NASCAR Visits “Tricky Triangle”, Monster Energy and Busch Beer Activating

Pocono

JohnWallStreet is headed to Long Pond, PA this weekend for the Pocono 400 at the “Tricky Triangle”. The race is on Sunday, but Pocono Raceway is hosting a series of events throughout the weekend that NASCAR fans in the Northeast will want to be aware of. Monster Energy kicks things off today with “Free Can Friday”, a promotion offering fans who bring an empty of Monster Energy (MNST) drink (to recycle) free access to the day’s activities. These include a BMX trick show and the General Tire #AnywhereIsPossible 200 (ARCA Series race). On Saturday, the track hosts an Alex Bowman selfie session and the Pocono Green 250 Recycled by J.P. Mascaro & Sons (Xfinity Series race), before the Cup Series takes over on Sunday. That race starts at 2pm, but make sure to get there early; Clint Bowyar (10:45a), Jimmie Johnson (11:00a) and Kurt Busch (11:15a) are all doing Q&As at the Tricky Triangle Club (opens at 8a).

Howie Long-Short: Pocono Raceway, which has been family-owned since its inception in 1971, is one of just two NASCAR tracks (out of 25) that is privately-owned; Indianapolis Motor Speedway is the other. International Speedway Corporation (ISCA) and Speedway Motorsports (TRK) own a combined 22 tracks (13 and 9, respectively), while Dover Motorsports (DVD) owns the “Monster Mile”.

In early April, ISCA reported “revenue and earnings increased for comparable events” in Q1 ’18, despite a continued decline at the gate (admissions revenue -2.5% YoY). Shares are down 11.5% (to $41.70) since February 1.

In late April, TRK reported that a YoY decline in admissions revenue for Q1 events led to a -2.5% decline in total revenue (to $74.4 million). Shares have declined 6% since (to $16.70) despite the company touting the prospects of long-term future profitability from Q3 event realignment.

DVD didn’t hold any events in Q1 ’18, so there was little to report during its most recent earnings statement. The stock is currently trading at $2.10 – exactly where it was 12 months ago.

Fan Marino: For those passionate about their brand of domestic beer, Busch and Busch Light (BUD) are set to go head-to-head on the track Sunday. Kevin Harvick will be driving his #4 Busch Beer Ford Fusion for Stewart-Haas Racing, as he seeks his circuit leading sixth win of the season. Harvick’s SHR teammate and friend Clint Bowyar, winner of the ’18 STP 500 at Martinsville, will be behind the wheel of the #14 Busch Light Ford Fusion. They’ll compete with the loser “scheduled” (weather pending) to cut the infield grass at Pocono. Off the track, the two will battle it out throughout the weekend on social media and will appear on stage together on Friday at Pocono’s Infield Block Party.

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NASCAR Hires Goldman Sachs to Explore Sale

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The France family, majority owners of NASCAR, has hired Goldman Sachs Group to “identify a potential deal for the company”, including the sanctioning body. An aging fan base (58, only golf, tennis and horse racing older), depressed race-day attendance (ISCA reported -1.6% YoY decline in ‘17), steadily declining TV ratings (9/10 races this season have fallen to all-time or decade-plus lows) and minimal “star-power” (see: Dale Jr. retirement) have raised concerns about sport’s long-term viability, which may explain why the France family is looking to sell after 70 years. No valuation has been established for NASCAR, though the company is expected to fetch several billion dollars; for reference purposes, Liberty Media Corp. acquired Formula One (FWONA) for $8 billion+ (included assumed debt, though no tracks were included) in Jan. ‘17. Sources have cautioned that talks remain in the exploratory stage and that no deal is imminent.

Howie Long-Short: NASCAR television ratings are down from their mid-2000 heyday, but it’s important to consider that the sport continues to put up impressive viewership numbers on Sunday afternoons. The spring race at Talladega last week saw TV viewership decline 20% YoY and it still drew 4.7 million viewers. It also must be noted that NASCAR has finished as the No. 1 or No. 2 sport (in terms of consumption) during 8 of the first 10 weekends of the ’18 season.

The France family is reportedly looking to sell a “majority stake” in the company. In addition to the Cup Series, NASCAR operates the Xfinity Series (2nd tier), Camping World Truck Series (3rd tier) and recently acquired ARCA (low-level stock car racing, will take over operations in ’20). The family also controls roughly 1/3 International Speedway Corporation (ISCA) shares. ISCA owns and operates 12/23 NASCAR Series tracks, which host 19 of 36 races on the MENCS schedule; including the Daytona 500. Sports Business Journal indicated that NASCAR executives expect the company (with tracks included), to draw offers between $3-5 billion.

I asked Dan Cohen, Octagon SVP, Global Media Rights Consulting Division who he thought might be interested in acquiring the stock car racing circuit?

Dan: Media companies looking at locking in live sports rights and programming around a well-established brand. Comcast, Disney, Liberty, ATT/Turner and Discovery are all possibilities. Also, complimentary auto racing businesses (think: Hulman/Indycar, TPG/IHRA) that would see consolidation as a strategic and immediate means of growing enterprise value.

Fan Marino: Those who say NASCAR needs a new “face of the sport” (to take over for Dale Jr.), should consider Kevin Harvick. Harvick won a rain-interrupted race at Dover on Sunday, his 4th checkered flag of the season (11 races, 8 Top 5 finishes). He led 201 of the 400 laps at the Monster Mile, taking a lead he would not relinquish with 62 laps to go. The win was the 41st of Harvick’s career, placing him 18th all-time. Only Kyle Busch (46) and Jimmie Johnson (83) have more amongst active drivers. Check out what Harvick did for his fans, before the race; there is no better ambassador within the sport.

Looking for a fresh face? There are several to choose from. 7 of the Top 15 best-selling drivers at retail (i.e. the track) are under the age of 30 and sales of their merchandise is up 74% YoY.

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Daytona Champ Finishes 10th at Fontana, Names 2 Stocks He Likes/Owns

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On Sunday, 2018 Daytona 500 winner Austin Dillon participated in the Monster Energy NASCAR Cup Series Race at Auto Club Speedway in Fontana, CA. Martin Treux Jr. won the pole and swept the stages, becoming the 1st NASCAR driver in history to accomplish that feat. Dillon finished 10th, for his 2nd Top 10 of the season. Prior to leaving Los Angeles for Fontana, JohnWallStreet had a chance to connect with Dillon to discuss a few names within his personal stock portfolio, to find out why a 100-year-old company would look to sponsor a car and to ask why he’s still racing in the Camping World Truck Series.

JWS: When we last spoke to you in September, you mentioned that Nintendo (NTDOY) and Cabela’s (CAB) were among the names in your personal portfolio. NTDOY is +25% since Sept. 30th and CAB was acquired by Bass Pro Shops at a 19% premium to its closing price on September 30th. Can you tip us off to a few other names that you like within your portfolio?

Austin: Dow (DWDP) is probably my favorite company. They’re huge behind STEM and have so many engineers around the world building great products. I also have stock in Coca Cola (KO), it’s a good company and I’ve always been a huge Coke fan.  

JWS: In addition to DWDP, Bass Pro Shops and American Ethenol (Growth Energy), AAA is a sponsor on your car. That company was founded in 1902. What are they looking to get out of a NASCAR partnership?

Austin: The youth movement is big to them. It’s a very old brand, but they want to let the younger demographic know about how many people they help service across the U.S. NASCAR is doing a good job of showing the youth movement (amongst drivers) and catering to our younger fans.

JWS: You recently participated in a Camping World Truck Series race. You’re a Daytona 500 Champion. Why are you still racing on that level? 

Austin: We had a new partner come in, an app (GoShare) that wanted to run in truck series. They came up with the idea to do it in the truck series because they’re kind of like an Uber for truckers. So, if you want your house moved, you can call them instead of calling a moving service and anyone with the right equipment can come and help move your stuff.

Howie Long-Short: Auto Club Speedway is owned and operated by International Speedway Corp (ISCA), a publicly traded corporation that also owns 12 other tracks including; Daytona International Speedway and Talladega Superspeedway. Other assets include Motor Racing Network (nation’s largest independent sports radio network), Americrown Service Corp. (concessions company) and Daytona One (retail, dining and entertainment development). On January 25th, the company reported full-year 2017 revenue ($671.4 million) grew to levels it hadn’t seen since ’10, sending share prices up 10.6% (to $45.30). Shares hit a high of $47.15 on February 1st, before settling back down to $44.25 at Friday’s close.

Fan Marino: You’ve been on a whirlwind media tour since winning at Daytona and mentioned that your favorite experience was doing Shaquille O’Neal’s podcast. As a 4x NBA Champion, did Shaq have advice for you?

Austin: He said, “take your mother out to dinner with your wife and take the trophy with you, after dinner leave the trophy with your mom and go and get like 5 or 6 more.”

Editor Note: Austin has not yet given the trophy to his mom, he’s holding on to it a bit longer; though he has plans to in the future.

Editor Note 2.0: Austin has a YouTube show, BarnLife. You can check out previous episodes, here.

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NASCAR’s Kevin Harvick Discusses the Daytona 500 and the Success of “Bloomin’ Mondays”

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February 10, 2018: Kevin Harvick during practice at Daytona International Speedway in Daytona Beach, Fl. (HHP/Harold Hinson)

The 60th annual edition of the Daytona 500, will be run on Sunday. JohnWallStreet will be in attendance, along with the 500 fans that Busch beer (BUD) is bringing to the event; providing coverage all weekend long (follow us on Twitter @HowieLongShort). Before we head down to Daytona, we got a chance to catch up with Kevin Harvick; who finished 3rd in 2017 Monster Energy NASCAR Cup Series standings. In Part 2 of 2 (link to Part 1 of interview), Kevin discusses his sponsors for the 2018 season, the significance of this particular race and the success of “Bloomin’ Mondays”.

JWS: The Daytona 500 is the biggest event on the NASCAR calendar. For those that are not NASCAR fans, can you try to explain why that is and the significance of the race?

Kevin: Well, it goes back to when they raced on the beach. This is the birth place of our sport. Bill France had a dream to build a really big racetrack and came and built the Daytona Speedway. There is no other race that matches the hype and there is no other race that matches that magnitude of winning the Harley J. Earl Trophy; putting your name on the list of Daytona 500 winners. It’s hard to explain the magnitude of it, until you experience winning the race. The celebration is different, you celebrate like you won a championship, because, basically you have. Winning the Daytona 500 can make a whole year. 

JWS: If you must pick one, do you want to win the Daytona 500 or the Monster Energy NASCAR Cup Series Championship?

Kevin: I want to win them both (laughing) but, I will tell you this, in 2007 when we won the Daytona 500, we did not have a great year; but, nobody remembers anything about that year except for, that is the year that I beat Mark Martin in the Daytona 500. It’s just that big. You have more sponsors show up, more celebrities show up, more fans show up, the TV ratings are higher, the radio ratings are higher, the exposure is greater and there isn’t anything about it that isn’t bigger.

JWS: Do you have any new sponsors in place for the 2018 season?

Kevin: Everything is pretty much the same. Jimmy John’s is on board again, Busch (BUD) is the other primary; along with Mobile One (XOM). Outback (BLMN) is activating heavily with their “Bloomin’ Mondays” (editor note: only program every Outback franchisee participates in) and they’re seeing a $10,000-$12,000 increase (in revenue, per store), pretty much every time we get a Top 10 finish.

Howie Long-Short: International Speedway Corporation (ISCA) spent $400 million on Daytona International Speedway renovations, for annual incremental EBITDA of just $15 million. That’s not an ideal ROI.

Fan Marino: Do you have a “most memorable” Daytona 500 experience, as a fan?

Kevin: I went there in 1995 for the first time and was in the grandstand going into turn one, watching the qualifying races. I grew up in Bakersfield, CA. I had never been to a racetrack of that size, let alone to the Daytona 500; so, to sit there and watch those cars go around the racetrack and to see all the cars you see on TV, it was eye opening. (note: Sterling Marlin won the 1995 Daytona 500.)

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Entertainment & Retail District at Daytona International Speedway Opens

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One Daytona, a lifestyle and entertainment complex located directly across the street from the Daytona International Speedway, is now open. Developed by the International Speedway Corporation (ISCA), the 300,000 SF space (estimated to cost about $150 million) is filled with a collection of shops, restaurants, hotels and apartments. Victory Circle, the epicenter of the newly created entertainment and retail district, hosts live music Thursday-Sunday; always free and open to the public.

Howie Long-Short: The International Speedway Corporation (ISCA) owns and operates the Daytona International Speedway and a dozen other race tracks; including the Talladega Superspeedway and the Martinsville Speedway. In late January, the company noted that full-year 2017 revenue ($671.4 million) grew to levels it hadn’t seen since ’10, sending share prices up 10.6% (to $45.30). Shares hit a high of $47.15 on February 1st, before settling back down to $45.05 at Thursday’s close.

Fan Marino: Daytona 500 News and Notes:

  • Alex Bowman, the man replacing Dale Earnhardt Jr. at Hendrick Motorsports (and driving the #88 car), won the pole for Sunday’s race; finishing at the top of the leader board after two qualifying rounds.
  • Peyton Manning will serve as the Honorary Pace Car Driver, where he will be behind the wheel of a Toyota Camry XSE pacing the 40-car field prior to Sunday’s race. (Editor Note: JohnWallStreet is taking a lap in the pace car, early Sunday morning. To see video, follow us on Twitter @HowieLongShort).
  • Academy Award and Golden Globe winning actress (for role in Monster, ‘03) Charlize Theron, will be the Honorary Starter for the 60th annual Daytona 500. Theron, also known for roles in Italian Job, A Million Ways to Die in the West and The Fate and the Furious, will waive the green flag indicating the race is starting.

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Coca-Cola Extends Long-Standing Partnerships with NASCAR, International Speedway Corporation

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Coca-Cola (KO) has extended partnerships with NASCAR and International Speedway Corporation (ISCA) through 2023, extending a 50-year association that has made the brand one of the “most recognized sponsors” in the sport. The integrated agreement means that KO will remain the “Official Soft Drink of NASCAR” and be the leading (non-alcoholic) pour of 21 NASCAR sanctioned race tracks (ISCA owns 12) for the 2018 season. In addition to pouring rights, KO’s immersive NASCAR marketing approach includes race entitlements (Coca-Cola 600, Coca-Cola 400) and the Coca-Cola Racing Family; a group of top drivers that make appearances and are featured in advertising, promotions and packaging.

Howie Long-Short: Back in early October, ISCA reported revenue for the quarter ending August 31st rose 2.2% (to $131.9 million), despite race attendance continuing to decline; with the hosting of non-traditional events, food, beverage & merchandise sales offsetting sagging ticket sales. The company has set 2017 revenue guidance at $660-$670 million; for comparison purposes, ISCA generated $661 million in 2016. The race track owner/manager will report 2017 full year earnings on January 25th.

Fan Marino: The Coca-Cola Racing Family includes 3 of the Top 11 in the Monster Energy NASCAR Cup Series standings; Denny Hamlin (6), Kyle Larson (8) and Austin Dillon (11). Prior to last season’s playoffs, I had a chance to sit down with Austin Dillon (a market buff) and talk to him about the personal stock portfolio he manages (i.e. not his retirement account). I asked him, if there was a trade you could take back; what would it be?

Dillon: I messed up on Tesla (TSLA), badly. I had it at $44. One of my engineers was like ‘it’s not going anywhere’ and I sold it (currently at $344). I had around 200 shares.

Fun Fact: Dillon played for the South-East team in the 2002 Little League World Series.

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GANASSI RACING SIGNS SPONSORSHIP DEAL WITH FIRST DATA; FIRST DATA PUTTING MARKETING DOLLARS IN TO NASCAR

Chip Ganassi Racing has announced a sponsorship deal with First Data (FDC) that will make the credit card processor the primary sponsor on Kyle Larson’s #42 car, for two races during this season’s Monster Energy (MNST) NASCAR Cup Series. Ganassi has been working to find a permanent replacement for current sponsor Target (TGT), whose contract expires at the end of the season, and is hopeful the partnership with First Data will grow in 2018. First Data has been making a big push in to the NASCAR space, targeting small business decision makers that comprise part of the sports’ overall fan base. The company recently signed a deal with International Speedway Corporation’s (ISCA) Martinsville Speedway, to act as the title sponsor of the playoff race in October (First Data 500) and will serve as the credit card processor at 2 additional races this year (Phoenix & Miami).

First Data Signs On With Chip Ganassi Racing, Will Sponsor Races For Kyle Larson

Howie Long-Short: The firm’s Global Financial Solutions division (retail & credit processing) recently reported it is up 12% YOY. With Clover helping to drive merchant on boarding, the future looks bright for First Data.

Fan Marino: First Data has been active in the sports sponsorship space of late, signing a 10-year deal with the Mets and purchasing the naming rights to their spring training facility in Port St. Lucie (First Data Field).

INTERNATIONAL SPEEDWAY: FALLS JUST SHORT OF EARNINGS PROJECTIONS; ONE DAYTONA SET TO OPEN IN Q4

International Speedway (ISCA) released its Q2 EPS ($.30), $.02 shy of analyst estimates. The company reported $165.3 Million in revenue for the quarter, short of the $166.79 Million estimated. CEO France Kennedy said the results met expectations and that the company remains on track for a 4th Quarter GRAND OPENING of One Daytona.

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International Speedway (ISCA) Misses Q2 EPS by 2c

Howie Long-Short opines: Boutique hotel? If you ain’t in an RV, it ain’t NASCAR.

Fan Marino says: The Daytona, is going to be a 145-room upscale, full-service boutique hotel, designed with motorsports in mind. I have to imagine the beds will look something like this.

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