SMI officials say while admissions revenue dipped, fans still coming to races
Speedway Motorsports Inc. executives say they are pleased with an admissions revenue strategy of adding value but not increasing price of high-end tickets, reducing the price of low-end tickets and curbing the number of limited-time discounted tickets offered at its races.
Admissions revenues that are comparable were down only 8 percent from July to September, which includes NASCAR Sprint Cup weekends at Bristol and New Hampshire as well as a couple of National Hot Rod Association events and a Camping World Truck Series event, SMI Chief Financial Officer Bill Brooks said during a conference call Wednesday to report third-quarter results. The industry trend has been about 15 percent.
“Our main objective with admissions has been to keep race fans coming to races, and rather than seeing those seats go unused, we reduced the price to meet the customers’ needs in difficult financial times in those locations that would be considered entry-level,” SMI President Marcus Smith said in the call with financial analysts.
“That was met with great appreciation from thousands of our fans and kept them coming to our races.”
One thing the SMI tracks have done less this year is offering special limited-time ticket specials leading up to the race.
“[We’re] maintaining the price integrity,” Smith said. “We don’t want to have the situation where somebody is sitting next to somebody else and you have a different price on your ticket that causes some angst among our fans. We’ve made that mistake before.”
SMI owns tracks in or near Charlotte; Las Vegas; Sonoma, Calif.; Bristol, Tenn.; Atlanta; Sparta, Ky.; Loudon, N.H.; and Fort Worth, Texas.
For the first nine months of the year – which isn’t totally comparable with 2008 because the company had 19 major NASCAR events (Sprint Cup and Nationwide) in the first nine months at its tracks in 2009 compared with 17 in the first nine months of 2008 – SMI reported a 4.2 percent drop in revenues from $480.3 million to $460.0 million.
Admissions revenue is down 8.1 percent from $152.0 million to $139.7 million, while event related revenue (sponsorship, corporate, concessions, etc.) dropped 11.5 percent from $162.1 million to $143.4 million. Broadcast revenue increased nearly 14 percent from $131.4 million to $150.0 million.
“We’re surprised at the strength and pleased [at] the actual attendance of people at our Sprint Cup events,” Brooks said. “It’s gratifying that the [ticket] strategy has been a success. But once our customers have come to the speedway, they have bought less souvenirs, somewhat less food and beverage, and they have attempted to buy cheaper seats or take advantage of promotions.
“But nonetheless they’re showing up. The weakness we’ve experienced has mostly been in the corporate side of the business – corporate purchases of tickets or suites, hospitality, entertainment, display and sampling, track rentals and driving schools, those areas are quite weak. That said, that business can come back rather quickly, and we’re hopeful that we’ll see some of that in 2010.”
Overall net income, which includes a $62 million loss for Motorsports Authentics (that includes a $55.6 million write-down on the value of SMI’s 50 percent share in the company it co-owns with International Speedway Corp.), was $4.9 million for the first nine months of 2009, down 94.3 percent from $84.9 million in 2008.
MA has stopped paying guaranteed royalties and is only paying royalties on actual merchandise sold and is trying to renegotiate its current guaranteed contracts.
“When we decided to pay only the earned royalties to our licensors, we found that the business actually cash-flowed even in this difficult economy because we made significant cost-cutting measures in the supply chain as well as the administrative overhead of the company,” Smith said.
SMI reaffirmed its financial guidance for the year, expecting to earn $1.70-$1.90 per diluted share from continuing operations.
As of 1 p.m. EST, SMI stock price had risen 10.7 percent on Wednesday.
