Business of Speed

The Money Behind the Motorsports Industry

By: Tim Frost

Date: June 1, 2019

This month, we will take a look at the financial and operational performance of the largest public companies in the motorsports sector.

International Speedway Corporation – (ISCA):

For 2018, International Speedway Corporation posted revenues of $673.2 million, an increase of 0.5% from the previous year. This company continued its revenue growth for the fourth straight year.

Broadcasting revenue was the largest driver of the motorsports and event related income category. Admissions, food and beverage remained under pressure as ticket sales remained under pressure with stagnant attendance at many events.

ISCA’s operating income was $97.4 million, or 14.5% of revenue. This is a slight decrease from 2017, due to rises in Nascar event (sanctioning fees) and motorsports event related expenses. The company recognized a benefit from the tax act, which raised its net income.

Overall, management placed emphasis on its disciplined approach to financial management, long term broadcast partnerships and commitment to consumer focused sales and marketing initiatives that provide fans good value.

Speedway Motorsports – (TRK):

Speedway Motorsports showed a revenue increase of $3.5 million to $461.9 million in 2018. The realignment of the second race to Las Vegas and the reconfiguration of the Roval at Charlotte contributed positively. The Nascar broadcasting revenue was 47.0% of total revenue and exceeds admission revenue by almost 2.7 times.

The impact of changing demographics, evolving media content consumption, the lingering effects of lower consumer and corporate spending will continue to challenge the company going forward.

Dover Motorsports – (DVD):

For 2018, Dover Motorsports had $47.0 million in revenue and operating income of $7.2 million. The slight increase was from higher broadcasting revenue, partially offset by lower admissions revenue. They recognized a gain from the sale of land at Nashville Superspeedway, which closed in 2011.

The Nascar broadcast contract is worth $32.9 million annually and the company’s annual purse and sanction fees are about $17.8 million

Formula One – (FWONK):

Liberty Media’s Formula One revenue was $1.83 billion, a 2.0% increase from the prior year. There hosted 21 races, one more then the prior season.

Formula One generates revenue in four different categories: (i) race promotion fees — (33.8%), (ii) broadcasting fees — (33.1%), (iii) advertising and sponsorship fees — (14.6%) and (iv) other revenue (18.4%).

Operating expenses of Formula One were $1.27 billion or 70.0% of revenue in 2018.

The included Team Payments of $913.0 million. This was an increase of $5.0 million compared to 2017.

Other expense increases were due to logistics and travel expense, higher costs associated with providing the chassis and component parts to F2 and GP3 teams, digital media development and spend on fan engagement

Executives noted that Formula One audience figures increased across TV and digital platforms for second year in a row, fast growth with social media followers, and average attendance per race weekend was up.

The announcements by International Speedway Corporation and Speedway Motorsports to go private with the Frances and Smith families were unprecedented.

This lead to speculation that Nascar could acquire both entities. Times have changed since the contention of antitrust violations over track and race date changes fifteen years ago.

The industry continues to seek growth opportunities with sports betting, esports and additional fan friendly affordable engagement initiatives.