Speedway Motorsports Looking to Rev Up Attendance

Automobile racing, the largest spectator sport in the U.S., is not immune to the sinking economy. Speedway Motorsports, which  owns such stockcar racetracks as Atlanta Motor Speedway, Bristol Motor Speedway, and the New Hampshire Motor Speedway, said it expects to book revenue of $480 million to $520 million in 2009, significantly below 2008 sales of $611 million. Amid current economic woes, how stable is the company’s customer base?

Much of Speedway’s total revenue, such as broadcasting, is generated under long-term contracts. As such, management remains confident that the company can ride out current economic conditions, according to the 2008 annual report filed with the SEC:

In the third-year of the eight-year NASCAR television broadcast agreement through 2014, our contracted revenues for 2009 should approximate $174 million. Many of our sponsorships and other corporate marketing contracts are for multiple years and also help provide revenue and other financial stability.

Chief Operating Officer Marcus Smith admitted on the fourth-quarter 2008 earnings call that ticket sales at most of Speedway’s major 2009 events are below comparable numbers at this time last year. To combat the ongoing impact of the recession, the company is increasing advertising and other promotional activities to help offset slumping demand. In addition, similar to actions taken by its major competitor, International Speedway Corp., management is reducing many ticket and concession prices, offering extended payment terms to many ticket buyers, and working with area hotels to reduce their overnight lodging rates by up to 15 percent (with no minimum night stays).

One bright spot — all NASCAR Sprint Cup and Nationwide, and most Camping World Truck, event sponsorships for the 2009 racing season (and many for years beyond 2009), are contractually sold, according to Smith, which should mitigate expected near-term declines in admission, concession, and souvenir sales demand.

Despite rising unemployment and plummeting consumer confidence, NASCAR holds tremendous appeal to racing enthusiasts, with almost four million fans attending Speedway Motorsports’ events last year. Sprint Cup racing remains the second highest rated regular season televised sport (only the National Football League is higher). Although 2009 will likely be a challenging year, the company is well positioned to zoom ahead when economic conditions improve.