Gearing Up for the Indy 500
By Rick Aristotle Munarriz (TMF Edible)
May 12, 2003
Car racing enthusiasts already know that between the wind and the rain, the qualifying rounds for this month's Indianapolis 500 proved to be wild and unpredictable over the weekend. Yet, as an investor, watching cars fly by with countless corporate emblems pasted on their vehicles has to leave you wondering why there aren't many stock plays out there to take advantage of motorsports' popularity.
Sure, you have International Speedway (Nasdaq: ISCA) and Speedway Motorsports (NYSE: TRK) to consider. Each company operates a collection of auto racing speedways and makes the lion's share of their money from admissions and event-related concessions. Speedway has an extra kicker in that 20% of its revenue comes from broadcasting the races. That's a great start, but where do you turn from there?
Series sponsors like RJ Reynolds (NYSE: RJR), Sears (NYSE: S), and Anheuser-Busch (NYSE: BUD) probably milk a lot out of their Winston, Craftsman, and Busch races, respectively, though the companies are too big for the events to have any kind of material impact on the bottom line.
What about the broadcasters? There's no pure play there either, as it's major conglomerates such as General Electric (NYSE: GE) and AOL Time Warner (NYSE: AOL) that air the marquee races. You're on the right track if you dig up Fox (NYSE: FOX) as the owner of the fast-growing SPEED Channel, but that company, too, has a wide range of programming interests.
That leaves some more eclectic plays out there. Keystone Automotive (Nasdaq: KEYS) toils in car collision replacement parts and materials, and cars getting banged up is obviously a big part of motorsports. You also have RC2 (Nasdaq: RCRC), which makes die-cast replicas of NASCAR vehicles.
Then again, RC2 changed its name from Racing Champions Ertl recently, reflecting its diversification into new product lines like its March acquisition of Thomas the Tank Engine toy specialist Learning Curve.
So, while auto racing fans may already know that Helio Castroneves secured the pole position for this month's Indy 500 race, you have a lot of laps yet to go if you're still looking for the pure plays beyond the speedway operators.
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