Kick the tires: Could NASCAR be in play?
America’s premier stock-car racing series has been controlled by the France family since its founding in 1948. But as NASCAR’s 70th anniversary season opens with this weekend’s Daytona 500, it comes amid rumblings over what the future could hold for the sanctioning body and its major track operators: International Speedway Corp., also controlled by the France family, and Speedway Motorsports Inc., controlled by the Smith family.
Could NASCAR be sold and its track operators merged or even included in such a deal?
While NASCAR said in a statement that it is not for sale, recent developments have fueled the speculation and it’s been a topic of major discussion along pit road and among motorsports observers. Several NASCAR and ISC executives have taken on dual roles at both companies; the Smith family and NASCAR Chairman and CEO Brian France have been linked to possible involvement in a bid for the Carolina Panthers; and ISC’s president indicated during a recent earnings report that the company is open to consolidation in the sport.
Liberty Media’s $8 billion purchase of Formula One two years ago showed the interest in sports content, and with many companies having a lot of revenue on their balance sheet, a number of institutional investors could be interested in NASCAR.
Meanwhile, many believe a sale or major consolidation is the best hope for a sport in dire need of reimagining and innovation. It could result in a far more unified operating structure, allowing for dramatic changes to scheduling, ticketing, marketing, revenue distribution, media strategies and cost controls.
“NASCAR has a very loyal following and it’s good media content value, so I can see people being interested in it if it ever came on the market,” said Sal Galatioto, president of Galatioto Sports Partners, whose firm is involved in sports property sales but has not typically done transactions in NASCAR. He thinks a media company would be the most likely suitor, but added “who knows? It could be anyone.”
Comcast is a name that often comes up in the garage area. The company is already one of NASCAR’s most important partners, serving as both a media rights partner and title partner of NASCAR through its NBC Sports and Xfinity brands, respectively. NASCAR is such an important investment for Comcast that several people from the sport, including new NBC Sports broadcaster Dale Earnhardt Jr., were interwoven throughout NBC’s Super Bowl pregame show this month. Many sources inside the sport believe that Comcast sees great value in owning the content and in its future distribution. Comcast officials did not respond to requests for comment.
SportsBusiness Journal talked to about two dozen executives inside and outside of NASCAR about what a sale of the sport would look like. Given the sensitivity of the topic, many agreed to speak only on background.
For starters, what assets would be included?
If NASCAR were sold on its own, a buyer would be getting the promotional, rule-making and rule-keeping arm of the sport. The sanctioning body has its own digital media network; negotiates major pacts for the sport, including media rights; and oversees the sport’s charter system. The sanctioning body doesn’t own teams or tracks, though the France family has a controlling stake in ISC, which has recently seen its stock price hit its highest level in nearly a decade.
However, the two companies had sought in the past to stress that they were separate in order to stave off antitrust concerns, dating back to the Ferko vs. NASCAR lawsuit in 2002 and Kentucky Speedway’s lawsuit against NASCAR in 2005. That underscores why the recent combined roles of four executives — Daryl Wolfe, chief sales and partnership officer; Eric Nyquist, chief communications officer; Paula Miller, senior vice president of human resources; and Craig Neeb, chief innovation and development officer — indicate a shift in strategy that has raised eyebrows.
Both ISC, which owns 12 tracks, and SMI, which owns eight speedways, are publicly traded. During an interview with SportsBusiness Journal last year, SMI President and CEO Marcus Smith denied any interest in selling the corporation.
But during ISC’s fourth quarter earnings call last month, ISC President John Saunders said that company’s executives have “always said that we’re certainly open to further consolidation in the sport, but I caveat that as … ‘at the right price’ so that remains a strategic priority for the company.” However, he added that “nothing is being contemplated at this time.”
The structure of NASCAR means that a sale of NASCAR by itself would be less desirable, albeit cheaper, than buying the tracks and NASCAR at the same time. ISC and SMI control the vast majority of the sport’s current 38-race annual schedule, so that structure would limit the power a new buyer of NASCAR would have. On the other hand, buying both track operators at once in addition to NASCAR would likely unlock new opportunities. Another possibility would be buying NASCAR and ISC but not SMI if the Smith family did not want to sell.
Still, the opportunity to own a historic property would make NASCAR an attractive target in any event.
“Given the extensive analysis we’ve done on NASCAR and ISC, if there was in fact a sale we think that a buyer would be inheriting not only an amazing business, but an iconic sports property. Truly a one-of-a-kind piece of Americana,” Andrew Kline, founder and managing director of investment bank Park Lane, said in an email, adding that he’s not aware of any pending negotiations.
So, how much would NASCAR sell for?
Estimates from the executives interviewed varied and are complicated by the fact that the sport would sell for more if the tracks were included. With the tracks included, estimates have typically ranged from $3 billion to $5 billion. By comparison, F1 sold for a combined $8 billion between equity and assumed debt, but no tracks were included in the sale.
Extrapolating from EBITDA figures, ISC’s enterprise value is $2 billion, according to Yahoo Finance, while SMI is worth $970 million.
The sale rumors also come amid a white-hot start to the year for mergers and acquisitions in global business, as a total of $273 billion in M&A has been conducted thus far this year, according to Dealogic data cited by the Financial Times — the busiest since 2000. They also come as NASCAR nears the midway point of its 10-year media rights deals with Fox Sports and NBC Sports, which bring in a combined $820 million a year through 2024.
France family members serving in official roles in the sport include NASCAR Chairman and CEO Brian France, ISC CEO Lesa France Kennedy and ISC Chairman Jim France. Brian France sold his stake in the company more than a decade ago, The Wall Street Journal reported last year. France Kennedy’s son, Ben Kennedy, recently took on a new role at NASCAR as general manager of the Camping World Truck Series. Multiple sources noted that Ben Kennedy’s appointment may signal that the France family intends to groom him for a future leadership role and could mean the family intends to remain in the sport. But others in the sport aren’t convinced that this is a surefire indication of the family’s long-term planning.
Meanwhile, as the Smith family mulls a possible bid for the Panthers, speculation has risen about whether a sale of SMI would help family members raise funds for an NFL venture. But when he was bidding to land an MLS franchise last year, Marcus Smith said that an MLS team would be “just one more facility; it’s not something that would prevent us from operating our core business.”
Bob Caporale, chairman of Game Plan, which advises on buying and selling sports teams but has been involved in only one deal in NASCAR, said he thinks that a new structure in NASCAR could help unlock value. He even suggested a model similar to stick-and-ball leagues, where the teams own the league itself.
“What’s struck me as unique about NASCAR when compared to the pro sports leagues is that there’s no ownership between NASCAR and the teams — it would seem that it would make a lot of sense,” Caporale said. “There could be a lot of value created in a new structure.”