SBD/Issue 94/Finance

ISC Says Investment In Motorsports Authentics Has Lost All Value

Int'l Speedway Corp. announced this morning that its $122.5M investment in Motorsports Authentics had completely lost its value, based on declining sales and the lack of potential for a turnaround. ISC, which wrote down the value of MA to zero, will not record any future profits or losses from the merchandise and apparel company that it jointly owns with Speedway Motorsports Inc. Bankruptcy remains an option for MA if it cannot renegotiate the terms of its licensing deals with several NASCAR teams. Those contracts are in default, ISC said, because MA has not been making payments on the full amount of the guarantees. The management at MA continues to negotiate with the teams to create new terms that would allow MA to be successful. ISC President John Saunders: "In my view, time is of the essence. There is an element of urgency. The longer this goes on, the more uncomfortable people become that something can get done. There are a number of stakeholders at the table and getting everyone on the same page is complex. We expect some resolution in the next 3-6 months." ISC's net income dropped 95% from $134.6M in '08 to $6.8M in '09, with its stake in MA costing a total of $77.6M.

RUNNING ON EMPTY: In ISC's earnings report this morning, the company said admissions revenue for '09 was $195.5M, down from $236.1M in '08. The only change in the number of events was one fewer IRL race. Total attendance for ISC's 21 NASCAR Sprint Cup races and other events was 3.1 million, down from 3.7 million in '08. Further dips are expected in '10, as ISC projects admissions revenue to drop year over year in the mid-to-high single digits. Sponsorship revenue is expected to be down in the mid-single digits and hospitality will be down in the high single digits to the low teens. Four Sprint Cup races and three Nationwide Series races in '10 remain without a title sponsor, which is consistent with last year. ISC's total revenue is projected to be down in the low single digits. Still, ISC reports encouraging signs from the corporate sales front, citing recently signed deals with UAW, Valvoline, HP Hood and Hershey's Milk.

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