S&P Global Ratings has upgraded NASCAR Holdings’ debt levels as the racing company’s outlook stabilizes on the heels of signing new media rights agreements. NASCAR Holdings’ main property, NASCAR, last year signed a seven-year media-rights agreement with five different broadcasters that goes from 2025 through 2031 and will net the sport $7.7B in total. The debt ratings agency also noted that “ongoing strong attendance and recent asset sales have supported very strong and rapid voluntary debt paydown,” and that the France family is traditionally conservative with its fiscal policies.
Those factors led S&P to raise NASCAR’s credit rating from BB+ to BBB, the latter of which is considered investment grade. NASCAR has about $135-145M in annual free cash flow, S&P said, in a January note earlier reported on by Sportico. The credit ratings agency noted that NASCAR’s plan to pay its teams more money in the next cycle “could erode margin beginning in 2025 ... suppressing EBITA growth.”
Projecting EBITA growth of 6-8% this year for NASCAR, S&P added: “However, normalizing capital spending following completion of a new production operations building and finalization of technology upgrades at NASCAR-owned facilities should reduce this figure to $85 million in 2024 and 2025 from about $100 million in 2023. We expect consistent free cash flow to drive leverage below 1x by the end of 2025.” NASCAR Holdings also controls several race tracks and owns the IMSA sports car series among other assets.
