Related Party Transactions

9 Months Ended

Sep. 30, 2011

Related Party Transactions

Related Party Transactions

NOTE 10 — Related Party Transactions

During the three and nine-month periods ended September 30, 2011 and 2010, Dover Downs Gaming & Entertainment, Inc. (“Gaming”), a company related through common ownership, allocated costs of $476,000 and $1,473,000, and $494,000 and $1,470,000, respectively, to us for certain administrative and operating services, including leased space.  We allocated certain administrative and operating service costs of $66,000 and $267,000, and $44,000 and $169,000, respectively, to Gaming for the three and nine-month periods ended September 30, 2011 and 2010.  The allocations were based on an analysis of each company’s share of the costs.  In connection with our 2011 and 2010 NASCAR event weekends at Dover International Speedway, Gaming provided certain services, primarily catering, for which we were invoiced $0 and $416,000, and $458,000 and $928,000 during the three and nine-month periods ended September 30, 2011 and 2010, respectively.  Additionally, we invoiced Gaming $0 and $246,000, and $126,000 and $353,000 during the three and nine-month periods ended September 30, 2011 and 2010, respectively, for a skybox suite, tickets and other services to the events.  There were no billings by either company for the fall NASCAR event weekend in the third quarter of 2011 because the NASCAR Sprint Cup Series event and the NASCAR Nationwide Series event usually held in the third quarter were held in the fourth quarter of 2011.  As of September 30, 2011 and December 31, 2010, our consolidated balance sheets included a $4,000 and $18,000 payable to Gaming, respectively, for the aforementioned items.  We settled these items in October 2011 and January 2011, respectively.  The net costs incurred by each company for these services are not necessarily indicative of the costs that would have been incurred if the companies had been unrelated entities and/or had otherwise independently managed these functions; however, management believes that these costs are reasonable.

Prior to the spin-off of Gaming from our company in 2002, both companies shared certain real property in Dover, Delaware.  At the time of the spin-off, some of this real property was transferred to Gaming to ensure that the real property holdings of each company was aligned with its past uses and future business needs.  During its harness racing season, Gaming has historically used the 5/8-mile harness racing track that is located on our property and is on the inside of our one-mile motorsports superspeedway.  In order to continue this historic use, we granted a perpetual easement to the harness track to Gaming at the time of the spin-off.  This perpetual easement allows Gaming to have exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of the following year, together with set up and tear down rights for the two weeks before and after such period.  The easement requires that Gaming maintain the harness track but does not require the payment of any rent.

Various easements and agreements relative to access, utilities and parking have also been entered into between us and Gaming relative to our respective Dover, Delaware facilities.  We pay rent to Gaming for the lease of our principal executive office space.  Gaming also allows us to use its indoor grandstands in connection with our two annual motorsports weekends.  This occasional grandstand use is not material to us and Gaming does not assess rent for it; Gaming may also discontinue our use at its discretion.

Henry B. Tippie, Chairman of our Board of Directors, controls in excess of fifty percent of our voting power.  Mr. Tippie’s voting control emanates from his direct and indirect holdings of common stock and Class A common stock and from his status as trustee of the RMT Trust, our largest stockholder.  This means that Mr. Tippie has the ability to determine the outcome of the election of directors and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of our voting power.

Patrick J. Bagley, Kenneth K. Chalmers, Denis McGlynn, Jeffrey W. Rollins, John W. Rollins, Jr., R. Randall Rollins, Richard K. Struthers and Henry B. Tippie are all Directors of Dover Motorsports, Inc. and Gaming. Denis McGlynn is the President and Chief Executive Officer of both companies, Klaus M. Belohoubek is the Senior Vice President — General Counsel and Secretary of both companies and Timothy R. Horne is the Senior Vice President — Finance and Chief Financial Officer of both companies.  Mr. Tippie controls in excess of fifty percent of the voting power of Gaming.