Motorsports Authentics reports 2007 losses

By SceneDaily Staff Report
Wednesday, December 12, 2007

The Motorsports Authentics licensed-products business will lose between $45 million and $50 million in 2007, International Speedway Corp. reported during a conference call Wednesday with financial analysts to discuss 2008 projections.

ISC, which will record a write-off of $25 million to $50 million in 2007 from Motorsports Authentics, projects that the business will break even in 2008.

"While we are clearly disappointed in the magnitude of the [write-off], we continue to believe the sale of licensed merchandise represents a significant opportunity in the sport," ISC Chief Financial Officer Susan Schandel said.

Motorsports Authentics, a 50-50 partnership between ISC and Speedway Motorsports, has laid off more than 20 percent of its staff and has changed certain operational procedures.

Motorsports Authentics will decrease the number of merchandise trailers at the track in the future and will use a more targeted apparel strategy, Schandel said.

The company blamed part of the losses on Dale Earnhardt Jr.'s announcement that he was leaving Dale Earnhardt Inc. in May, as well as other driver movement for 2008 announced earlier than usual.

Schandel said ISC expects Earnhardt Jr. and others to sell more products next year when they move to new teams.

Among other items discussed:

  • ISC has spent approximately $6 million in expenses in the Kentucky Speedway antitrust lawsuit in 2007 and expects to spend another $5 million to $6 million in 2008 if the case goes to trial as scheduled next March.
  • Television rights fees will increase 2 percent from 2007 to 2008.

In a news release issued prior to the conference call with analysts, company officials expressed optimism about next year.

"ISC is poised for a successful year in 2008," said ISC President Lesa France Kennedy. "While we continue to keep a close eye on national economic trends and their impact on consumer spending, we expect to post increases in all of our major revenue categories in fiscal 2008. This growth will drive higher free cash flows to support a prudent capital allocation strategy, including a more aggressive share repurchase program."

The company anticipates total revenues to range between $805 million and $825 million for the 12-month period that will end next November and earnings between $3.05 and $3.15 per diluted share.

Mentioned Drivers: Dale Earnhardt Jr.

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