ROAD RAGE.

A record-breaking financing deal. A top-tier merger. A cash-rich company. A growth-hungry industry. Who wouldn't want to be in the driver's seat?

Perhaps not many people would include stock car racing in the sequence beginning "Baseball ... basketball ... football ... hockey...." Stock car events never had the cachet of, say, Formula One races, where the drivers included the occasional European aristocrat. No, stock car races were at the other end of the class spectrum, defiantly down-home, so rural and Southern that if the concession stands had served "possum sandwiches," nobody would have blinked an eye. But in January of 1999, stock car racing received the ultimate American endorsement as a mainstream sport: a $224-million superspeedway in Kansas City financed with a big chunk of tax-exempt municipal debt.

Kansas solons had in hand a stack of accounting analyses proving that a single weekend of Nascar could generate more economic benefits than hosting the Superbowl. So International Speedway Corp. CFO Susan Schandel was able to negotiate a deal with ample taxpayer support. ISC's equity in the new facility is a mere $78 million. Approximately $24 million of tax-exempt special obligation bonds, called STAR bonds, will be repaid by sales taxes generated from businesses in the speedway area. Another issue of roughly $70 million of tax increment financing (TIF) bonds will be serviced by payments made by ISC in lieu of property taxes. The state department of transportation committed $35 million to improving access roads to the site, and there was a mix of tax credits and other incentives topping off the rata-touille of subsidies.

Of course, there's nothing terribly unusual about public financing of stadiums and arenas for sports like football, hockey, baseball and basketball, but two things make ISC's Kansas project unique. First, no government entity has ever offered that much support to a stock car track before. Second, says Schandel, "In a lot of sports facility deals, the local government owns the stadium and has the right to use it for concerts or anything other than, say, football events.

"But we own the facility outright, and have the right to use it every day. All revenue from the facility is ours - whether naming rights, concessions, admissions, whatever. We were able to negotiate this cutting-edge deal because the Kansas government officials recognized what motorsports can bring to their community."

Greg Carey, a managing director in the public finance department of underwriter Salomon Smith Barney, explains, "Even though there are only three or four races a year, each race is a four- or five-day event. The amount of money generated from those races dwarfs any other sporting event." Stock car fans tow their RVs hundreds of miles to camp at the track or fly in and book hotels well ahead of race day, because they wouldn't want to miss the qualifiers and practice runs on the days leading up to the big event, the race itself.

They make themselves at home and stay awhile, spending money not only on track admissions and camping or motel bills, but also on gas, food, souvenirs, liquid refreshments - whatever it takes to have a good time. These direct expenditures ripple through the whole local economy as stores and restaurants buy more from their own vendors, who hire extra help or pay overtime to meet the demand, so the money multiplier can shove the total economic impact of a weekend of racing well north of $200 million, according to sports facility development expert Rick Horrow. Not only is this bigger than the Superbowl, unlike the Superbowl, races can happen more than one weekend a year. By the way, the figure doesn't include the economic potential of real estate development in a state suddenly famous for something besides being fiat, having tornados and sending mean Bob Dole to Washington.

DEBT PHOBIA 

Susan Schandel was at the wheel on the financing of the new ISC track in Kansas. Like racing itself, financing a race track is a lot more interesting than it looks at first glance. The uninitiated often wonder how anyone could possibly get excited about cars going around in circles again, again, again, day after day. The cognoscenti know that the physical demands of racing are so tough that drivers sweat away several pounds in a single race, and the impact of tiny decisions is magnified by the stress of a long, tough contest. The right call on whether to add or subtract half a pound of pressure in a single tire, or shoot 2.2 seconds of gas into the tank instead of 3 to save time, can make all the difference between winning and losing.

Getting the Kansas financing to market required a similarly keen sense of timing and opportunity. Salomon's Carey is still astonished by the discovery that a Kansas law prevents deals from going to market if there is a threat of litigation. "I've worked on transactions for 17 years and never before came across something like that," he says. Lawyers for homeowners in the area of the track took full advantage, sidelining the bond deal more than once with demands for concessions and threats to sue.

A former Ernst & Young auditor who joined ISC in 1992 and rose to CFO in a scant four years, Schandel has been taking the company through a pulse-jolting course, by racing's surprisingly staid financial standards. "I'm in the difficult position of balancing a conservative philosophy of 'no debt' against an effort to expand the company," she admits.

Traditionally, ISC financed its tracks with straight cash equity. "The cash flows from motor sports are tremendous," says Schandel. "Our EBITDA last year was about $75 million, from total revenues of $189 million, and net margins for the past five years have been 20 percent or better. Since I've been here, we've borrowed only $7 million or $8 million for a couple of months." This year, though, in addition to closing financing on the Kansas speedway, Schandel negotiated a $300-million revolving credit with a group of banks to finance a merger with Penske Motorsports.

Why bank debt for that purpose ? "Our philosophy is conservative, and we think long and hard before borrowing," Schandel explains. "But the company's foundation is very strong, and we consistently beat our own internal estimates for cash flow, so we're reluctant to have long-term notes that can't be prepaid. Yet as the industry consolidates we think there are a number of opportunities for acquisition and development, and we don't want our hands tied."

The merger with Penske is basically a stock swap that offers Penske shareholders either a straight exchange (of Penske for ISC stock) or 30 percent of the value of their Penske stock in cash, and the remainder in ISC stock. In addition to the Penske and Kansas City deals, Schandel has structured several other acquisitions in recent years. In 1997, ISC bought out partner Coming's 50-percent interest in the famed Watkins Glen, New York, track; bought a 45-percent interest in Miami's Homestead Speedway; acquired the Phoenix International Raceway; and launched a major new development in Chicagoland. The future may include a venture with famed real estate, casino and bankruptcy dealmaker Donald Trump, to enter the metro New York market; ISC and the Trump Organization are evaluating several sites for a possible track.

RACING 2010

Unlike a football or baseball field, a "track" can take different configurations to support different types of races. In its Chicagoland venture, ISC partnered with the Indianapolis Motor Speedway Corporation and the owners of Route 66 Raceway to create a joint venture company called Raceway Associates, an ambitious bid to bring almost all known forms of motorsport into one vast complex.

Raceway Associates now owns Route 66 Raceway, a 240-acre complex including a dragstrip, a clay oval and a road course. Drag races pit hot rods against each other one on one over straight quarter-mile speed strips. Road courses are several miles long, with a layout that forces drivers to weave through a lot of left and right turns to simulate Grand Prix-type open road racing. The new joint venture company purchased an additional 930 acres adjacent to this track to build a new, $100-million oval superspeedway capable of seating 75,000 spectators for Nascar and Indy Racing League contests. Raceway Associates will offer something for every racing taste: stock cars, Formula One cars, hot rods and even trucks.

"When I first started, this company was a lot different," Schandel recollects. "Our focus was monitoring, rather than being proactive about growth. My main responsibilities were historically focused, or looked maybe one year ahead. Today, we look five or 10 years out into the future, preparing master plans for each facility, strategizing how we want to grow the company and where we want to be. The biggest change for me is to move out of the historical focus and into a more visionary role."

The good ol' boys who started racing their rods for something to do during the daytime when they couldn't run moonshine would probably be aghast at the notion of a woman making so many of the important decisions about the future of motorsports. But Schandel is quick to point to her mentor, Lisa Kennedy, executive vice president of ISC and daughter of the late Bill France, Nascar's founder. Kennedy's brothers, William and James, are chairman and president of the company, respectively.

Kennedy brought the theme park concept to motorsports with Daytona USA, an interactive entertainment center that draws half a million tourists a year, not counting the race crowds, to the Daytona International Speedway. Fans can get greasy with pit crews, race each other on computer-simulated runs and catch a super-wide-screen projection of an actual race. Sports industry sources say that the NFL and Major League Baseball are studying Daytona USA as a model for attracting fans to stadiums on non-game days.

"People who aren't familiar with the sport think of it as a good ol' boy thing," Schandel laughs. "But recently the trend is to broader demographics. About 38 percent of the fans are women, a pretty big number compared to other sports." Nascar racing is marketed as a family activity, and a great deal of emphasis is on the relationship between its athletes and their fans.

"Our athletes are very fan-friendly," says Schandel. "That sets them apart from other pro sports. They have sponsorship deals, after all, and it doesn't help sell the product if the driver isn't fan-friendly."

It all makes not only for a powerful sport, but a potent financial engine, too. Nasdaq-listed ISC has left even the high flyers of the high-tech Nasdaq 100 in the dust, with a total return to its stockholders better than double that of the index over the past five years.

Schandel's Track

1996: Promoted to CFO at ISC

1992: Joined ISC as corporate controller and chief accounting officer

Before ISC: In public accounting, most recently as audit manager for Ernest & Young LLP 

Prep work: B.S., accounting, Penn State

Home & family: Ormond Beach, Fla., with husband, Dave, and children, Paul and Laura

Time off: Boating, golfing, following Penn State football

New Jersey-based business writer Gregory J. Millman drives a minivan that hits 65 mph on a good day.