GOODWILL AND OTHER INTANGIBLE ASSETS

Annual Impairment Assessment

–

The Company evaluates goodwill and other intangible assets for possible impairment annually in the

second

quarter, or when events or circumstances indicate possible impairment

may

have occurred. Other intangible assets are comprised of nonamortizable race event sanctioning and renewal agreements. See Notes

and

to the Consolidated Financial Statements in our

2016

Annual Report for additional information on the Company’s goodwill and other intangible assets and assessment methodology and evaluation (much of which is

not

repeated here).

Management's latest annual assessment in the

second

quarter

2017

was based predominately on management's best estimate of future discounted operating cash flows and profitability attributable to such assets for all individual reporting units and identified intangible assets. The impairment evaluation considered NASCAR

’s approved realignment of

one

annual Monster Energy Cup Series and

one

annual Camping World Truck Series racing event from NHMS, and an annual Xfinity Series racing event from KyS, to LVMS beginning in

2018,

and anticipated associated net increases in our future long-term cash flows and operating profits. Among other factors, the latest assessment assumes projected cash flow and profitability recovery, using modest annual inflationary growth rates for projected revenue streams and operating costs (other than NASCAR broadcasting revenues and event management fees), and strategic amounts of planned capital expenditures. Management projected annual increases in contracted NASCAR broadcasting rights revenues, and associated NASCAR event management fees, based on historical and anticipated rates which are supported by recently negotiated multi-year contracts. NASCAR event management fees for years after

2020

have

not

been negotiated, and future annual fees could differ substantially from those assumed in management’s impairment assessment. Management also considered recent market trading ranges of price to earnings and sales multiples, cash flow and other traditional valuation methods, control premiums, and other market information related to our common stock from historical and forward-looking perspectives.

Our

2017

annual assessment found the estimated fair value of each reporting unit and each indefinite-lived race date intangible asset substantially exceeded its associated carrying value except for NHMS and TMS race date agreements and SMIP

’s reporting unit. As of

September 30, 2017

and

December 31, 2016,

the carrying values of non-amortizable race date event sanctioning and renewal agreements associated with NHMS and TMS were approximately

$199.6

million and

$98.8

million. We recognized an impairment for NHMS race date intangible assets in

2015

reducing carrying values to estimated fair value at that time resulting in nominal excess fair value in future impairment assessments. The estimated excess of fair value of identified intangible assets associated with NHMS and TMS is relatively nominal at this time, heightening sensitivity to management’s assumptions used in estimating future discounted cash flows and profitability and associated risk of failing impairment testing. Management’s assumptions considered the following factors and conditions. NHMS was acquired in

2008,

largely before the severe economic recession, which we believe has resulted in long-term operating challenges for many major sports. The

2017

evaluation reflects continuing lowered estimated future cash flows because the economic recovery has been slower and weaker than previous forecasts, and ongoing lower than anticipated revenues for various major racing events. The evaluation also reflects, similar to challenges faced by many major sports, reduced visibility on profit recovery due to factors such as changing demographics, evolving entertainment choices for fans, appealing “at-home viewing” experiences and retirement of popular long-standing “megastars”. We have lowered our expectations for forecasted growth rates for certain revenues and profit recovery. However, those expectations and forecasts are based on many factors out of our control, and could be found unachievable. Such ultimate outcome could adversely impact our estimates of fair values, particularly for NHMS and TMS race date intangible assets.

Our

2017

annual assessment indicated that the carrying value of goodwill associated with SMIP, which conducts event and non-event souvenir merchandising, exceeded its estimated fair value because of potentially unfavorable merchandising business model developments. As such, a non-cash impairment charge of

$1,117,000,

before income tax benefits of

$419,000,

was reflected in the

second

quarter

2017

to reduce associated goodwill to

$0.

The

2017

impairment charge pertains to our “motorsports event related” reporting segment (see Note

There have since been

other events or circumstances that indicate possible impairment, and management believes our operational and cash flow forecasts support our conclusions that

unrecognized impairment exists as of

September 30, 2017.

Our future profitability or success associated with the NASCAR race realignments described above could significantly differ from management expectations and estimates, and are subject to numerous factors, conditions and assumptions, many of which are beyond our control. Different economic or industry conditions or assumptions, and changes in projected cash flows or profitability, if significantly negative or unfavorable, could have a material adverse effect on the impairment evaluation and our future financial condition or results of operations. The evaluations are subjective and based on conditions, trends and assumptions existing at the time of evaluation.

Other Information

–

The changes in the carrying value of other intangible assets and goodwill during the

nine

months ended

September 30, 2017

and

2016

are set forth below. The carrying amounts include accumulated impairments for goodwill of

$149.7

million and

$148.6

million at

September 30, 2017

and

December 31, 2016,

and for other intangible assets of

$99.9

million at both

September 30, 2017

and

December 31, 2016.

Changes in the carrying value of other intangible assets and goodwill are as follows (in thousands):

	Other Intangible Assets				Goodwill
	2017		2016		2017			2016
Balance, beginning of year	$	298,383	$	298,394	$	47,342		$	47,342
Increase from acquisitions		–		–		–			–
Decrease from impairment charges		–		–		(1,117	)		–
Balance, end of period	$	298,383	$	298,394	$	46,225		$	47,342