Motorsports Authentics restructures to focus on at-track sales
Motorsports Authentics, as expected, will abandon most of its licensing business and restructure to focus on trackside retail sales.
The company, co-owned by International Speedway Corp. and Speedway Motorsports Inc., will be the exclusive trackside retailer of licensed merchandise for the newly formed NASCAR Teams Licensing Trust.
Previously, Motorsports Authentics secured licenses from the individual teams, had the product manufactured and sold the finished product to retail stores as well to fans through its haulers and shops that were set up at the individual tracks.
But the company could not pay the guaranteed portion of its contracts (the portion not based on sales) with teams and drivers. What once was a company valued at $247.5 million – the amount spent by ISC and SMI in 2005 to purchase Action Performance and Team Caliber, the two main NASCAR merchandise companies at the time – carried a value of zero just four years later at the end of 2009.
The new model has diecast makers and apparel companies acquiring team and driver licenses through the NASCAR trust, and then their product will be sold in the MA haulers and stores at the track. It will be the only company allowed to sell the merchandise at the track from the teams involved in the NASCAR trust. All teams have been invited to join the NASCAR trust, and there are 11 teams currently on board.
“That [trackside sales] is the core competency of the business,” said ISC President John Saunders in a conference call with financial analysts Thursday. “That’s what they do best. We’ve gotten the business out from underneath these guaranteed payments that threatened its viability.
“MA’s participation going forward will be trackside distribution. … We think it will get profitable. It’s not going to be the company it once was.”
Motorsports Authentics will continue to design and distribute its Chase Authentics apparel line.
“To best represent the industry and provide the quality of product that all fans deserve at track, we are going to refocus our attention, time and energy on perfecting the trackside shopping experience,” said Motorsports Authentics Vice President Jim Morris in a news release. “Trackside retail has been a major component of NASCAR races for much of the last 20 years and we’re excited about building on the foundation we started back in the days of Action Performance and Team Caliber.”
According to an ISC filing with the U.S. Securities and Exchange Commission, the only guarantee remaining from the previous contracts is $5.5 million, which will be made in payments through January 2013. As of earlier this year that guarantee could have been more than $11 million.
In an interview in March, SMI Chairman Bruton Smith said he was disappointed in the business.
“That was the worst decision that I have ever made in my business life … buying half of that damn sorry-ass company,” Smith said. “I refused to do it for five years and finally got talked into it and should have never done it. We have been working diligently to try our best to straighten the company out and we’re going to be continuing to do that and by golly, we might be successful.
“But it was a sorry-run company and the due diligence was not done properly and the company had a lot of crap out there.”
