NOTE 1 — Business Operations

References in this document to “we,” “us” and “our” mean Dover Motorsports, Inc. and/or its wholly owned subsidiaries, as appropriate.

Dover Motorsports, Inc. is a public holding company that is a marketer and promoter of motorsports entertainment in the United States. Through our subsidiaries, we own and operate Dover International Speedway® in Dover, Delaware and Nashville Superspeedway® near Nashville, Tennessee. Our Dover facility was scheduled to promote the following six events during 2020, all of which were under the auspices of the premier sanctioning body in motorsports - the National Association for Stock Car Auto Racing (“NASCAR”):

2 NASCAR Cup Series events (May and August);

2 NASCAR Xfinity Series events (May and August);

1 NASCAR Gander RV & Outdoors Truck Series event (May); and

1 NASCAR ARCA Menards Series East event (August).

Due to the impacts of the COVID-19 pandemic, our May NASCAR weekend was postponed and the three events originally scheduled for that weekend were held in combination with our already scheduled August NASCAR weekend events. On July 25, 2020, Delaware state officials notified us that due to public safety and health concerns, they would not approve our request to host a limited number of fans at our August NASCAR weekend. As a result, all of our 2020 events were held with no fans in attendance during the third quarter of 2020.

In contrast, in 2019 and 2018 we held six events, all with fans in attendance. A NASCAR Cup Series event, a NASCAR Xfinity Series event and a NASCAR Gander RV & Outdoors Truck Series event were held at Dover International Speedway during the second quarter of 2019 and 2018. A NASCAR Cup Series event, a NASCAR Xfinity Series event and a NASCAR ARCA Menards Series East event were held at Dover International Speedway during the fourth quarter of 2019 and 2018.

In 2021, we are scheduled to once again promote these six events, with three events at Dover International Speedway in May and three events at Nashville Superspeedway in June. We have not promoted a major motorsports event at our Nashville Superspeedway since 2011. On June 3, 2020, we announced that we would be moving one of our NASCAR Cup Series events historically held at Dover International Speedway to Nashville Superspeedway beginning in 2021. We entered into a four-year sanction agreement to promote a NASCAR Cup Series event in Nashville for the 2021 to 2024 racing seasons. We also entered into a one-year sanction agreement to promote a NASCAR Cup Series event at Dover International Speedway for the 2021 season. Total revenues from these event weekends were approximately 98% of total revenues in 2020, and approximately 96% in 2019 and 2018.

The 2020 global outbreak of COVID-19 was declared a pandemic by the World Health Organization on March 11, 2020 and has resulted in travel restrictions, business closures, government-imposed stay-at-home orders and the implementation of “social distancing,” limitations on the size of gatherings, cancellations of events and certain other measures to prevent the further spread of the virus. The continued spread of COVID-19 has also led to unprecedented global economic disruption and volatility in financial markets, a rise in unemployment levels, decreases in consumer confidence levels and spending, and an overall worsening of U.S. economic conditions. It remains highly uncertain how long the pandemic and the resulting economic challenges and restrictions on day-to-day life will last. New or renewed restrictions may be implemented in response to the virus spread rate in the United States and evolving conditions, including overall uncertainty about the timing of widespread availability of vaccines. For those reasons, we are unable to predict the long-term impact of the pandemic on our business at this time. The extent to which COVID-19 impacts our results will depend on future developments, but the continued spread of COVID-19 and associated economic impacts could have a material adverse effect on our future financial condition, liquidity, results of operations and cash flows. In particular, if restrictions related to COVID-19 limit our ability to host fans at our scheduled 2021 events, our admissions and event-related revenues will be adversely impacted.

We hosted the Firefly Music Festival (“Firefly”) on our property in Dover, Delaware for eight consecutive years and it was scheduled to return on June 18-21, 2020. Due to the COVID-19 pandemic, the 2020 event was cancelled. The inaugural three day festival with 40 musical acts was held in July 2012 and the 2019 event was held in June 2019 with approximately 120 musical acts. The promoter of the Firefly event is Goldenvoice, a company of AEG Presents, LLC, a subsidiary of Anschutz Entertainment Group, Inc. AEG Presents is one of the world’s largest presenters of live music and entertainment events. Our amended agreement grants them two 5-year options to extend our facility rental agreement through 2032 in exchange for a rental commitment to secure our property. In addition to the facility rental fee, we also receive a percentage of the concession sales we manage at the events. There has been no decision yet regarding whether Firefly will be held in 2021. If Firefly is not held in 2021, due to government-imposed restrictions related to the COVID-19 pandemic or other reasons, our business will be adversely affected.

On August 17, 2017, we entered into an agreement with an entity owned by Panattoni Development Company (the “buyer”) relative to the sale of approximately 147 acres of land at our Nashville property at a purchase price of $35,000 per acre. On March 2, 2018, we closed on the sale of the property with proceeds, less closing costs, of $4,945,000. Net proceeds after taxes were approximately $4,150,000 resulting in a gain of $2,512,000. On September 1, 2017, we also awarded to the buyer a three year option for approximately 88 additional acres at a purchase price of $55,000 per acre. That option agreement has been amended twice since: first, on February 9, 2018, to extend its term and to add additional acreage; and second, on June 25, 2019, in connection with the buyer’s exercise of its option on two parcels, we adjusted the acreage and further extended the term of the option on a third parcel. The buyer paid to us $500,000 for the extension of this option until March 1, 2022, and this non-refundable payment would be credited to the purchase price at the closing of that option parcel. On July 26, 2019, the buyer closed on the sale of the first two parcels, comprising approximately 133 acres, which yielded to us proceeds, less closing costs, of $6,397,000. Net proceeds after taxes were approximately $5,314,000 resulting in a gain of $4,186,000. On July 29, 2020, the buyer closed on the sale of the third parcel of approximately 97 acres at our Nashville property. Proceeds from the sale, less closing costs, were $6,460,000. Net proceeds after taxes were approximately $5,290,000 resulting in a gain of $4,843,000. The buyer’s deposit previously paid to us was credited to the purchase price. In November 2020, we entered into an agreement to sell an additional 350 acres of land at our Nashville facility for $14,355,000. The buyer paid us $500,000, which is non-refundable except in the event of a default by us that is not cured within the applicable cure period, and which would be credited to the purchase price at the closing of the sale of that parcel. The transaction is expected to be consummated on or before May 31, 2021. At December 31, 2020, the carrying value of the land is classified as assets held for sale in our consolidated balance sheet. Assuming this option is exercised, the remaining Nashville Superspeedway property will consist of approximately 650 acres. None of the acreage sold or under agreement extends to the land on which our superspeedway is sited.

On February 28, 2019, we entered into an agreement to sell 7.63 acres of land at our Nashville facility for proceeds, less closing costs, of $267,000. The sale closed in the first quarter of 2019 and resulted in a gain of $139,000, which we have reported as gain on sale of land in our consolidated statement of earnings.

During September 2018, we entered into negotiations to sell the last remaining parcel of land we owned near St. Louis. The sale resulted in a loss of $99,000, which we reported as loss on sale of land in our consolidated statements of earnings. The sale closed in the first quarter of 2019 with proceeds, less closing costs, of $531,000.