Thursday, November 01, 2007

NASCAR For Sale? Separating The Facts From The Fiction

An article posted Tuesday under the headline “Could NASCAR Be For Sale?” on the website read, “Just weeks after rumblings that there could be a change in the NASCAR leadership with current CEO Brian France stepping aside for his uncle Jim France, there seems to be speculation that NASCAR itself could be for sale. Multiple sources are saying that NASCAR’s parent company, International Speedway Corporation, is studying the sale of the world’s largest stock car auto racing sanctioning body due to financial troubles.” The story said that an investment bank – “most likely New York based Lehman Brothers” – has conducted a study, placed a value on NASCAR and prepared a prospectus for potential buyers.

The story included no byline, but Editor Greg Engle said today that the article was written by a staff intern, then “doublechecked” by him. We invited Engle to discuss the allegations on-air, but he declined, citing language in his contract with an Orlando, Florida-based TV station that prevents him from appearing on any other media outlet. In a brief telephone conversation earlier today, Engle said that he has now backed off on some of the allegations made in the article.

“I never rescind anything that I post on the site,” he said. “Once it’s up, it’s up. But I am going to write something later today clarifying some of what was said.

“There is definitely something going on,” insisted Engle. “I have two sources telling me that the sale is being discussed, and another at Lehman Brothers that confirms that a prospectus has been done. Something is going on, and it sounds to me like someone in the France family is looking to sell out.”

A close examination of the story, however, reveals it to be riddled with assumptions and inaccuracy.

At one point, the article identifies International Speedway Corporation as “parent company of NASCAR," something even the greenest cub reporter knows to be untrue. ISC and NASCAR are operated as independent entities by different members of the France family. NASCAR is privately held, while ISC is publically owned. Approximately 35% of ISC stock is owned by France family members, with the remainder trading on the open market.

“I understand that now,” said Engle when asked about the mistake.

The article also states, “financial troubles for ISC include the costs of lawsuit mitigation, combined with the loss of potential tracks in New York and Washington State.” ISC is indeed party to the ongoing Kentucky Speedway antitrust lawsuit, and has committed large sums of money to its (so-far) unsuccessful effort to build new tracks in Metropolitan New York and the Pacific Northwest. However, ISC recently sold the plot of land it purchased on Staten Island to a company planning build a 3.5-million square foot warehouse distribution center, recouping much of the capital expenditure from that project. ISC has been sued before – remember Francis Ferko – and emerged with its profit margin intact. There is no reason (other than wild conjecture) to believe that the same will not happen again.

The article states, “Combined with falling ticket sales and TV ratings…investors are getting weary.” Actually, that’s not true, either, since a drop in TV ratings results in no loss of revenue to NASCAR or ISC. NASCAR’s current television contract contains no linkage between revenue and ratings, meaning that the sanctioning body (and its tracks) get paid the same amount whether anyone is watching, or not. NASCAR’s TV partners – FOX, TNT and ESPN/ABC – are impacted by flagging ratings, since they cannot charge as much for advertising. NASCAR and ISC, however, are unaffected.

Engle is correct that lagging ticket sales are a concern for ISC, which owns a number of speedways. They do not however, affect NASCAR’s bottom line in any way. NASCAR collects its sanction fee in advance of each event, and receives the same amount of money, no matter how many fannies are in the stands on race day.

Finally, Engle fails to explain how the sale of NASCAR could possibly impact ISC’s financial bottom line. Once again, for emphasis: NASCAR is privately owned, and is separate and distinct from International Speedway Corporation. The sale of NASCAR would benefit only specific members of the France family; and not ISC stockholders

Asked to comment on Engle’s story yesterday, NASCAR spokesman Ramsey Poston was reluctant to do so, simply calling the report, “ridiculous.”

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