In an interview with Dave Moody on NASCAR Radio’s Sirius Speedway on Tuesday, Bruton Smith stated that he does not believe the former owners of Kentucky Speedway will exercise their right to appeal a recent ruling in their antitrust lawsuit against International Speedway Corporation and NASCAR. If that is true, the one obstacle that has stood between Kentucky and a Cup race date has been removed. NASCAR has always maintained that, as long as there was a lawsuit pending, they would not allow Kentucky Speedway to host a Cup race.
In July 2005, Kentucky Speedway LLC filed suit against NASCAR and International Speedway Corporation (ISC), alleging that they violated federal antitrust laws by illegally restricting the award of NASCAR NEXTEL Cup Series races and illegally directing Cup races to ISC. Kentucky Speedway LLC also alleged antitrust violations relating to various restraints of trade involving NASCAR Busch Series and Craftsman Truck Series races.
In the nearly five years since the suit was filed, there have been jabs and legal maneuvers by both sides to try and force a settlement, but nothing has been able to bring the lawsuit to a conclusion. After the latest appeal by the former owners of the speedway was denied by a three-judge panel of the Sixth U.S. Circuit Court of Appeals, the only one option left for them is the Supreme Court.
Former majority owner Jerry Carroll has assured Smith that there will be no appeal to the Supreme Court which, if that is true, means that he can finally move forward with his plans to ask NASCAR to allow him to host a Cup race at the track in 2011. Smith has always maintained that NASCAR has never given him a Cup date, so if he is going to have a race at his Kentucky track, he is going to have to move a date from one of his other venues. Smith isn’t new to this proposition, he’s been moving dates from one track to another for years, even to the detriment of some very loyal race fans.
In 1996, Smith and Bob Bahre purchased North Wilkesboro Speedway, with Smith taking one of its race dates to his then new Texas Motor Speedway. In 2004, as part of the settlement of the Ferko lawsuit, ISC sold Rockingham Speedway to Bruton Smith under the condition he would move the lone remaining race date at the track to Texas Motor Speedway and not host a NASCAR-sanctioned race at the track while it was under their ownership.
NASCAR has maintained for several years that they will not be adding any more dates to the schedule, so the date for Smith’s track is going to have to come from an existing racetrack. Smith has two options at his disposal to gain a date for Kentucky. He can either take a date from one of his existing tracks or he can purchase another track that has a Cup date and move that date to Kentucky.
The latter seems like a very limited option. There are currently three tracks on the schedule that host Cup races that are not owned by Smith’s SMI group or ISC, the track ownership arm of NASCAR: Indianapolis Motor Speedway, Dover Downs and Pocono Raceway.
While Indianapolis has recently gone through a shift in leadership, it is doubtful they would sell the track to Smith and NASCAR would most likely not approve of moving the one date they currently have at the world’s most famous racetrack. Pocono Raceway is owned by the Mattioli Family and they have steadfastly maintained that they will not sell their track.
The Mattiolis have seen their track through some very rough times in the past and now that the track is back on solid footing, they aren’t going to let it go easily. It is almost a labor of love running the track more than a business, so the odds of prying it out of the family hands are very slim.
That leaves Dover Downs as the last option. Dover is a publicly traded company that operates the racetrack, a horse-racing track and a casino. Smith could certainly approach the board of directors and try and purchase just the racetrack, but he’s attempted that in the past and they were not receptive to that idea.
His other option would be to try and purchase the majority of the publicly-traded shares of the company and then seize ownership of the board, thus gaining control over the entire operation and having the authority to move a race date. While Bruton is very wealthy man, purchasing the majority of the outstanding shares of a company is a daunting task.
As of Feb. 27, 2009, there were 15,464,610 shares of common stock and 16,603,173 shares of Class A common stock outstanding. There were 1,034 holders of record for common stock and 20 holders of record for Class A common stock. As of the close of business February 23rd, the stock price was $3.68. That makes the market capitalization of Dover Downs $115,910,000.
Assuming Smith could make a trade for 51% of the outstanding shares at that price, he’d have to come up with $59,114,100. However, if word got out that he was trying to purchase the shares, the stock would undoubtedly go up and he would probably end up having to spend somewhere in the neighborhood of $80-$100 million.
Smith paid nearly $79 million for Kentucky Speedway when he purchased it. That was a very large expenditure for SMI and the additional purchase of New Hampshire has certainly used up a large amount of the reserves of the corporation. It would be a tremendous strain on the company to lay out that much more cash to try and take control of another racetrack. Most likely the first alternative is going to be the one that Smith employs.
Smith’s SMI Incorporated currently owns seven tracks that host Cup races: Atlanta, Bristol, Charlotte, Las Vegas, New Hampshire, Sonoma and Texas. Sonoma and Las Vegas only host one race so he is certainly not going to take a date away from one of them. Texas, New Hampshire and Bristol are perpetually sold out, so there is no logical reason to move a date from them. Charlotte is the flagship track of the corporation and in the heart of NASCAR’s core country, so the odds of moving either of its dates are minimal.
That leaves Atlanta, which has struggled for several years to put fans in the stands. The bottom line in race promotion is putting the most fans in the stands for the race events you promote. Kentucky has already proven that the fan base in the area will wholeheartedly support the racetrack. With Atlanta’s attendance numbers routinely lacking, it is obvious that they’re the track that is in the greatest danger of losing a race date.
While no one wants to see a track with the history of Atlanta lose one of its races, the people of Kentucky have been teased for years with the hope of seeing NASCAR’s heroes up close and personal in their own backyard. Now that the only barrier NASCAR has acknowledged to allowing that to happen has been removed, it is looking more and more apparent that there will be a race in the Bluegrass State in 2011.
About the author
What is it that Mike Neff doesn’t do? The writer, radio contributor and racetrack announcer coordinates the site’s local short track coverage, hitting up Saturday Night Specials across the country while tracking the sport’s future racing stars. The writer for our signature Cup post-race column, Thinkin’ Out Loud (Mondays) also sits down with Cup crew chiefs to talk shop every Friday with Tech Talk. Mike announces several shows each year for the Good Guys Rod and Custom Association. He also pops up everywhere from PRN Pit Reporters and the Press Box with Alan Smothers to SIRIUS XM Radio. He has announced at tracks all over the Southeast, starting at Millbridge Speedway. He's also announced at East Lincoln Speedway, Concord Speedway, Tri-County Speedway, Caraway Speedway, and Charlotte Motor Speedway.
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