Motorsports Authentics losses top $20 million in 2009

By Bob Pockrass - Associate Editor

Thursday, November 05, 2009

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Motorsports Authentics, the primary provider of NASCAR-related merchandise, has lost $20.1 million in the first nine months of 2009, Speedway Motorsports Inc. reported in a filing with the Securities and Exchange Commission today.

SMI owns half of Motorsports Authentics with track operating rival International Speedway Corp.

The $20.1 million in losses this year does not include the $111.2 million write-down of the worth of the company. SMI estimates its half is worth $14.9 million. It cost ISC and SMI $247.5 million to purchase Action Performance and Team Caliber to form Motorsports Authentics in 2005.

For the first nine months of 2008, Motorsports Authentics made nearly $10 million but couldn’t stay in the black for 2009. The company warned the situation might not get better and that bankruptcy is a possibility.

“MA continues to have a material amount of inventory,” the company stated in its detailed financial filing of overall third-quarter results. “Although lower than 2008, a significant portion of MA’s 2009 revenues and gross profits relate to sales of Dale Earnhardt, Jr. licensed merchandise, which may or may not continue at current levels.

“Lower 2009 revenues have resulted, and may continue to result in, reduced profitability and increased exposure to excess product levels.”

In the last four months, Motorsports Authentics has stopped paying guaranteed royalties due licensors. It only is paying royalties on what is actually sold.

Motorsports Authentics currently has guarantees on some of its contracts that last through 2015.

“Certain licensors have not granted extended cure periods, although no licensor has yet terminated their license agreement,” SMI states. “MA is attempting to renegotiate its license agreements with essentially all present significant licensors of NASCAR merchandising on terms that allow MA reasonable future opportunities to operate profitably.

“Should such negotiations not be successful, should MA management decide to allow license defaults to remain uncured or should licensors not grant extended cure periods and exercise their rights under the agreements, MA’s business and its ability to continue operating could be severely impacted.”

If Motorsports Authentics ceases operations, SMI reported it could be required to fund part or all of associated contingent guarantee obligations of up to approximately $11.6 million.

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21 responses to "Motorsports Authentics losses top $20 million in 2009". Post a Comment.

1

Short-Track said:
Nov 5, 2009 at 3:17 PM
I've said it before and i'll say it again,it's time to drop the prices on the merchandise and die-casts!I have recently begun to get a collection together in the past 5 years so my son will have some real cool collectibles later on in his life.Last year I bought 5 1:24's(scale)and atleast 15 1:64's and this year I have bought 5 1:64's!I am working hard just like the majority of the NASCAR fans are and can't afford a single 1:24.I don't even want to go into t-shirts,ballcaps,jackets,etc. that have been bought over the years.They need to drop the prices and change the way they run the company.Greed=Trouble and i'm not surprised by this story one bit!!!
2

SD_User_007387 said:
Nov 5, 2009 at 3:28 PM
I'm a diecast collector and I always buy my diecast on EBAY. Much cheaper than paying $70 at the track, QVC, NASCAR.com etc.
3

Anonymous said:
Nov 5, 2009 at 3:51 PM
It's easy for some to just yap, " they need to drop those prices" when they don't have a clue about the overhead that the companies have that are trying to run the business. MAYBE they just paid way to much. ("It cost ISC and SMI $247.5 million to purchase Action Performance and Team Caliber to form Motorsports Authentics in 2005")

Kinda like all those houses that sold for $600,000 that are now worth about $ 325,000 ?? Maybe Obama will bail them out..
4

Short-Track said:
Nov 5, 2009 at 3:53 PM
I got burned on EBAY last summer so still a little gunshy however RACEGEAR.com usually has specials!
5

jerryswiatek said:
Nov 5, 2009 at 4:01 PM
Ya! obviously they paid too much and have too big an overhead, and some may have too big of heads. Get the price fair and sales will happen. Paying $65.00 to $85.00 for .75cents worth of cast iron is stupid,
6

davekooz said:
Nov 5, 2009 at 4:03 PM
#s1and 2 I cant agree more.I have been a collector for over 10 years and have over 400 1/24 scale cars in my collection.That being said I have found myself buying fewer cars because of the cost and also MA makes a substandard product.Every diecast I have from Action or MA I have had to"tweek" to make it look as the cars do on the track.I have several Team Caliber and a couple CFS diecasts that I didn't have to touch.If MA has any hopes of gaining back their place in the market,they need to A. build a better product.B. lower their prices.C. I'd like diecasts from the 70's and 80's.There are a few custom builders on Ebay, and what they can do is amazing. D. purchase their hats and shirts from a quality manufacturer.
7

jdxenterprises said:
Nov 5, 2009 at 4:15 PM
I just think collecting in general has changed. It is not like it used to be. Your driver might have 4 or 5 different sponsors throughout the year now. Not 1 like in years past. In this economy I just can't buy 5 different hats and shirts and cars. And who knows who my driver might be with 2 years down the road. Everyone (drivers and/or sponsors) are chasing that dollar from team to team.
8

ramblinman2006 said:
Nov 5, 2009 at 4:18 PM
Part of the problem is the constant paint scheme changes thinking everyone will rush out and buy the latest and that is no longer true If you were able to just purchase 1 car a year of your favorite driver that should be suffiecient. The fans and buyers are as much to fault at the manafactures of this crap die cast. If you refuese to buy their produce they will either shape up or ship out.Way to many people wanting a large piece of the pie.
9

48addict said:
Nov 5, 2009 at 4:29 PM
I have a feeling #3 works for MA. That said, I was at Daytona this July and noticed that there was a lot less merchandise available at the trailers than there was two years ago. Let's look at one item --- $7.00 to $10.00 for a driver pin. That is insane. These things are made in China and cost pennies. They would sell a lot more of them if they priced them reasonably at $3.00. I don't want to see them go under. I just want them to get their act together. And what happened to the discount for military? I was told in July that only Ryan Newman was offering a military discount where two years ago everyone was. You appreciate the military? <snort> Big talk and no action. I want my driver to get his cut when I buy his merchandise but I have gotten some fantastic deals on eBay for official merchandise. Last year I drove to Daytona to pick up some gear and one of the clerks quietly told me about an outlet store up the street. At least someone understands the hardship of this economy. I cleaned up at the outlet store and don't feel guilty because I also spent over $200 at DIS on merchandise.
10

esuchlandldo said:
Nov 5, 2009 at 4:50 PM
This is just another example of SMI and ISC trying to get more and more money and their greed came back and bit them in the butt.
11

mom said:
Nov 5, 2009 at 6:21 PM
A healthy Nascar would produce a healthy MA. Maybe they should listen to the fans without whom none of it would exist.
12

mdhutton said:
Nov 5, 2009 at 7:28 PM
The Dale Jr. angle is worth noting. MA had a banner year in '08 when fans had to "re-tool" their die casts, apparel, etc. due to Dale Jr.'s team change. That's worn off now, and in this economy folks aren't going to pay upwards of $70 every year.
13

Werner said:
Nov 5, 2009 at 7:54 PM
i still don't have my JJ 3X Champ car!!!...only 2920 made...he's got more fans than that, doesn't he?....LOL
14

iusewd40 said:
Nov 5, 2009 at 7:59 PM
You "Collector" guys are Nuts to spend the money you do on this China-Made stuff. I just bought 4 diecast at an on-line Auction for $6.00. I drove 30 miles to pick them up so maybe i have $10.00 invested in the 4. Go ahead and keep paying $75.00 per---Jr. is laughing all the way to the bank
15

leftturn said:
Nov 5, 2009 at 8:32 PM
SHORT-TRACK- Be careful. It all starts out sooo innocent. A few 1/64's here and there and the next thing you know and your trolling the web looking for autographed anything. My middle bedroom/gallery looks like a forgotten corner in a souvenir trailer. Did you know they did a Looney Tunes theme at Richmond in 2001-02-03? Did you know there were 24 cars used in those 3 years? I do. I am reminded every day. Not to mention the press set from 2001 of 8 cars, press pass, t-shirt, pin, decal, program and special press day pace car. That is in a box in the closet along with untold treasures I had to have. Like others, I used EBAY, Go Motor Bids and Mom and Pop retail outlets. Register with PayPal and they will mediate or give you a refund if a seller goes astray. Did you know that in 1995....
16

indioblanco said:
Nov 5, 2009 at 9:31 PM
Even the 1/64th scale cars are over $5.00 at Wally World or Target. Remember when they were 99 cents and we griped because they were once give-aways? T-shirts at $30.00 a pop! It was once considered good advertising to pass out free ball caps - - - not charge 26 bucks for one. (Am I the only one who noticed that the one-size-fits-all caps are way too small for an adult male? Most large men look silly in a OSFA cap.)
17

bthompson133 said:
Nov 5, 2009 at 9:42 PM
they'll all be worth mega bucks when nascar goes under from bad management
18

bthompson133 said:
Nov 5, 2009 at 9:43 PM
won't be long now, hang in there
19

xbrownsx said:
Nov 6, 2009 at 6:39 AM
Overhead or not, the products are grossly overpriced top to bottom. Lower the prices drastically, and they will make $$ through more volume sales.
At least I won't be buying anything to do with Richard Petty Motorsports and FORD items.
What a sell-out to his loyal fans - No More.
20

johnetic said:
Nov 6, 2009 at 9:05 AM
I need to say something here - I used to work in Nascar memoribilia (got out about two years ago), and let me tell you, Chinese products don't cost "pennies". That $80 die cast costs $80 becuse the die cast is featured up, has 200+ parts (which need to be assembled by hand) and, by the way, has at least 20% tacked on for royalties to the team, the driver, Nascar and the car manufacturer. They also come (for the most part, execpt for drivers like JR and JG) in very low production runs, which are much more expensive for MA to produce (anything below 10,000 units of 1:24 scale is a low production run, and costs upwards of 30% more than a run of above 10,000 units.) I don't know about now, but in the past roughly 70-80% of the production runs were below 10,000 units, with only two or three drivers able to sustain higher quantities. So, MA's choices are - produce more product, reduce the number of parts and features in the product to get a lower price, and rework the royalty situation so that they don't pay as much to the team and can pass savings on to the customers. #1 won't work, because many drivers wouldn't get made at all becuase the market won't sustain 10,000+ units of David Regan die cast where it might be albe to handle 1500 units (no bets) and there would be a glut of cars from the top four or five drivers. #2 may work, but I think a collector wants all of the features that they get in the $80 car, and there might be issues with some collectors not wanting to spend money on a lower featured car. #3 wont work becuase guess what? MA and Action before it have overvalued the worth of these licenses, and have contracts that are totally unsustainable in today's market. Teams will have to take a lower % or rewrite existing contracts, and good luck getting that done without bankrupcy. That is probably the best option for them at this point, which I hate to say because I have friends at MA and it will be really painful for them.
21

Werner said:
Nov 6, 2009 at 4:36 PM
JOHNETIC...yeah but 2920 on the 3X Champ car?...MA told me they want to keep the collectors value up, while they go bankrupt...i can remember a time when they had "refresh" cars when they could sell more...i bid on a 3X on Ebay, but i be darned if i pay more than what the thing reatiled for...that hunk of metal ain't gold...