NASCAR track stock crashes on Wall St.
ESPN/ABC deal a dud on Street
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The stock of NASCAR's two track operators, Intl. Speedway Corp. and Speedway Motorsports, each fell by double digits at the end of the day Thursday. These track companies pocket 65% of the $4.48 billion license fee.
Dennis McAlpine, an industry analyst and head of McAlpine Associates, said the report of a 40% increase from the previous contract is "a meaningless number," chiefly because the new contract stretches out to eight years (2007-14), whereas the previous deal covered only six years.
After he ran the numbers, McAlpine said that NASCAR may gain an average of only 4% a year overall, starting in 2007. Even worse, NASCAR could actually lose money in the first four years of the new contract, he said.
McAlpine's analysis shows that NASCAR will scarf up $560 million in 2006, the final year of the old contract. NASCAR's officials haven't broken down the year-by-year payments under the $4.48 billion deal but these contracts are always back-loaded. Since the average yearly license fee in the new deal is $560 million, McAlpine said that "track operators will have three or four years of down TV rights fees beginning in 2007."
Stung by the analysts' skepticism, Intl. Speedway put out a damage-control statement late Thursday by Lesa France Kennedy, president of the speedway. She lauded the broadcast/cable deals, saying they'll "further drive fan and media awareness for all three major NASCAR series, which helps fuel long-term attendance and corporate-related revenue growth for" the speedway.
Kennedy's response didn't persuade McAlpine, who lowered his rating on both Intl. Speedway and Speedway Motorsports from a buy to a hold.
