This month, we will take a look going private transactions by the publically traded track operators.
October 2019 will be recognized as a landmark in the business of motorsports. Both International Speedway Corporation and Speedway Motorsports will no longer exist as publically traded entities.
International Speedway Corporation and Nascar announced their intention to merge late last year. The France Family offered to acquire the outstanding shares they did not own and take the company private.
The initial offer of $42 per share was raised to $45, after a set of negotiations, litigation, and review by financial advisors. A set of independent directors (non-France Family members) recommended approval.
A proxy vote was sent to outsider shareholders and approved by a majority. As a result, shares under the ticker symbol ISCA would no longer be traded on NASDAQ.
The International Speedway Corporation going private deal was valued at $2.0 billion.
International Speedway Corporation was a publically traded company for over 20 years, since its IPO in 1996.
Subsequent to the delisting, International Speedway Corporation was purchased by NASCAR and become a wholly owned subsidiary.
Speedway Motorsports timeline was shorter. They announced their desire to go private in April.
The Smith Family offered to buy all the outstanding shares they did own, starting with an offer at $18.00 per share and ending up at $19.75.
Total deal value was $800 million taking Speedway Motorsports private.
The majority of NASCAR Cup track was now under the private ownership of the France and Smith families. NASCAR / ISC would own twelve venues and SMI have eight.
Why did the companies go private?
The primary reason was to face the headwinds of a competitive economic landscape.
Being able to make decisions without the scrutiny of the public markets is attractive. Meeting quarterly analyst estimates and expenses for regulatory compliance will no longer be necessary.
Decreasing attendance, declining television ratings, challenging sponsorship environment, and the uncertainty of broadcast contract renegotiation are the industry biggest concerns. The expiration of the tax break for motorsports facilities is a factor.
Significant changes are being discussed about the future of the NASCAR Cup schedule. Reducing the number of dates and a shorter season are few of the possibilities.
The broadcast contracts have been the most consistent and largest source of revenue for track operators. The current contract expires in 2024 and is valued at $4.0 billion. It pays about $800 million annually for a bundle of media rights covering NASCAR properties.
Uncertainty over the renegotiation is significant, due to rapidly changing media landscape. A guaranteed increase is not a given, and plateaued levels are possible.
The sponsorship model is being redesigned to offer tiered levels. Series entitlement and category exclusivity will no longer be the focus. Flexibility and bundling of rights with a multiple properties will be the norm.
The key to future is strategic flexibility. The France and Smith families are making significant commitments to the future of the sport. They have the backing of the financial institutions. They must be willing to innovate and make changes. The racing community will ultimately benefit from the right decisions.
(Note: Effective October 2019, the BOS – Stock Index will no longer reflect data for International Speedway Corporation (ISCA) and Speedway Motorsports (TRK) since they have gone private and not traded on public exchanges.)