ISC: Corporate Interest Encouraging, But Negotiating Terms Tougher
Yesterday, racetrack operator International Speedway Corp. reported slightly higher first quarter net income on $152 million in revenue, a drop of 8.4%. The drop in revenue was "primarily driven by adverse economic conditions, resulting in lower sponsorship, suite, and hospitality revenues at NASCAR events" the company reported.
While company officials maintained that sponsorship revenue would be flat to down mid single digits for 2010, ISC President John Saunders was much more encouraged by the recovery rate of corporate spending as compared to what the company is seeing as of yet on the consumer side.
"We're having a lot of activity in our corporate sales group where going into early 2009, I think, things were pretty sketchy for companies," Saunders said.
ISC has agreements in place for 85% of expected gross marketing partnership revenue for 2010, with two Sprint Cup and one nationwide entitlement still open.
Senior Vice President and Chief Financial Officer, Dan Houser, said both new business activity and existing renewals are showing positive signs pointing to 3M, Aflac, Bank of America, CARFAX, ConAgra, San Bernadino County, Dollar General, FedEx as renewals with Bubba Burgers, COPD, HD, Kemp, Showtime and Lowe's coming in on the new business side.
Saunders said that the renewals speak to the strength of these companies and the demonstrated ROI they've seen from NASCAR.
"It's been demonstrated and documented time after time of the return on investment these companies get."
While corporate interest may have picked up, ISC execs indicated that deal length and pricing power, which traditionally has included annual escalators in line with inflation, may have weakened a bit in the current generation of deals and renewals.
"Pricing we're seeing in the low single digits to flat," Saunders said. "It's still a tough environment in terms of what it was several years ago, and the deals are somewhat on shorter terms. But again the good news is we're starting to see increased activity in that sector of the business."
ISC owns and operates 14 motorsports facilities within the United States and hosts 19 Sprint Cup events throughout the year.
source: seekingalpha.com
