NASCAR Moving Fast Bodes Well for International Speedway

With a historic TV rights negotiation and greater brand affiliation than any other U.S. sport, NASCAR is headed nowhere but up. With 12 speedways, including the home of the iconic Daytona 500, International Speedway is in position to profit.

Jan 30, 2014 at 5:32PM

Daytona, Fla.-based International Speedway (NASDAQ:ISCA) is an American staple. The company behind NASCAR's greatest event, the Daytona 500, and plenty of others, believes its brightest days are ahead of it after the country's biggest sport (by sales) renegotiated a lucrative TV contract and as NASCAR's stars grow their public image and appeal. While International Speedway isn't a press-loving hyper-growth or cheaply valued stock, the company does offer investors a rare, vivid view into its sales for the next decade -- a luxury that allows for easy forecasting. Recent earnings showed a year-over-year drop for the company's full fiscal year, but that should not deter investors from what looks to be a reliable, easy-to-understand business that will without doubt grow in the long term.

Stabilizing?
NASCAR, like most other elements of the U.S. economy, was hurt deeply during the financial crisis and was slow to recover. As of year-end 2013, International Speedway management was finally seeing what it considers a "stabilization" of its core business.

As mentioned above, sales did fall year over year, but just barely. The company hauled in $188.7 million in its fiscal fourth quarter -- down from $189.4 million in 2012's same quarter. Beyond the macroeconomic timidity, the company took hits in the form of a $400,000 marketing expense for its mega project at the Daytona Speedway, called Daytona Rising. 

Daytona Rising is a much bigger project than that 400 grand might suggest. It's a $400 million effort to revamp the iconic venue. At its completion, Daytona Rising will have 40 million pounds of steel -- 1% of annual U.S. steel output. The project is aimed at reenergizing consumer interest in the sport, enhancing the experience, drawing in more corporate sponsors (the first major sponsor is to be named shortly), and ultimately, greater usage fees. Additionally, the company has a proposed project that would be built across the street. This one, called One Daytona, would be a multipurpose entertainment complex.

International Speedway also took a $6.3 million charge related to retired assets.

On an adjusted basis, net income came in at $25.8 million ($0.55 per share), compared to $28.3 million ($0.61 per share) in the year-ago quarter.

So what makes this business appealing if sales are still falling year over year, especially considering that NASCAR is only growing its already tremendous fan base and sales?

Visibility
The big thing for investors to focus on is the fact that NASCAR just negotiated a 10-year deal for TV rights.

NASCAR attracts 70 million viewers for its Sprint Cup series. This is a highly targeted demographic that is extremely valuable in the eyes of advertisers. Beyond its core male demographic, the sport is also growing its traction with women and Hispanic fans. The TV rights are the key source of income for International Speedway, and investors can put their calculators away as the next decade's sales are already available for viewing.

Last year, NASCAR ended its run with Disney-owned ESPN, renegotiated its contract with Fox, and opened a new deal with NBC Sports. The deal, covering TV rights for 2015-2024, was the biggest in the sport's history at $8.2 billion. The more that NASCAR earns from its TV rights, the more International Speedway charges for usage, as well.

The exact gains that International Speedway will see are not yet available, but during management's conference call it was made clear that we should know sometime in the first quarter of 2014. Investors should expect appealing figures.

Attendance numbers are still recovering for International Speedway's properties, but the industry tailwinds look great. Being so closely tied to NASCAR is a great business moat for the company, and with more Fortune 500 brands sponsoring the sport than any other in the United States, the value of this partnership is clear. Investors and fans alike should feel good about International Speedway's prospects going forward.

More from The Motley Fool 
Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

Michael Lewis has no position in any stocks mentioned. The Motley Fool recommends International Speedway and Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers