SMI To Proceed With Kentucky Acquisition
August 28, 2008 | 6:10 P.M. EST
In May 2008, Speedway Motorsports entered into an agreement to acquire Kentucky Speedway from Kentucky Speedway LLC, pending a 90-day period to conduct due diligence. The period expired Aug. 18, and the company has decided to move forward with the acquisition, subject to satisfaction of remaining closing conditions. The acquisition is expected to close in the fourth quarter of this year, most likely in December.
"Moving forward on Kentucky Speedway allows our company to expand its geographic reach into the motorsports hotbed of the Midwest," said O. Bruton Smith, founder, chairman and chief executive officer of Speedway Motorsports, Inc.
"We are optimistic about being able to promote a Sprint Cup Series event at Kentucky Speedway. Once we secure a Sprint Cup Series event, we plan to expand seating capacity and host some of the largest crowds in the Midwest," Smith added. "Kentucky Speedway entertained sellout crowds for NASCAR Nationwide Series and IndyCar Series events this year. With a Sprint Cup date, season ticket sales, seat licenses and corporate sponsorship opportunities will increase tremendously."
NASCAR has stated it cannot allow realignment of an existing Sprint Cup Series race date until the anti-trust litigation among NASCAR, International Speedway Corporation and the current ownership of Kentucky Speedway is resolved. Although the time frame for resolution is uncertain, Speedway Motorsports will continue to work with NASCAR to schedule a Sprint Cup Series date at the facility.
Speedway Motorsports also plans to use its proven business model to maximize revenues and streamline expenses at existing Kentucky Speedway events to offset an initial reduction in the company's earnings, which could approximate $0.12 to $0.18 per share per year pending the scheduling of a Sprint Cup Series event at Kentucky Speedway. The reduction in earnings relates primarily to estimated interest, depreciation and general administrative expenses.
Smith continued, "We are in this motorsports business for the long term. The opportunity to buy a modern race track below replacement cost in a market with incredible growth potential was simply too good to pass up. While we expect some short-term loss, this is a significant investment in the future that better positions us to compete in this industry, and will pay off with long-term gains when the NASCAR Sprint Cup Series is added to Kentucky Speedway's event calendar."
Located on 820 acres in Sparta, Kentucky, just south of Cincinnati, Kentucky Speedway features a 1.5-mile tri-oval speedway, with chair-back grandstand seating for 66,089 spectators, 50 luxury suites with seats for approximately 2,000, private RV spaces, and reserved and unreserved camping spaces.