason, Smith said, but the moves also aim to make operations more efficient.