Motorsports Facility Valuation Issues Fitzhugh L. Stout, MAI Senior Managing Director Integra Realty Resources - Charlotte Douglas L. Nickel, MAI Senior Managing Director Integra Realty Resources – Wilmington, DE

A Brief History November 2, 1895 – First American Automobile Race – Exhibition race between Chicago & Waukegan and back – 92 miles – $500 prize (roughly $14,000 today) – Winner completed the race in 8 hours and 44 minutes – Average speed: 10.5 miles per hour! First Indianapolis Race – May 29, 1910 – 200 miles – Average speed 72 miles per hour 2013 Indy 500 – Average speed miles per hour – Winner purse $2,353,355

Types of Motorsports Facilities Oval Track Drag Strips Road Courses

How Did All This Get Started?

Oval Track Typically ½ mile to 2 mile oval or “oval” shaped Dirt (smaller facilities) or Asphalt/Concrete paving Stadium style setting Counterclockwise (Left hand turns only) Some include infield road courses (Daytona, Indy) Multi-vehicle competition Larger facilities – Located in mass media markets – Sanctioned events (NASCAR, IRL/CART) – Typically televised events

Drag Strips ½ mile to 1 mile Two competing lanes Grandstands flanking both sides of the starting lanes Head to head competition Located in mass media and smaller markets Upper tier events sponsored by NHRA

Road Courses 1 to 4 miles in length High and low speed left and right turns Test amateur and professional racer’s skills Clockwise direction (consistent with European standards) Outskirts of major market areas or remote market areas Few sanctioned events, mostly club-style events (SCCA, NASA, AMA, enthusiast/brand organizations) Limited grandstands and spectator areas

NASCAR & It’s Impact Background History of NASCAR (National Association for Stock Car Auto Racing) What makes NASCAR Unique NASCAR Track Types NASCAR Racing Series Components of Value Evidence of Race Date Value Evidence of Superadequacy Valuation Process

History of NASCAR Prohibition/Bootlegging NASCAR Founded First New Speedway Richard Petty Wins First Winston Cup Championship Fortune 500 Sponsorship Begins NASCAR Reaches New Fans The New Millennium

What Makes NASCAR Unique NASCAR is privately held NASCAR sanctions races on an annual basis

NASCAR Track Types

Bristol Motor Speedway

Atlanta Motor Speedway

Daytona International Motor Speedway

Indianapolis Speedway

Watkins Glen International

Competitive NASCAR Tracks

Competitive Local Tracks

DEFUNCT NASCAR TRACKS NASCAR Track Issues

Decline in Industry Income Industry Decline in Income (in thousands) Years Ending December SMI Historic IncomeN/A$320,451$323,521$376,719$442,834$419,116 Annual Decline-0.9%-14.1%-14.9%5.7%N/A Total Change (2007 to 2011)-23.5% ISC Historic Income$387,932$398,903$415,708$474,327$570,584N/A Annual Decline-2.8%-4.0%-12.4%-16.9%N/A Total Change (2008 to 2012)-32.0% DMI Historic Income$24,092$27,972$36,358$56,747$58,780N/A Annual Decline-13.9%-23.1%-35.9%-3.5%N/A Total Change (2008 to 2012)-59.0% Combined Historic IncomeN/A$747,326$775,587$907,793$1,072,198N/A Annual Decline-3.6%-14.6%-15.3% Total Change (2008 to 2011)-30.3% Note: Preceding does not include broadcast revenue which has been added in below Combined Income including Broadcast Revenue N/A$1,187,400$1,202,444$1,306,954$1,482,526N/A Annual Decline-1.3%-8.0%-11.8%N/A Total Change (2008 to 2011)-19.9%

Historic Attendance NASCAR NASCAR Race Attendance122,255135,504230,822237,781235,114285,503325,655354,711357,458 Annual Change-9.78%-41.30%-2.93%1.13%-17.65%-12.33%-8.19%-0.77%N/A Change from 2004 to % Change from 2004 to % Source: Atlanta Motor Speedway Note: One of two Sprint Cup race dates moved in 2011

EVIDENCE OF RACE DATE VALUE EVIDENCE OF SUPER ADEQUACY

Cost Approach Physical Obsolescence Functional Obsolescence External Obsolescence

Sales Comparison Approach Summary of Comparable Improved Sales No.Name/Address Sale Date; Status Acres; Oval Track Length Prop Rights Effective Real Estate Sale Price# of Seats$/Seat 1North Carolina Motor SpeedwayOct –$4,400,00060,113$73.20 US Highway 1 North and North NC Hwy 177 Closed–– Rockingham1.017Fee Simple Richmond County NC 2Pikes Peak Int. RacewayOct –$10,330,00043,400$ Midway Ranch Rd.Closed–– Fountain1.0Fee Simple El Paso County CO 3Martinsville SpeedwayJul –$4,300,00065,000$ Speedway Rd.Closed–– RidgewayFee Simple Henry County0.526 VA 4USA International SpeedwayMay –$6,200,00011,000$ Old Polk City Rd.Closed–– Lakeland0.75Fee Simple Polk County FL 5New Hampshire Int'l SpeedwayJan –$38,700,00095,561$ N.H. Route 106Closed–– Loudon1.058Fee Simple Merrimack County NH 6Moroso Motorsports ParkApr –$7,500,00011,000$ Bee Line Hwy.Closed–– Jupiter2.25Fee Simple Palm Beach County FL 7Memphis Motorsports ParkJan –$2,062,50025,000$ Victory Ln.Closed–– Millington0.75Fee Simple Shelby County TN 8Kentucky SpeedwayMay –$62,550,00068,089$ Speedway Dr.Closed–– Sparta1.5Fee Simple Gallatin County KY

Income Capitalization Approach Three direct capitalization methods: Traxprofile Survey Method Standard Going Concern Method Non-NASCAR Analysis.

Subject Data Available Detailed Income and Expense Information Utilization Rates Separate NASCAR Event vs. non-NASCAR Event revenue and income

Capitalization Rate Selection

TraxProfile Survey Method Traxprofile General Admissions Example Planned Events35 Complete Rainouts (Region 3)18.1%Cap Rate: % Revenue Events Tax Rate:1.6131% Rounded29Combined Rate % Average Attendance per Event5,000 Average Price Per Ticket$8.00 General Admissions Revenue$1,160,00042% Total Revenue$2,761,905Value:$5,500,000 Back Gate (Pit Admissions)25%$690,476 Food and Beverage21%$580,000 Other Income12%$331,429 Overall General Expenses79%$2,181,905 Net Revenue from Events$580,000 Expenses Advertising2.5%$69,048 Food6.0%$165,714 Insurance4.0%$110,476 Payroll7.0%$193,333 Purse49.5%$1,367,143 Rent7.0%$193,333 Other cost of sales3.0%$82, %$2,181,905 Gross Profit$580,000 Track Rentals Days Average Rental Rate per Day$2,500 Total Track Rental Income$250,000 Total Income$830,000 Business Profit20%$166,000 Miscellaneous$10,000 Total Other Deductions$176,000 Estimated Net Income to the RE$654,000

GOING CONCERN METHOD MODIFIED GOING CONCERN METHOD VS.

Revenues Oval Tracks – Ticket sales/gate receipts – Sanctioning fees – Daily usage fees (track rental for practice/testing) – Advertising/sponsorships – Television fees – Concessions Dragstrips – Ticket sales/gate receipts – Sanctioning fees – Advertising/sponsorship – Television fees – Concessions Road Courses – Daily usage fees (track rental) – Program fees – Advertising/sponsorship – Concessions/gasoline sales – Gate receipts

Road Course Revenues Track Rental – Weather/Climate Based – Utilization Generally all weekend days (Saturday & Sunday) – 80% - 100% used Most Fridays – 65% - 80% Some weekdays (M-Th) – 10% - 35%

Expenses Fixed – Real Estate Taxes – Insurance Variable – Payroll – Racetrack Operations – Repairs & Maintenance – Utilities – Food service/concessions – Fuel – Administrative Reserves!

Case Study 1

Case Study 2

Case Study 3

Capitalization Rate Good question! Property desirability?

Investor Surveys

Band of Investment

Sources Financials for corporations – Latest NASCAR information – and Individual track information – or Google track name Articles on track valuation – (Lum Library) Information on development of capitalization rates for race industry - Ibbotson SBBS Valuation Yearbook 2012 or Rates of Return –

Open Discussion