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Motorsports Facility Valuation Issues

Motorsports Facility Valuation Issues. Fitzhugh L. Stout, MAI Senior Managing Director Integra Realty Resources - Charlotte Douglas L. Nickel, MAI Senior Managing Director Integra Realty Resources – Wilmington, DE. A Brief History. November 2, 1895 – First American Automobile Race

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Motorsports Facility Valuation Issues

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  1. Motorsports FacilityValuation Issues Fitzhugh L. Stout, MAI Senior Managing Director Integra Realty Resources - Charlotte Douglas L. Nickel, MAI Senior Managing Director Integra Realty Resources – Wilmington, DE

  2. A Brief History • November 2, 1895 – First American Automobile Race • Exhibition race between Chicago & Waukegan and back • 92 miles • $500 prize (roughly $14,000 today) • Winner completed the race in 8 hours and 44 minutes • Average speed: 10.5 miles per hour! • First Indianapolis Race • May 29, 1910 • 200 miles • Average speed 72 miles per hour • 2013 Indy 500 • Average speed 167.734 miles per hour • Winner purse $2,353,355

  3. Types of Motorsports Facilities • Oval Track • Drag Strips • Road Courses

  4. How Did All This Get Started?

  5. Oval Track • Typically ½ mile to 2 mile oval or “oval” shaped • Dirt (smaller facilities) or Asphalt/Concrete paving • Stadium style setting • Counterclockwise (Left hand turns only) • Some include infield road courses (Daytona, Indy) • Multi-vehicle competition • Larger facilities • Located in mass media markets • Sanctioned events (NASCAR, IRL/CART) • Typically televised events

  6. Drag Strips • ½ mile to 1 mile • Two competing lanes • Grandstands flanking both sides of the starting lanes • Head to head competition • Located in mass media and smaller markets • Upper tier events sponsored by NHRA

  7. Road Courses • 1 to 4 miles in length • High and low speed left and right turns • Test amateur and professional racer’s skills • Clockwise direction (consistent with European standards) • Outskirts of major market areas or remote market areas • Few sanctioned events, mostly club-style events (SCCA, NASA, AMA, enthusiast/brand organizations) • Limited grandstands and spectator areas

  8. NASCAR & It’s Impact • Background • History of NASCAR (National Association for Stock Car Auto Racing) • What makes NASCAR Unique • NASCAR Track Types • NASCAR Racing Series • Components of Value • Evidence of Race Date Value • Evidence of Superadequacy • Valuation Process

  9. History of NASCAR • 1920-1933 Prohibition/Bootlegging • 1947-1950 NASCAR Founded • 1954-1959 First New Speedway • 1960-1970 Richard Petty Wins First Winston Cup Championship • 1980-1989 Fortune 500 Sponsorship Begins • 1990-2000 NASCAR Reaches New Fans • 2000-2010 The New Millennium

  10. What Makes NASCAR Unique • NASCAR is privately held • NASCAR sanctions races on an annual basis

  11. NASCAR Track Types

  12. Bristol Motor Speedway

  13. Atlanta Motor Speedway

  14. Daytona International Motor Speedway

  15. Indianapolis Speedway

  16. Watkins Glen International

  17. Competitive NASCAR Tracks

  18. Competitive NASCAR Tracks

  19. Competitive Local Tracks

  20. Competitive Local Tracks

  21. DEFUNCT NASCAR TRACKS NASCAR Track Issues

  22. Decline in Industry Income

  23. Historic Attendance Note: One of two Sprint Cup race dates moved in 2011

  24. EVIDENCE OF RACE DATE VALUE EVIDENCE OF SUPER ADEQUACY

  25. Cost Approach • Physical Obsolescence • Functional Obsolescence • External Obsolescence

  26. Sales Comparison Approach

  27. Income Capitalization Approach Three direct capitalization methods: • Traxprofile Survey Method • Standard Going Concern Method • Non-NASCAR Analysis.

  28. Subject Data Available • Detailed Income and Expense Information • Utilization Rates • Separate NASCAR Event vs. non-NASCAR Event revenue and income

  29. Capitalization Rate Selection

  30. TraxProfile Survey Method

  31. GOING CONCERN METHOD VS. MODIFIED GOING CONCERN METHOD

  32. Revenues • Oval Tracks • Ticket sales/gate receipts • Sanctioning fees • Daily usage fees (track rental for practice/testing) • Advertising/sponsorships • Television fees • Concessions • Dragstrips • Ticket sales/gate receipts • Sanctioning fees • Advertising/sponsorship • Television fees • Concessions • Road Courses • Daily usage fees (track rental) • Program fees • Advertising/sponsorship • Concessions/gasoline sales • Gate receipts

  33. Road Course Revenues • Track Rental • Weather/Climate Based • Utilization • Generally all weekend days (Saturday & Sunday) • 80% - 100% used • Most Fridays • 65% - 80% • Some weekdays (M-Th) • 10% - 35%

  34. Expenses • Fixed • Real Estate Taxes • Insurance • Variable • Payroll • Racetrack Operations • Repairs & Maintenance • Utilities • Food service/concessions • Fuel • Administrative • Reserves!

  35. Case Study 1

  36. Case Study 2

  37. Case Study 3

  38. Capitalization Rate • Good question! • Property desirability?

  39. Investor Surveys

  40. Band of Investment

  41. Sources Financials for corporations – www.morningstar.com Latest NASCAR information – www.NASCAR.COM , http://www.new2nascar.com/history.htm, and http://nascarnation.us/page/a-brief-history-of-nascar. Individual track information – www.trackname.com or Google track name Articles on track valuation – www.ai.com (Lum Library) Information on development of capitalization rates for race industry - Ibbotson SBBS Valuation Yearbook 2012 or www.morningstar.com Rates of Return – www.realtyrates.com

  42. Open Discussion

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