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This article explores the history of motorsports, the types of motorsports facilities, and the impact of NASCAR. It also delves into the valuation process, including the cost, sales comparison, and income approaches.
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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
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
Types of Motorsports Facilities • Oval Track • Drag Strips • Road Courses
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
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
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
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
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
What Makes NASCAR Unique • NASCAR is privately held • NASCAR sanctions races on an annual basis
DEFUNCT NASCAR TRACKS NASCAR Track Issues
Historic Attendance Note: One of two Sprint Cup race dates moved in 2011
EVIDENCE OF RACE DATE VALUE EVIDENCE OF SUPER ADEQUACY
Cost Approach • Physical Obsolescence • Functional Obsolescence • External Obsolescence
Income Capitalization Approach Three direct capitalization methods: • Traxprofile Survey Method • Standard Going Concern Method • Non-NASCAR Analysis.
Subject Data Available • Detailed Income and Expense Information • Utilization Rates • Separate NASCAR Event vs. non-NASCAR Event revenue and income
GOING CONCERN METHOD VS. MODIFIED GOING CONCERN METHOD
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
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%
Expenses • Fixed • Real Estate Taxes • Insurance • Variable • Payroll • Racetrack Operations • Repairs & Maintenance • Utilities • Food service/concessions • Fuel • Administrative • Reserves!
Capitalization Rate • Good question! • Property desirability?
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