Group Created with Sketch.
Volume 23 No. 28
  • Created with Sketch.
  • Created with Sketch.
  • Created with Sketch.

McKinsey advising on NASCAR/ISC deal

NASCAR has hired McKinsey & Co. to consult on its planned integration with International Speedway Corp., sources said, as the sanctioning body plans out the historic privatization of the France family’s track company.

 

Led by Chairman and CEO Jim France and ISC CEO Lesa France Kennedy, the founding family of NASCAR has spearheaded an ambitious, $2 billion plan to take the publicly traded ISC private and make it part of the private sanctioning body. ISC owns 13 major NASCAR-hosting tracks across the U.S., in addition to several drag strips and real estate ventures that include a shopping center adjacent to Daytona International Speedway and a casino at Kansas Speedway.

The idea is that it will be easier to do business and find more value in the entities by uniting NASCAR and ISC, rather than keeping them separate. Sources said McKinsey will help figure out the new structure of the combined company.

NASCAR and McKinsey declined comment.

“It’s a good move on their part because they’re merging these two companies, and to put them together in the right way, it’s smart to hire some experts [in that space],” said Lauri Eberhart, co-founder of the Apollo Sports & Entertainment Law Group and a former executive vice president and general counsel for racetrack owner Speedway Motorsports Inc. “What you’re going to see is McKinsey looking at: ‘How do we best combine these two companies?’ They’ve got duplications on both sides. … What you’ll also see is [McKinsey identify] areas that are very inherent to NASCAR and there is no duplication, like competition.”

NASCAR and McKinsey have worked together on projects in the past. Scott Prime, NASCAR’s vice president of strategic development, is a former McKinsey executive.

Areas that are most ripe to be consolidated, according to industry executives, are administration, legal, accounting and possibly sales and marketing, although sources cautioned that the sport will still need a robust sales staff and localized marketing, which could keep those departments with a higher employee count. C-suite changes are unclear, although clearly NASCAR’s leaders will have greater oversight of track operations. ISC President John Saunders, who has been with the company since 1998, has been seen as approaching the end of his tenure, and sources say he could leave the company in the months after the acquisition closes.

The deal to combine the companies is not yet complete, but NASCAR cleared its biggest hurdle in May by announcing that ISC’s special committee, which represents non-France shareholders, accepted a $45 per-share price. NASCAR’s initial bid in November was $42, and ISC’s proxy statement to the Securities & Exchange Commission revealed that France and France Kennedy threatened to end the bid in late March when the ISC special committee demanded $46 per share.

Meanwhile, Moody’s this month rated NASCAR for the first time and examined what the combined NASCAR-ISC will look like. Moody’s gave the $1.4 billion credit facility that NASCAR willl use to help finance the acquisition of ISC a Ba2 rating, which is the second best on its junk scale. It said NASCAR’s 
outlook is “stable with revenue projected to be flat to slightly positive as higher TV broadcast revenue offsets declines in
admission and food, beverage, and merchandise revenue.”

The NASCAR-ISC deal is expected to be completed by the end of this year. It comes as rival track operator Speedway Motorsports Inc. also progresses on the Smith family’s plan to privatize its tightly controlled but publicly traded company.