Possible Bidders for NASCAR
Comcast (NASDAQ: CMCSA) is also bound to come up, not only because of its sponsorship of the Xfinity Series, but because the idea of a media company buying a racing series for content is fresh in minds after Formula One was purchased by Liberty Media (NASDAQ: FWONA), which reportedly spent more than $8 billion in January 2017 to acquire Formula One. Also, Comcast is already one of NASCAR's most important partners, serving as both a media rights partner and title partner of NASCAR through its NBC Sports and Xfinity brands, respectively. NASCAR is such an important investment for Comcast that several people from the sport, including new NBC Sports broadcaster Dale Earnhardt Jr., were interwoven throughout NBC's Super Bowl pregame show this month. Many sources inside the sport believe that Comcast sees great value in owning the content and in its future distribution.
France Family's Dual Control
NASCAR & ISC Undervalued?
Meanwhile, Goldman Sachs has been selling. Filings show the bank reduced its holdings by 104,403 shares as of Q1 2018, down 52% from year end 2017. A snapshot of Goldman's trading is below; the 13F filings are here.
Crown Jewel: Daytona
- The bear case for International Speedway (NASDAQ:ISCA) is pretty simple. NASCAR is a declining sport. The benefit of contracted revenue increases from a 10-year TV deal is being offset by lower admissions revenue, leading to basically zero organic profit growth.
- As such, ISCA should be worth no more than maybe 12-13x free cash flow - even lowering the near-term discount rate and assuming only a modest step-down in profits under a new deal.
- That doesn't even include the fact that ISC's operating cash flow through 2021 is basically spoken for, with nearly two-thirds going back into the declining business at sub-optimal ROIC. (Notably, ISC spent $400 million to upgrade Daytona - for annual incremental EBITDA of just $15 million.)
- Its forward EV/EBITDA multiple is a seemingly reasonable 8.3x