Will SMI buy Dover?
“Since the separation of casino and motorsports operations more than six years ago, the share price of Dover Motorsports has fallen by approximately 20 percent," it states. “In a 2002 letter to shareholders of the companies, Chairman Henry Tippie stated that the spin-off was intended to facilitate ‘capital raising and acquisitions’ in order to ‘set the stage for future growth’ for the casino and motorsports companies. The spin-off, as originally conceived, has failed to live up to its stated intentions. After six years without price appreciation, the old playbook must be thrown out.
“The days of the independent NASCAR track owners have all but passed. Dover Motorsports will never be able to achieve the operating performance of International Speedway Corp. and Speedway Motorsports Inc. The combined strength of the industry leaders leaves the Company at a permanent competitive disadvantage in regards to sponsorship dollars, operating margins and infrastructure. It is simply not possible for a single Sprint Cup series track to produce the results of a large portfolio of similar tracks. More time and additional patience cannot change this fact. Both ISC and SMI can operate the Monster Mile more profitably than Dover Motorsports will ever be able to.
“Additionally, ISC and SMI have both demonstrated an ability to successfully acquire, integrate and develop other racing facilities. In stark contrast, Dover Motorsports has failed in its strategy to grow via acquisition (Gateway & Memphis) and through the development of a de novo racing facility (Nashville), with only losses to show for all of the effort.
“Dover Motorsports’ options for value creation outside of a sale of the Company are quite narrow. While small incremental investment at the Monster Mile remains a possibility, it will be very difficult to move the needle enough to make a difference in the Company’s operating results. Given the reality of the situation, the only option is for Dover Motorsports to use its free cash flow to pay down debt."
05/29/08 Speedway Motorsports Inc. owner Bruton Smith said on Tuesday that, based on conversations he has had with Dover officials, the track is "more or less for sale." Smith's company, Speedway Motorsports Inc., owns six NASCAR tracks and is buying another in Sparta, Ky., for a reported $78 million. Dover Motorsports Inc. president and CEO Denis McGlynn would not speak in detail about the Delaware track's status. "I can never read [Smith's] mind," McGlynn said Wednesday. "These situations can be somewhat frustrating as a publicly held company. We don't, and cannot, comment on acquisitions. We are not allowed to speculate." McGlynn insists that moving one or both of the track's dates to another venue wouldn't make sense. "Under any circumstance, whether we remain the way we are or are sold, the markets don't change," McGlynn said. "We're the only track in NASCAR that serves four markets — Philadelphia, Baltimore, Washington, D.C., and New York." Despite its proximity to those four major cities, Dover Motorsports earnings have been up and down in recent years, according to financial reports. In 2007, the company's earnings topped $86 million, compared to $91 million in 2006 and 2005, $84 million in 2004 and $78 million in 2003. The track's ownership is separate from that of the adjoining casino, hotel and harness racing operations, which are owned by Dover Downs Gaming & Entertainment Inc. Delaware News Journal