Do Dover and Pocono have a future in NASCAR?

By Bob Pockrass - Associate Editor

Friday, June 06, 2008

Jason Smith
Getty Images for NASCAR

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When Dover International Speedway staged its first NASCAR race in 1969 and Pocono Raceway did the same five years later, the owners of both tracks couldn’t predict that they’d still be hosting NASCAR races in 2008.

NASCAR was still a Southeastern sport. Dover didn’t turn a profit in its first 15 years of NASCAR racing. Pocono Raceway nearly went bankrupt two or three times in its first decade.

But Dover and Pocono relied on NASCAR to survive, and NASCAR relied on those tracks to expand the sport to the Mid-Atlantic region, just as Michigan International Speedway spurred growth in the Midwest and tracks in California did out West.

They are part of NASCAR history, yet when rumors swirl that a track is about to lose a coveted Cup date, Dover and Pocono are most often mentioned.

That’s because the two tracks stand alone, along with Indianapolis Motor Speedway, as the only tracks on the Cup circuit not owned by the France family’s International Speedway Corp. or Bruton Smith’s Speedway Motorsports Inc.

There’s no question about the future of Indianapolis Motor Speedway, home to the Indianapolis 500 and NASCAR’s Allstate 400 at the Brickyard. However, some observers question whether Dover and Pocono can survive in a sport dominated by ISC and SMI tracks.

When Smith recently agreed to buy Kentucky Speedway, he indicated that another track could be part of his plan to get Kentucky a Sprint Cup race. The process of elimination leaves Pocono or Dover as the most likely tracks for SMI to purchase and take away one or both dates.

It’s easy to think Smith could swoop in and purchase those tracks and move their races with the stroke of a pen and a hefty check. But Pocono Raceway owners Dr. Joe Mattioli and his wife, Rose, and Dover Motorsports Inc. Chief Executive Officer Denis McGlynn aren’t waiting around for the highest bidder, whether it’s ISC and its 12-track operation or SMI and its seven-track company.

They claim that the uniqueness of their tracks – the 2.5-mile triangular Pocono and the 1-mile high-banked concrete Dover – are a welcome respite from the 1.5-mile cookie cutters that dominate the Cup schedule. They claim their locations near America’s biggest cities would require NASCAR to think awfully hard before taking a race away.

But why not sell? Why not throw in the towel, pocket the money and take an extended vacation, like former New Hampshire International Speedway owner Bob Bahre recently did when he sold his track to Smith and SMI?

To Mattioli, the answer is easy. He grew up in a five-room house with no running water, went into the military and became a dentist. His intense work ethic made him a millionaire, but he burned out at age 35. He and his wife invested in a golf course, founded ski resorts and eventually partnered with others to build Pocono Raceway. Their track in the Pocono Mountains of Pennsylvania is now their life.

“To that time, everything I did was for money,” Mattioli says of his days as a dentist. “I decided I wasn’t going to do anything in my life that I didn’t love.”

The 83-year-old Mattioli doesn’t have to keep running his race track to make a living. Dover, as a publicly traded company, doesn’t have that luxury. Mario Cibelli, who owns 16 percent of Dover common stock, which translates to 1.3 percent of voting stock, is the largest shareholder not on the board and is urging the company to sell.

“You can’t compete with the giants, it’s really impossible,” Cibelli says. “The industry is all but consolidated. … Just the reality of the situation speaks to that.”

That’s not what McGlynn thinks. He oversaw public relations at Dover in 1972 and went from a guy begging Philadelphia media to interview Bobby Allison to operating the race track.

“My world hasn’t changed all that much,” he says. “We’re still a successful company here, doing very well. Only because somebody is now comparing us against Speedway Motorsports, which is a megamonolith, and ISC, do we get criticized.

“But we are still the same successful company that we were before. So life’s not bad here. And we’re doing fine. If you were to ask Doc [Mattioli], I would guess he’s pretty happy up there, too.”

Dover’s Story

Dover ranks seventh among the 22 Cup tracks in seating capacity at 135,000. That’s more than Atlanta, Las Vegas, California, Michigan, Richmond and others.

Fans saw empty seats at the June 1 race, but McGlynn points out that he’s not the only one fighting attendance issues.

McGlynn does fight a reputation for heavy traffic, hampered by slow ingress and egress, as well as upgrades other tracks make. He says the biggest problem was that much of the land bordering the south end of the grounds was owned by many different people.

The track finally bought the last piece of land two years ago and has expanded parking lots, created a fan zone area, moved hospitality to a more convenient location and improved traffic flow.

“It ultimately was painful to get those property owners out there, but we just couldn’t wait any longer,” McGlynn says. “We knew we had to catch up with some of the other facilities and what they were doing. I have to give Speedway Motorsports credit. The capital improvements that they made have raised the bar for everyone.”

Dover also is in the middle of a makeover that is still a few years from completion. A new media center, new suites and a fan medical care facility are done. A pedestrian bridge was recently built over the track where fans can watch the race. Plans include new restrooms, a new sound system and eventually a more spacious and fan-friendly garage area and improved pit road.

“People coming back three years from now are going to think this is a brand-new facility that just got built,” McGlynn says. “We’re going to continue to upgrade this place so it’s the best one on the circuit.”

And then there’s the monster mascot, named “Miles,” that symbolizes the toughness of the concrete track. The action figure, created in 2004 with the design of the Dover trophy, has been a popular seller among fans. Track officials have now created a 46-foot monster monument that sits in front of the track.

“We want to build an emotional bond with this facility,” Dover Vice President of Sales & Marketing Mark Rossi says. “We want you to make this your hometown track. … Everything we do is trying to create a better experience for the fan, and that’s part of it.”

Only 8 percent of fans at Dover races come from Delaware. The track serves four major markets – Philadelphia, New York City, Baltimore and Washington, D.C. – with 60 million people within 300 miles and 30 million within 150 miles.

And that, along with its 1-mile high-banked configuration, is what will help Dover keep both of its dates, McGlynn says.

“Forty years should mean something to NASCAR,” McGlynn says. “I don’t have any fear that NASCAR would yank a date out of here [because of] our facilities and our location. If anybody wanted to look hard at who we are and how we perform here, they would be hard-pressed to make a decision to bring a race from here to a smaller market.”

Pocono’s Story

Mattioli can rattle off similar statistics about his track. Recent studies show that 100 million people, a third of the U.S. population, live within 300 miles of the Pocono mountains. But within 30 miles, there is little but small towns and ski resorts.

Pocono Raceway is different from many other tracks, with modular buildings and suites that cater to individuals ticketholders instead of corporate suits. Mattioli makes improvements without fanfare. He added steeples to his grandstands as a safety measure against lightning this year. There was no news release.

In the 1990s, Mattioli realized the track facilities needed upgrading and invested about $3 million annually. He improved the garages and created lounges for the drivers as part of a facelift in 1995.

Inspired by “The Howdy Doody Show” and its peanut gallery, Mattioli designed a paddock area where fans can see the cars in the garage and watch teams at work. A gallery at the exit of the garage allows fans to easily get autographs from drivers and occasionally get souvenir lug nuts from crewmen. The overwhelming response resulted in Mattioli building risers so more people could see.

Mattioli says that, besides the ISC tracks in Kansas and Chicago built earlier this decade, his track is as new as any of the rest.

That feeling isn’t shared by everyone.

“I love the Mattiolis and I’m a huge supporter of them, but their race track is outdated,” driver Jeff Gordon says. “It needs a ton of upgrades.”

Mattioli increased seating capacity by the thousands. Pocono does not reveal its seating capacity but can attract as many as 130,000 fans. Mattioli also surveys other tracks’ ticket prices and sets his in the middle.

The track apparently makes a lot of money. Mattioli is building a resort across the street that will consist of 250 buildings with four two-bedroom apartments each. He envisions teams bringing corporate guests to Pocono and entertaining them at the resort. He is building the $150 million project, he said, without a loan.

Mattioli also is ready to invest at least $3 million in what would be a $15 million project to get a dedicated raceway exit off of Interstate 80. Those plans won’t stop just because of rumors that Pocono will lose one or both its dates. Mattioli, who now owns 92 percent of the stock in the speedway, helped NASCAR in 1982 when he added a race following the bankruptcies of tracks in Ontario, Calif., and College Station, Texas.

“In 1982, there were a number of tracks that went bankrupt,” Mattioli says. “Bill France [Jr.] came to me and wanted me to take [another] race because they had one on the schedule. I didn’t want it, and I refused.

“Then he came up and said, ‘I really need this to run a race in 1982,’ and we took it. … When I said I didn’t want it, I wanted it, but I just couldn’t handle it, I thought. For Bill, I agreed to run it, and from that time, we’ve been running it.”

Mattioli doesn’t worry that, after Bill France Jr.’s death last year, France’s brother and children won’t honor that commitment and may take a race from Pocono.

“It’s never come up, never ever come up, never, ever. Not even an inkling. And I don’t expect it to. They’re not that kind of people,” Mattioli says.

So Mattioli and his family just follow their course, which includes their PFC slogan (pretty, friendly, clean) and believe they’ll have two races despite the undercurrent of doubt.

“The fact that it’s in the Northeast is a positive thing, but I’m shocked that they’ve had two races as long as they have and I’ll be surprised if that stays that way for the future, just because of the way this sport’s grown and the markets that we need to be in,” Gordon says. “I’m as curious as anybody else is to see the future of that track. Obviously there’s a lot going on right now with Kentucky and New Hampshire and with Bruton.”

The Bruton Factor

With speculation swirling following SMI’s latest purchase, will Dover and Pocono remain with their current owners and hang onto their race dates? Or, will they have no choice but to sell and watch their dates move to Kentucky Speedway or Las Vegas Motor Speedway?

According to NASCAR’s race reports, both Pocono and Dover drew more than 130,000 fans for their races last year that weren’t impacted by rain – better than 19 events at other tracks. Dover’s June race last year was rained out but the next day drew an estimated crowd of 90,000 – better than seven Cup races run on their originally scheduled dates.

“We’ve got a great NASCAR fan base in the Mid-Atlantic and Northeast region, which both Dover and Pocono help serve those fans,” NASCAR spokesman Ramsey Poston says. “So they’ve been very important to this region. … These particular tracks, it’s not only a question of the sport’s history and heritage and its following, but it’s what is the effect on this fan base and being able to serve the fans in this area and give them races that they can easily drive to.”

That’s why those tracks don’t worry about losing dates and why they attract interest from potential buyers, some who may want to move those dates and some who don’t.

Mattioli insists that his track can’t be bought because it is in a trust that involves his children and grandchildren. He and his wife own Pocono. When they die, it goes to their three children. When they die, it goes to their seven grandchildren. The grandchildren can sell the track, but the three children can’t.

“My three children are in their 50s, so they’re going to live another 30 years,” says Mattioli, who has a couple of years on the 81-year-old Smith. “When [the grandkids] get it, they can sell it. If Bruton can figure out some way to live another 30 years, maybe he can buy it then, but the price is going to be fantastic.”

Brandon Igdalsky, the eldest of the grandsons who serves as president of the speedway, says: “We have too much fun here. That’s the bottom line. We grew up here.”

Mattioli says it’s not financially feasible to sell the track. Anyway, the France family, not Smith, has first dibs.

“It would be a cold day in hell that I would sell it to somebody else,” Mattioli says. “And not only that, the way it is set up, I can’t.

“They know that everything that I do is for the benefit of the France family and NASCAR. I don’t worry about Bruton Smith. I don’t care what he does. That’s his problem.”

As CEO of a public company, McGlynn cannot discuss whether Dover is for sale. Dover is owned by the Rollins family with their trustee, Henry Tippie, holding control of the voting stock. Dover operates other tracks (Nashville Superspeedway, Memphis Motorsports Park, Gateway International Raceway) and works in conjunction with a horse track encircled by the auto racing surface and a hotel/casino that buffers the backstretch.

In speculating about Smith’s plans, Jerry Carroll, the owner of Kentucky Speedway, told reporters that Dover was ripe to be bought and Smith would bring a Cup race to his track in 2009.

“Bruton is a smart guy and a very successful guy and I give him all the credit in the world for everything that he’s accomplished,” McGlynn says. “But I’m not certain it’s necessary that everybody hang on his every whimsical notion.”

So could Dover Motorsports be sold to ISC or SMI?

“We would do whatever is best for the shareholders,” McGlynn says. “All that said, we’re not tremendously disadvantaged by not being part of them.”

Whether Smith could buy Dover is also questionable. He took a $300 million loan to purchase New Hampshire earlier this year, and would assume $63.8 million in debt if he purchases Kentucky. Bob Simonson, a financial analyst at William Blair, estimates that Dover could cost more than $230 million to purchase and SMI would assume $50 million more debt.

“Bruton, where are you going to get a quarter of billion dollars?” Simonson says. “You just shelled out $300 million-plus. … For a public shareholder, you’re leveraging. This is a wonderful business, a wonderful franchise business and great cash flows, but hello, you’re adding an awful lot of debt.”

The lack of debt separates Pocono from the track ownership groups, Mattioli says.

“Have you ever looked at their financial sheets?” Mattioli says. “You find another track that’s paid for, has no debt and has up into the six- to eight-figure reserve cash, able to build $150 million project without borrowing a penny.

“That’s what Pocono is. I don’t know what the future holds, naturally. But we’re in good shape.”

This article first appeared in the June 5 edition of NASCAR Scene.