ISC sees admissions revenue drop nearly 19 percent, lowers financial expectations for 2010
International Speedway Corporation has seen ticket revenue drop 18.9 percent in its events through May and expects ticket revenues to be down as much as 15 percent in all of 2010.
In reporting its financials for the first six months of 2010, ISC reported admissions revenue down from $91.5 million to $74.2 million. That primarily is from the NASCAR weekends at Daytona (in February), Auto Club Speedway, Martinsville, Phoenix, Talladega, Richmond and Darlington.
Overall capacity has dropped from mid-90 percent a few years ago to 80-81 percent, ISC President John Saunders and ISC Chief Financial Officer Dan Houser acknowledged during a conference call with financial analysts.
Customers continue to purchase tickets much closer to the event than in the past as they wait to make sure they have the financial means to attend and with the knowledge races won’t be sold out, Houser said.
ISC’s average ticket price was reduced 4-6 percent for 2010, Saunders said.
“We continue to experience at most events a significant run-up, three to six weeks out from the event,” Saunders said. “We see a huge spike in activity as the consumer gets visibility on the event, on the weather and so forth.
“That’s good news. Ultimately, we want to build back our advance-sales model. This past weekend here in Daytona [for the Coke Zero 400], we saw an incredibly surprising and pleasing activity during the race week and walk-up.”
Saunders said while television ratings have shown a drop in the younger demographic, ISC has not seen that from its ticket buyers.
“We’re not seeing that [drop] in the live gate,” he said. “We’re seeing the consistency that we’ve experienced over the years. It’s in the television viewership that [the younger audience] has decreased. … ESPN appeals to that younger demographic, and that is the next key initiative that will come about in the tail end of the season [with ESPN telecasts].”
In addition to admissions revenue being down, ISC reported food, beverage and merchandise revenues dropped 9.1 percent from $26.8 million to $24.4 million. Other motorsports-related revenue (television rights, sponsorship, hospitality and advertising) dropped 2.6 percent from $195.4 million to $190.3 million.
Poor weather at Martinsville, which forced the postponement of the Sprint Cup Series race to Monday, and Talladega, which resulted in a Cup-Nationwide doubleheader on the Sunday of its race weekend, likely cost the company at least $1.5 million in revenue, Saunders said.
ISC reported that it expects food, beverage and merchandise revenue to drop 4-6 percent overall for the year and other motorsports-related revenues to drop 4-9 percent. It expects revenue from the NASCAR television contract to increase 2.5 percent.
The company expects 2010 revenues to be between $650-$660 – slightly lower than its prediction in January of 2010 revenues to be between $660-$680 million – and predicts its diluted earnings to $1.50-$1.60 per share. It had predicted diluted earnings per share to be between $1.60-$1.80. In 2009, it was $1.86 per share, down from $2.78 per share in 2008.
Overall revenues have dropped 7.6 percent from $318.5 million to $294.2 million.
ISC has only one Cup sponsorship to sell for the remainder of the year – the Cup race at Richmond International Raceway in September is not yet sponsored.
“Many of us felt the economic recovery was gaining momentum and consumer confidence was on the mend, however global and domestic conditions have not progressed as positively as we had anticipated and that is reflected not only in our second quarter results but also our outlook for the rest of 2010,” ISC Chief Executive Officer Lesa France Kennedy said.
“ISC is solidly profitable and continues to generate substantial cash from operations. We remain financially sound.”
The company’s net income for the first six months of 2010 was $35.7 million. In the first six months of 2009, it recorded a net loss of $6.6 million, but that included $58.9 million in losses from investments, most notably Motorsports Authentics.
Motorsports Authentics, which is owned by both ISC and Speedway Motorsports Inc., and is considered to have a worth of zero, has been restructured into primarily an at-track sales business instead of licensing and at-track sales business.
The announcement of ISC’s financials resulted in a large volume of trading today – nearly two times more than normal – while the stock price as of 2 p.m. EDT had gone up less than 1 percent, up 12 cents from $25.01 per share to $25.13 per share.
