International Speedway Corporation (NASDAQ:ISCA)
Q2 2014 Earnings Conference Call
July 03, 2014 09:00 AM ET
John Saunders - President
Dan Houser – SVP, CFO and Treasurer
Jaime Katz - Morningstar
Tim Conder - Wells Fargo Securities
Good morning, and welcome to the International Speedway Corporation's 2014 Second Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterward, you will be invited to participate in the question and answer session. (Operator Instructions). As a reminder, this conference is being recorded on Thursday, July 3, 2014.
With us on this morning's call are John Saunders, President and Dan Houser, Senior Vice President and Chief Financial Officer. After formal remarks, a question-and-answer period will follow. The operator will instruct you on procedures at that time.
Before we start, the company would like to address forward-looking statements that may be addressed on the call. Forward-looking statements involve risks, uncertainties and assumptions. Actual future performance, outcomes and results may differ materially from those expressed in these forward-looking statements.
Please refer to the documents filed by the International Speedway Corporation with the SEC, specifically, the most recent report on Form 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in these forward-looking statements.
With these formalities out of the way, I will now turn the call over to John Saunders. John?
Good morning and thank you for participating on today's call. We are pleased to report higher revenues for our second quarter driven by contractual increases in television broadcast rights and stabilizing admissions despite the weather-related challenges.
Auto Club Speedway achieved its first sellout since 2005, and Kansas Speedway's Cup event moving to Mothers' Day eve resulted in an admissions lift of over 15%. These results are encouraging signs that NASCAR's Industry Action Plan, and our consumer marketing and capacity management initiatives are working.
During the quarter we hosted seven Sprint Cup weekends in addition to Bike Week events in Daytona. Regarding weather challenges, Martinsville's cup event was directly impacted. The threat of inclement weather impacted Phoenix's late sales cycle and severe weather conditions in and around the region plagued Talladega. These factors were offsets to the positive results at Auto Club in Kansas Speedway.
Richmond's cup event, which has experienced steady attendance declines over several years, was off only 2%. Overall, our weighted average ticket price was up 2% for the quarter. In addition, the Supercross event in Daytona continues to grow increasing 4% in attendance over the last year, representing its sixth consecutive attendance increase.
We believe strongly that we are on the right track with our capacity management program. This strategy promotes sell-outs, creates excess demand and drives earlier purchase decisions, which in turn increases capacity utilization. A significant proportion of the capacity reduction was a result of providing improved fan amenities such as wider seating and social zones that provide engagement opportunities for our guests while removing sections that do not provide adequate sightlines.
Other benefits of capacity management include enhancing pricing power and higher average ticket price, increasing tickets sold in the renewal cycle, increasing customer retention, driving attendance to our support events, improving the value equation for our corporate sponsors and more visually compelling event for the television audience as noted by the broadcast booth multiple times during the Talladega race.
With regards to the rest of the year, the third quarter is shaping up nicely. In June, Michigan delivered solid admissions driven by an increase in the average ticket price and the Coke Zero 400 barring inclement weather forecasts and Watkins Glen are on track to meet or exceed expectations.
It is early to be drawing conclusions about the fourth quarter ticket sales, but we remain optimistic that we can leverage the excitement around the new Chase format into results at the gate.
Regarding TV ratings for the Fox segment of the 2014 season, both the broadcaster and NASCAR cite poor weather as a major factor in the year's early-season decreases. The sport got off to a particularly bad start when rain delayed the Daytona 500 more than six hours and forced it to air opposite the Winter Olympics' closing ceremony.
Not surprisingly the Daytona 500's TV ratings dropped 43% from last year, earning a 5.6 rating and 9.3 million viewers. Subsequent rain delays at Bristol, Texas and Martinsville made it difficult to build the type of momentum that typically drives viewership.
In spite of the 10% drop for Fox, NASCAR still ranked as the most-watched sports event of the day for nine of its 13 weekend races. Despite the headwinds, industry report say that NASCAR offers enough inventory to add buyers over the course of its season to make up for any ratings declines and that this year's ratings results shouldn't affect advertising interest in the sport.
Even with some ratings erosion NASCAR is still pulling huge numbers when compared to other sports properties as well as what is available in the general market. In addition, NASCAR saw increases in key demographics during the Fox portion of the season.
Hispanic viewership rose 12% building on last year's increase of 40% in that demographic, plus viewership in the 18 to 24-year-old male demo rose 6%. Starting with the June event at Pocono the Sprint Cup broadcast have transitioned to cable on TNT, where they have been the number one cable sports event two out of the four weekends. As we look forward to the second half of this season, we remain optimistic that the new Chase format will drive viewership as well as ticket sales.
On the corporate partnership front, we are pleased with how the year is progressing. At this point for fiscal 2014, we have agreements in place for approximately 94% of our gross marketing partnership revenue target. We have all 20 NASCAR Sprint Cup Series event entitlement sold and only one of our 15 NASCAR Nationwide Series event entitlements open. This compares well to last year at this time, when we also had approximately 94% of our gross marketing partnership revenue target sold and entitlements in place for all Sprint Cup and Nationwide events.
We currently have 15 of our 20 NASCAR Sprint Cup entitlements under contract for 2015 and we are in renewal discussions on several more. Looking beyond 2015, our sales team is engaged on many fronts, pursuing additional founding sponsors for DAYTONA Rising, and as demonstrated by the Ford Championship Weekend contract extension, securing partnerships that will maintain strong contracted revenues into the future.
We are progressing at full speed on the DAYTONA Rising construction. Fans attending this weekend Subway Firecracker 250 and Coke Zero 400 events powered by Coca-Cola will be greeted with astounding progress on the project since Speedweeks.
Concourse and injector construction is well underway and the installation of escalators and seats has begun in earnest. Upon completion, DAYTONA Rising will feature 40 escalators, which tops the nation in the number of stadium escalators.
Vertical transportation is a key ingredient in this massive project and the escalators will help guests easily navigate the new venues, so they can enjoy all the new amenities. I recently toured the construction, and the width and length of the new concourse areas are going to provide an experience beyond wildest expectations.
Last week, Florida Governor Rick Scott signed House Bill 7095 into law. The bill establishes a process by which sports franchises apply to receive sales tax refunds from the state based on the amount of sales tax generated by the facility.
Our DAYTONA Rising project is eligible to apply for these funds. This bill can provide capital for the project, allowing us to build upon the already massive economic benefits being generated in the region, from thousands of new jobs to millions of dollars in new tax revenues and it makes evident that the state recognizes the tremendous value that DAYTONA Rising has and will continue to deliver.
Our proposed mixed-use development across from Daytona International Speedway, ONE DAYTONA is steadily gaining momentum. During the quarter, we continued to advance project leasing, financing and contractor selection.
Most recently, we announced ONE DAYTONA selected Shaner Hotels and Prime Hospitality Group as its hotel partners. Shaner Hotels and PHG are planning a 145-room full-service boutique property and are working with global hospitality leader Marriott International to bring an exclusive Marriott Autograph Collection hotel to ONE DAYTONA. This type of upscale property reiterates our commitment to offering an unparalleled hospitality experience for our fans, visitors and residents in 2016.
As we discussed last quarter, earlier this year ONE DAYTONA joint venture formed a Community Development District or CDD. The CDD is a local special-purpose government framework under Florida statutes for managing and financing infrastructure required for community development.
During the quarter, the CDD completed negotiations with the City and County for a $40 million incentive package to finance a portion of the estimated $53 million in infrastructure required for ONE DAYTONA.
This agreement is monumental for making ONE DAYTONA a reality that will create much-needed jobs for our community and build value for our shareholders.
The mid-year report for the Hollywood Casino at Kansas Speedway is strong in operating performance and cash flow. In fiscal 2014, the property has met or exceeded operating profit every month and we received cash distributions of $15.5 million today, $10 million of which was received prior to May 31, 2014. This is consistent with our expectations for the year of approximately $20 million.
The joint venture Board continues to evaluate the next phase, a Hollywood Casino Hotel. As we have discussed previously, the JV is subject to a 1% of gross gaming revenue penalty if it had not commenced construction on an adjacent hotel by the second anniversary of its opening, which was February 2014.
This deadline for commencement was previously extended to October 2014, and has now been further extended pending a convention center feasibility study by the Unified Government, which could impact the location and design of the hotel.
In the interim, our JV is not being charged the penalty. However, the final decision to move forward with the proposed hotel will be market-based and approved by the JV Board. Should the JV decide not to build the hotel, it will be subject to the penalty from the second anniversary of its opening forward.
Accordingly, beginning February 2014, the casino joint venture began accruing the 1% penalty. Included in our income from equity investment amounts for the quarter is approximate $200,000 expense related to this penalty.
With that, I'll turn the call over to Dan Houser.
Thanks, John, and good morning everyone. Our 2014 second quarter results met our expectations, generating increased revenues compared to the same period in 2013 and in most areas of our business showing signs of stabilization.
Items affecting quarterly comparison for our second quarter 2014 results include certain costs associated with DAYTONA Rising, asset retirements primarily attributable to our capacity management initiatives, capitalized interest related to DAYTONA Rising, carrying costs incurred in 2013 related to Staten Island and the consolidation of Motorsports Authentics. All these are outlined in our earnings news release and are included in our GAAP to non-GAAP reconciliation where appropriate.
Looking at the income statement, second quarter admissions revenue of $35.7 million was consistent with the prior year. Decreased attendance driven by the threat of inclement weather was largely offset by increased attendance and admissions revenue for events at Auto Club and Kansas Speedway's. Additionally, the average ticket price for the quarter increased almost 2% to approximately $54.42.
The increase in Motorsports related revenue to $128.4 million was primarily attributable to the contracted increases in television broadcast revenues. Partially offsetting this increase was corporate sponsorship and media advertising revenue associated with Motor Racing Network.
For the quarter, ISC's domestic television broadcast and ancillary revenues were approximately $96.1 million. The increase in food, beverage merchandise revenue to $22.7 million was primarily a result of higher merchandise sales after consolidating Motorsports Authentics.
Prize and point fund monies and NASCAR sanction fees increased to $51.2 million. The increase is due to higher television broadcast rights fees for the NASCAR Sprint Cup, Nationwide and Camping World Truck Series events as standard NASCAR sanctioning agreements require specific percentage of television broadcast rights fees be paid to competitors.
Motorsports related expense increased to $35.3 million. The slight increase is primarily due to cost driven by inclement weather for the events at Phoenix and Martinsville and strategic spend to improve the guest experience with large screen video boards at Talladega.
Food, beverage and merchandise expense increased to $17.4 million, primarily a result of higher merchandise sales after consolidating Motorsports Authentics. The food, beverage and merchandise margin compression is primarily attributable to MA. Excluding MA operations, food, beverage and merchandise expense as a percentage of related revenue for the second quarter 2014, increased only slightly compared to the prior year.
General and administrative expense increased to $27.6 million for the quarter. This is primarily due to the budgeted increase in certain administrative costs as well as the consolidation of MA, partially offsetting the increase were carrying costs related to our Staten Island properly incurred in fiscal 2013, but not in fiscal 2014.
Depreciation expense of $22.8 million, primarily due to shortened service lives of certain assets related to DAYTONA Rising. Excluding these charges depreciation was consistent with prior year. Specific to DAYTONA Rising, accounting conventions during the construction period, and also when the project comes online will impact our reported financials.
Based on our current plans for DAYTONA Rising, we have identified existing assets that are expected to be impacted by the redevelopment and will require mostly non-cash charges for accelerated depreciation or loss on asset retirements totaling approximately $50 million over the expected 26-month project time span. In addition, we have significant capitalized interest through the project period, which I will discuss shortly.
The $1.2 million retirement of long-lived assets is primarily attributable to the removal of certain assets in connection with DAYTONA Rising and capacity management projects.
Interest income was comparable to the same period of the prior year. Interest expense decreased to $2.7 million, primarily due to higher capitalized interest associated with DAYTONA Rising. Equity and net income from equity investments of approximately $2.8 million represents our 50% interest in the Hollywood Casino at Kansas Speedway. This compares to $3.2 million in the second quarter of 2013.
Included in the equity income amount for the second quarter 2013 is approximately $600,000 related to a one-time property tax refund for which there is no comparable amount in the current period. Also contributing to the decrease in the second quarter 2014 is approximately $200,000 accrued for the hotel penalty John previously discussed. When normalizing for these two factors, equity income from the casino for the quarter is up over 10% versus last year.
Net income for the three months ended May 31, 2014 was $21.5 million or $0.46 per diluted share on approximately 46.5 million shares outstanding. However, when you exclude certain costs associated with DAYTONA Rising, asset retirements primarily for removal of assets in connection with certain capital improvements and capitalized interest related to DAYTONA Rising, we posted earnings of $0.50 per diluted share for the 2014 fiscal second-quarter. As described in the earnings release, this is compared to non-GAAP net income for the 2013 second quarter of $0.51 per diluted share.
As for the balance sheet and future liquidity, at May 31st our combined cash and cash equivalents totaled $218.2 million, current deferred income was approximately $82.7 million and shareholders' equity was $1.3 billion.
At the end of the quarter, totaled debt was approximately $274.2 million, which includes approximately $165 million in senior notes, $58.9 million in TIF bonds associated with Kansas Speedway, $49.8 million for the term loan on our headquarters office building and $502,000 in revenue bonds.
For our share repurchase program, we will continue to maintain opportunistic parameters based on levels of our stock price. As such, during the second quarter we did not purchase shares of our Class A common stock. We have approximately $62 million and remaining capacity on our $330 million authorization. On a quarterly basis, we review and adjust if necessary the parameters of our stock purchase plan.
As it relates to capital spending, for the six months ended May 31, 2014, we spent approximately $74.7 million on capital expenditures for projects at our existing facilities related to DAYTONA Rising and to a lesser extent a variety of other improvements and renovations.
In fiscal 2013, our board endorsed a capital investment plan for 2013 through 2017 not to exceed $600 million over the period. The five-year plan encompasses CapEx for all of our 13 facilities including DAYTONA Rising and any equity commitments to undertake ONE DAYTONA.
The majority of DAYTONA Rising's construction will occur in fiscal 2014 and 2015. We estimate ISC's total CapEx, excluding capitalized interest will be approximately $200 million and $180 million in fiscal 2014 and fiscal 2015 respectively.
With the target completion date for DAYTONA Rising in January 2016, spending will then decrease significantly with an expectation of capital expenditures for projects at all of ISC's existing facilities to be between $60 million to $70 million annually in fiscal 2016 and 2017.
While we will leverage our revolver on a short-term basis, we will not take on additional long-term debt to fund DAYTONA Rising. However, accounting rules require that we capitalize a portion of the interest on our outstanding debt during the construction periods. We estimate we will recognize approximately $11 million to $13 million of [Cap I] from 2014 through 2016, with roughly half being recorded in 2014.
Keep in mind that we will adjust for DAYTONA Rising related capitalized interest in our non-GAAP presentation, so you can expect interest expense on a non-GAAP basis to be approximately $4 million per quarter.
In terms of our 2014 financial outlook, we are reiterating our previous guidance revised for consolidation of Motorsports Authentics. We expect total revenues for fiscal 2014 to range between $635 million and $650 million, EBITDA margin to range between 29.5% and $30.5%, operating margin between 17% and 18.5% and non-GAAP earnings of a $1.30 to a 1.50 per diluted share.
Our fiscal 2014 non-GAAP guidance excludes any accelerated depreciation associated with shortening asset service lives and future loss on disposals of long-lived assets, which could be recorded as part of capital improvements where assets are removed prior to the end of their actual useful life, any income statement impact attributable to the DAYTONA Rising project, the MA fair value adjustment and income tax benefit, any gain or loss on sale of assets and any legal judgments or settlements.
In closing, we remain well-positioned for ongoing success with our largest revenue source secured through 2024, a strong balance sheet and stabilizing consumer and corporate revenues. Although macroeconomic improvement remains tepid and inclement weather can impact event weekend performance, we are encouraged by the results of our consumer marketing and capacity management initiatives working in concert with NASCAR's industry action plan. As well, we continue to focus across our business on keeping costs down.
Like all of you on the call, we are anxious of an announcement from NASCAR the broadcasters regarding the revenue per year and thereafter for the new contracts beginning in 2015. While all of the motorsports industry promoters, teams and NASCAR, would like to see a healthy step up in rights fees from 2014 to 2015.
Keep in mind that both, Fox and NBC are launching new cable sports networks aimed at growing market share over a number of years and hence will negotiate for more a back-loaded payment stream.
As I said last quarter, my guess and I emphasize it is no more than my guess, is we will ultimately see rights fees from 2014 to 2015 flat to a low single-digit increase.
Thanks for joining us today. I will now turn the call back over to the operator for Q&A.
Thank you. (Operator Instructions) Your first question comes from the line of Jaime Katz from Morningstar. Your line is open.
Jaime Katz - Morningstar
Good morning, everyone. Thanks for taking my question.
Jaime Katz - Morningstar
My first question is on admissions. I know you guys mentioned that the weather impacted races, attendance was down, but I am curious how it looks as a non-weather impacted races, so we know price overall was up, but how did some of the better weather races fare?
Well, I mean, we had sell-out increased attendance in revenues at Auto Club Speedway, very favorable weekend at Kansas. The date moved a little later in the season, it also moved to a night event on Mother's Day eve. That was a huge success. Attendance was up; weighted average ticket price was up.
As John said in his comments, and we said previously, Richmond is one that has kind of had us scratching our heads. It looked like we saw some nice stabilization and we are very happy about that; continue to work with Talladega, but overall I think that everything was pretty encouraging outside of where we had the impact for the weather.
Also as John said in his comments that looking into Q3, we feel pretty good. Michigan was favorable. We had a nice crowd there. We are very happy with that. Looking pretty solid for the weekend here this weekend, you know we have a large walk-up year for the July race in Daytona, so there is a lot at risk the last few days, but right now we are on pace, pretty happy with that and encouraged about Watkins Glen. To get further out on the calendar, it's still kind of early to say, but things are stacking up. We feel like we are seeing a nice stabilizing trend.
Jaime Katz - Morningstar
Okay. Then, I think, you guys made an interesting point about ratings not necessarily affecting advertising. You said that corporate or it seems like, corporate sponsorship has really picked up in this last quarter. Is there anything we can infer from the corporate spending trends from what you guys have been seeing?
Well, the comment John made about the TV ads was really an industry statement that that's what they have been saying in the industry, so that's really the most visibility we have into to that. From our point, we are pretty encouraged with the rest of the year, we have got one Nationwide event open, but otherwise able to work on additional up-sell inventory, so we feel pretty good about our target for this year and we are well positioned going into next year. We have got 15 of our 20 cup entitlements already under contract and many of the remaining are renewal discussions that we feel really very good about.
What is encouraging about that is, when you get that perishable inventory off the table, then your sales teams are really able to focus on the rest of the portfolio filling in those dollars and as well on drive that we have got for the founding sponsors for DAYTONA Rising, which we also are encouraged about and hope to have some announcements here in the next couple of quarters on that.
Jamie, this is John. I would add that we continue to see versus two, three years ago, where the term of corporate sponsorships was one to two years, we are seeing a trend back to where we were pre-downturn with three-year to five-year terms with the low-to-mid single-digit escalators, again, all encouraging signs.
Jaime Katz - Morningstar
Okay. Then lastly, I know you guys haven't really commented on some of the other events at [this facilities in] [ph] the Sprint Cup is clearly the bread and butter, but maybe just the cadence of how things have changed. Are they taking up for the Nationwide here and some of the other events that you are holding at the tracks?
Well, a couple of things that we talked about in the first quarter call, the great success we are having here with the Rolex 24 and the new IMSA series, that event has been steadily on the incline. Here during the Bike Week, I think, we said we had our fourth consecutive increase for the Supercross. That's an event that continues to grow and it's also a very attractive demographic for us, which we are really excited about getting that element onto the property and exposing that next generation to Motorsports.
Nationwide and Trucks tend to, you know, they kind of fluctuate around with weather and things like that, particularly if you have got tough weather forecast a lot of times, you know, attendances drive interest more to the Cup weekend. However, I would say with our capacity management, one of the things that we will do with [abstract] [ph] which we are very encouraged about is as we get to balancing that supply/demand for the cup events then you have a platform to really drive demand to those sport events. You ultimately then got some pricing power, and most importantly from our perspective is, you move the purchase decision out on the timeframe and take a lot of the weather risk out of the equation. That's probably the biggest nemesis that we are suffering immediately that we feel like we can we can do something about.
Jamie, this is John. A couple of other things I would add and we have talked about this on previous calls. Much of the 2000s, many of these Nationwide and truck tickets were bundled to the Cup ticket and as we saw in the downturn we unbundled a rather significant percentage of those, so that had an impact.
But when you take a look at the star power which is part of the industry action plan you've got these younger drivers, Chase Elliott for one coming up through, that's some real personalities as some of our drivers are getting older like Jeff Gordon, so we have got star power in the queue.
Lastly the thing I would add, Dan touched on it. We talked about it on our first quarter call. We will talk more in the third quarter, but TUDOR SportsCar Championship Series, as a result of the merger this past year sort of a diamond in the rough and this past weekend Watkins Glen had their Sahlen's Six Hours of the Glen Race, which is a race that dates back to the 60s and the results were a record versus where they were over the last 10 years. Again, momentum on other series, we are cautiously optimistic that those things are going to bounce back as we go forward.
Jaime Katz - Morningstar
Excellent. Thank you. Have a good holiday.
You too, thank you.
Your next question comes from the line of Tim Condor from Wells Fargo Securities. Your line is open.
Tim Condor - Wells Fargo Securities
All right. Thank you. On the admission side, can you give us a little color how the advanced ticket sales are looking for the balance of the season? I just, again, expanding on your comments about approach you have taken with taking seats out or should we expect looking into next year - Again, I know, you don't have any invisibility on that, but should we expect those advance ticket sales at this point to probably start to trend upward when we look to into '15 versus what you have for the balance of this year?
Well, first of all, Tim, I would say for - first thing I would point to is deferred revenue year-over-year. I think we are down between $2 million and $3 million. Really all of that is timing of sponsorship stuff that our advanced ticket sales are actually up on a deferred revenue basis year-over-year, so that's a concrete indicator there.
Again, as we have said, probably the number one thing that we are seeking from our capacity management is to drive advanced sales. That is, we think, takes an extreme amount of risk out of the system, not only with weather and all of the other individual lifestyle of things that can come up for a fan, for a customer, as they delay a purchase decision.
I mean, if you buy a ticket six weeks out from the event, then everything that goes on in your life for the next six weeks is, I am going to be at that event on that weekend. If you wait until week of then everything that comes up in your life is potentially a deterrent to that decision, so we think strategically that is very, very important for us.
Also we are looking at some tiered pricing structures. We do take some pricing later in the sales cycle. We don't discount tickets. We haven't done that at all through the recession, where we lowered prices as it gets (Inaudible), but we do have a higher ticked price out of the gate on race day and also potentially some tiering so that you get - are you going to get a good deal or you are going to get not only the best price, but the best value for your purchase by making an earlier decision to purchase.
Tim Condor - Wells Fargo Securities
Okay. Is it fair to say that the strategy at this point - you are starting to see some very early of that paying off in the advanced ticket commitments at this point?
Yes. I would say so.
Tim Condor - Wells Fargo Securities
Okay. Then, John. Regarding the comment that you made with the sports franchise of sales tax refunds, I think you said that the framework to potentially provide additional capital for the DAYTONA Rising project. Are you saying that maybe in total the dollars that you guys are planning for that has not change, but should we sort of look at any of that revenue or the refund of taxes here in the early going, as in 2015 in particular. There is maybe some incremental pound money and any thoughts as to maybe how that will be deployed?
I will let, Dan, speak to how that money would flow, but let me clarify my comments. What the State adopted and the Governor signed, was a sales tax rebate plan. It's up to $3 million over 30 years.
Tim Condor - Wells Fargo Securities
There isn't a guarantee, but there is an application process by which qualifying facilities have to demonstrate who is delivering the biggest benefit to the state of Florida. Given the given the significant amount of the attendees to Daytona International Speedway come from out of state, we feel like we are in a pretty good position to qualify for that funding.
Another technical aspect of that bill is, those who are seeking it have got to make roughly a $250 million investment in the facility which - upwards of $400 million, we would certainly qualify, so it's not a given, but we feel like we are strong frontrunner given the draw that we had from out-of-state, but in terms of the flow, I will let Dan.
Yes. Tim that will be money that will come in annually and actually run through the income statement, we report our admissions dollars net of related sales taxes, so you know that will be something that will flow through earnings as we receive or accrue those.
As far as, it's definitely additional cash flow and it has definitely have been driven by the states recognition of the of the investment that the company is making here and what that's driving as far as jobs and investment in the State of Florida, I think that first of all we look to that to supplement the commitment that we made to our board and to our shareholders as we said that.
You know, number one; we got a budget for the project. Number two, we got a target for revenue and EBITDA. There was point as we looked at the project that we have been at this process of trying to get some incremental dollars at the state level and also to get this sales tax rebate that pretty much all of the sports, stick and ball sports teams, professional sports in Florida were getting except for Daytona International Speedway and our Homestead facility, so it has been a long process that we have been making our case.
There were some things particularly along the redevelopment of our midway that were deferred because it didn't appear that we were going to get these funds, so I think we will be seeing - this is just another factor in our total capital allocation decisions with hitting the targets for the returns on DAYTONA Rising, the performance of our core business, our ability to manage costs and other ways that we will seek to fund the ongoing operations of the business.
Tim Condor - Wells Fargo Securities
Okay. Great. Thank you, gentlemen.
There are no further questions at this time. Gentlemen, I would turn the call back to you.
I just want to thank everybody for joining us on the second quarter call and we look forward to talking to you in a couple of months on the third quarter. Again, thanks for joining us.
This concludes today's conference. You may now disconnect.
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