REPEATING/Bear Stearns Waves the Yellow Caution Flag On the Motorsports Industry.

Sports Editors/Automotive Racing Writers & Columnists

NEW YORK--(BW SportsWire)--May 21, 2001

Despite Plenty of Positive Hype, The Industry Faces Difficult

Economics

Notwithstanding strong television ratings and renewed enthusiasm, the motorsports industry could face a patch of rough road ahead, according to a new report from Bear Stearns. The weak economy has begun to impact sponsorship opportunities and soften ticket demand, the report cautions, which could lead to a slowdown in revenues in the current year. "Everyone is excited about the TV ratings and the hype surrounding NASCAR, and they should be," said Marc Falcone, Bear Stearns associate director and leisure analyst. "But that does not take away from the fact that the fundamentals in the industry are not as strong as they have been in the past."

A Cautious Approach

An uncertain economic climate in the US, marked by low consumer confidence, corporate earnings warnings and large-scale layoffs, has produced a tough environment for the motorsports industry. Falcone points to slowing ticket sales, reduced sponsorship spending and cutbacks in corporate hospitality programs as indications that the industry is not immune to the slowing economy. The Bear Stearns analyst is further concerned about the sport's ability to make strides to expand its fan base beyond the Southeast.

A Reason For Renewed Enthusiasm

With a quarter of the NASCAR Winston Cup schedule complete, Fox's stepped-up television coverage and its surge in viewership has generated a tremendous amount of enthusiasm in the industry. The ratings have topped prior years and they have outperformed other competing major sports telecasts. This increase in interest, however, will take some time to develop into additional revenue streams for the industry, according to Falcone. "Eventually high levels of viewership will increase nationwide attendance growth and sponsorship interest, but it may take a while." The Bear Stearns analyst estimates the industry should see stronger numbers in 2002-2003.

Companies to Watch

Among the companies discussed in the Bear Stearns report, "Motorsports--A Slightly Different Story Now" are International Speedway Corp. (ISCA), Speedway Motorsports Inc. (TRK), and Dover Downs Entertainment (DVD).

To view the full report or to speak with Marc Falcone, members of the media may contact Laura Conover [e-mail] at 212-272-8768 or Russell Sherman [e-mail] at 212-272-5219.

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