Business Operations

9 Months Ended

Sep. 30, 2021

Business Operations

Business Operations

NOTE 2 – Business Operations

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. We promoted the following six events during 2021, 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 June);

● 2 NASCAR Xfinity Series events (May and June);

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

● 1 NASCAR ARCA Menards Series East event (May).

We had 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 and held the inaugural event in June 2021. We also entered into a one-year sanction agreement to promote a NASCAR Cup Series event at Dover International Speedway for the 2021 season, which was held in May 2021. In September 2021, we entered into a one-year sanction agreement to promote a NASCAR Cup Series event at Dover International Speedway for the 2022 season, tentatively scheduled for May 1, 2022.

The spread of the COVID-19 pandemic and the actions taken to slow it's spread have 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. During 2021, however, many COVID-19 related restrictions eased and social events resumed with varying levels of participation. Our May 2021 NASCAR race weekend at Dover International Speedway had fans in attendance, although the State of Delaware limited attendance to up to 20,000 fans. Our June 2021 NASCAR race weekend at Nashville Superspeedway was held without governmental restrictions. It remains 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. 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.

We hosted the Firefly Music Festival (“Firefly”) on our property in Dover, Delaware for eight consecutive years prior to its cancellation in 2020 due to the COVID-19 pandemic. Goldenvoice, a subsidiary of Anschutz Entertainment Group, Inc. (“AEG”) and the event’s promoter, held Firefly at our property on September 23-26, 2021. The four-day festival has grown from 40 musical acts in July 2012 to approximately 120 musical acts in September 2021. AEG 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.

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 facility 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. On November 5, 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 a $500,000 non-refundable deposit which would be credited to the purchase price at the closing of the sale of that parcel. On May 26, 2021, we closed on the sale with proceeds, less closing costs, of $14,326,000. Net proceeds after taxes were approximately $12,000,000 resulting in a gain of $8,510,000. The buyer’s deposit previously paid to us was credited to the purchase price. At December 31, 2020, the carrying value of that land is classified as assets held for sale in our consolidated balance sheet. The remaining Nashville Superspeedway property consists of approximately 650 acres. None of the acreage sold extends to the land on which our superspeedway is sited.