SBJ/September 1 - 7, 2003/This Weeks Issue
Team Sports pulls the plug on TRAC plans
Published September 1, 2003
The aspiring stock car racing league that made noise with deals with a major speedway operator and ESPN in the last two years pulled the plug on the venture last week, conceding that it had been unable to land investors who were willing to risk $5 million to join as team operators.
Team Sports Entertainment, the publicly traded company that planned to launch Team Racing Auto Circuit (TRAC) next May, was due to run out of funding at the end of September if it could not meet a scaled-down goal of lining up six owner-operators and a cadre of sponsors to back them. With no reason to believe it would do so, the company's board of directors voted last week to discontinue its efforts.
TRAC executives said they believe the company will be able to meet most of its outstanding debts without filing for bankruptcy protection, said Terry Hanson, president of Team Sports Entertainment.
Sports investment banker Moag & Co. had been soliciting ownership prospects for TRAC since June 2002. In April, TRAC retained Raycom Sports to sell sponsorships.
"Once we continued to have problems selling teams, with no real prospects out there, it was our fiduciary duty to let people know where we are," Hanson said. "There were a lot of people interested in the concept. But, other than our [stockholders], nobody wrote any checks to us. You can't operate a company without income."
TRAC management altered its initial business plan several times in the last two years in an effort to get its product off the ground. While the company was able to forge alliances with major industry players, it couldn't get any of them to risk cash.
TRAC initially projected a $10 million-a-year television rights deal, but couldn't land anything close to that. When the circuit finally announced a TV deal with ESPN in April, it was a time-buy that required the property to pay the network $10.66 million to produce and air its races in 2004.
TRAC's deal to run its races at Speedway Motorsports Inc. tracks gave the embryonic property a dose of credibility but did nothing to help its bleeding ledger sheet.
"I thought we had a good business concept," Hanson said. "We had good cars. We had the venues lined up. We had ESPN. But nobody wanted to write a check. We thought it was a good idea, but nobody else felt it was a good enough idea to write a check."