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Motorsports Authentics bids to avoid bankruptcy

Geoff Smith, president of Roush Fenway Racing: "Until MA has its internal differences sorted out, it's difficult to predict what is going to happen. The two owners have to be able to agree on a course of action. The whole process is moving slower than we'd like..."
In an all-out effort to avoid bankruptcy, the joint owners of Motorsports Authentics are attempting to reorganise the troubled licensed merchandise company and settle the millions of dollars it owes several NASCAR teams.

MA's 50-50 owners, International Speedway Corp. and Speedway Motorsports Inc., have been in constant contact with the top teams since the end of the season, with one of NASCAR's top executives, senior vice president Paul Brooks, acting as a mediator.

It's uncertain exactly how much MA owes the teams, but its contracts with the best-selling organisations such as Hendrick Motorsports, Roush Fenway Racing and Dale Earnhardt Inc. guarantee each of them close to $3 million annually, industry insiders say. MA, which has lost money in three of its four years in existence, has been paying a portion of those guarantees, about a third to half, based on their merchandise sales.

Officials from ISC and SMI declined comment, citing the continuing nature of the negotiations. But team officials characterise the talks as frustrating because there remains no clear merchandise plan for the sport and the season-opening Daytona 500 is less than two months away. MA is responsible for most of the sport's trackside retail activity and much of its licensed merchandise, although that model could change as part of the company's restructuring.

Several team officials have cited differences between ISC and SMI for restricting the process.

“Until MA has its internal differences sorted out, it's difficult to predict what is going to happen,” said Geoff Smith, president of Roush Fenway Racing. “The two owners have to be able to agree on a course of action. The whole process is moving slower than we'd like, and really until the two owners' interests are aligned, it's going to be an awkward situation for the teams.”

Another team executive characterised talks as “stuck in neutral. There's not a clear solution, but everybody's still at the table, still committed to working this out.”

Most team officials say they're willing to forgive some of the debt from MA, but they need a clearer understanding of the plan going forward before agreeing to a settlement.

One scenario has the teams taking a stake in a new die-cast entity that would be spun off by MA, but the details of who would run the company and how the revenue would be shared are complicated, which makes it difficult to generate a unanimous vote from the teams.

It's not clear precisely where ISC and SMI differ because team executives won't divulge negotiation specifics, but the die-cast entity is one of several new scenarios that have emerged, each of which would take MA and NASCAR merchandising in a new direction. Another option is for MA to declare bankruptcy, which is still on the table but considered a last resort.


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