SBD/May 2, 2012/Finance
SMI Cites Unemployment, High Gas Prices As Reasons Behind 2.1% Drop In Q1 Revenue
The weak economy continues to challenge NASCAR's track companies. Speedway Motorsports, Inc. (SMI) today reported Q1 revenue decreased 2.1% from last year to $84.8M and attributed the drop to high unemployment and high gas prices, which dampened demand for tickets at its recent races. Admissions revenue declined by $1.1M and event-related revenue decreased by $900,023 compared to the same period last year. Broadcast revenue, which is contractually guaranteed, increased by $1.1M compared to the same period last year. SMI managed to reduce its expenses by $7.6M compared to Q1 '11 largely because it took a loss last year on debt it redeemed and refinanced. In a statement, SMI President & COO Marcus Smith said, "Looking forward, we have already sold all of our NASCAR Sprint Cup and most of our Nationwide Series event sponsorships for 2012, and many for racing seasons beyond 2012. Corporate interest in our premier facilities for track rentals, driving schools and other promotional activities continues to increase. These, and other bullish signs like stabilizing advance ticket sales, are all positive signs that SMI's business continues to rebound." During SMI's earnings call, Smith spent time trumpeting NASCAR's TV performance. He said that although ratings were down this year, viewership is up and the sport outperformed all other sports in TV ratings for seven of its 10 races this season. His emphasis on the sport's TV performance mirrored the earnings call ISC had in March. NASCAR is expected to begin negotiating a new TV contract sometime in the next year, and both SMI and ISC depend on the sport's broadcast revenue for a considerable portion of their quarterly earnings. Smith said NASCAR has not set a timeline for when it would like to negotiate new TV deals. Its current agreements with Fox, Turner and ESPN run through '14. Smith: "(Negotiations) could go into next year and that's the target. If it happens this year, that would be early. I wouldn't be surprised to see something happen this year. If it doesn't, then next year would be on time."
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