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International Speedway (NASDAQ:ISCA)

Q3 2011 Earnings Call

October 06, 2011 9:00 am ET

Executives

Daniel W. Houser - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer

Lesa Kennedy - Vice Chairman and Chief Executive Officer

John R. Saunders - President

Charles N. Talbert - Director of Investor & Corporate Communications

Analysts

Michael K. Walsh - Wells Fargo Securities, LLC, Research Division

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

Operator

Good morning, and welcome to the International Speedway Corp. 2011 Third Quarter Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Thursday, October 6, 2011. I would now like to turn the conference over to Charles Talbert, Director of Investor and Corporate Communications for International Speedway. Mr. Talbert, please go ahead.

Charles N. Talbert

Thank you, operator. Good morning, everyone, and welcome to the International Speedway's conference call. We are here to discuss the company's results for the third quarter ended August 31, 2011.

With us on this morning's call are Lesa France Kennedy, CEO; John Saunders, President; and Dan Houser, Senior Vice President and Chief Financial Officer. After our formal remarks, a question-and-answer period will follow. The operator will instruct you on procedures at that time.

Before we start, I 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 ISC with the SEC, specifically the most recent reports 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.

So with these formalities out of the way, I'll turn the call over to Lesa Kennedy. Lesa?

Lesa Kennedy

Good morning, and thanks, everyone, for joining us on today's call. Through disciplined focus on the cost side of the business, we are delivering a stronger operating margin. The execution of our cost-containment initiatives has increased fiscal year-to-date bottom line results despite lower revenues. This was partially driven by not hosting any IndyCar events this year. While the economy remains our biggest impediment, we feel confident that our commitment to improving the guest experience will better position the company for long-term growth.

Recent and ongoing capital improvements at our facilities continue to be well received by our customers. We believe that delivering unique and memorable experiences, attractive pricing options and strong racing will, in time, generate stronger revenues, as well as increased bottom line results. Investing in our business through fan-friendly capital improvements and strategic ancillary development such as our Hollywood Casino at the Kansas Speedway, along with sound financial policies will ensure that ISC maintains its significant competitive advantage within the industry. With a strict focus on our business plan, we have consistently delivered solid financial results. And when the economy strengthens, we have a tremendous opportunity to prosper through improved consumer and corporate spending trends. To further support our stock price, we're also returning capital to our shareholders through open market share repurchases, as well as our annual dividend payment.

We're excited about the prospects for International Speedway Corp. And with that, I will now turn the call over to John Saunders.

John R. Saunders

Thank you, Lesa. While we are still experiencing softness in our attendance-related revenue categories, we are seeing positive signs of stabilization in our business. Deferred revenue has stabilized year-over-year. Advance ticket sales for our Sprint Cup events are up approximately 1% in units and down approximately 3% in revenue. Our weighted average ticket price through August for Sprint Cup events is comparable to 2010, down only slightly, approximately 2%. Per cap spending for our fans is steady.

Our capacity utilization for Sprint Cup through our August Michigan event is approximately 84%, which is consistent where we expect to be at the end of the NASCAR season. This compares favorably to last year's utilization rate of approximately 76%.

As we have stated during previous calls, our attendance-related revenues will continue to be our most significant business risk. We believe the company's full year revenues will be below our guidance of $635 million. On a more positive note, due to our concerted efforts to take costs out of the business, we are maintaining the low end of our non-GAAP earnings guidance of $1.60 per share and operating margin of 22%. These are marked improvements over our fiscal 2010 results. While revenues will be below our expectations, it should be noted that our 2010 revenues included approximately $10 million from the 4 IndyCar series events we promoted last year.

We have further inroads to make to motivate our customers to commit to their purchasing decisions sooner. Not only will this mitigate possible and actual inclement weather, but also the various life events that arise unexpectedly. To accelerate the sales cycle, we have implemented targeted consumer initiatives that we are optimistic will succeed in getting our customers to make their purchasing decisions earlier. We are actively prospecting for new fans, particularly the next-generation fan. We have expanded our youth initiatives to encourage families to attend. In many instances, children 12 and under are admitted free with a ticketed adult. This younger demographic is our next-generation race fan. To market to this demographic, traditional means of advertising may not be adequate to reach them effectively. Other mediums, primarily social media channels, more effectively access and resonate with the youth segment. We are actively involved in creating an interactive dialogue to drive interest with current and potential fans.

Our tracks are also implementing programs aimed at engaging first-time race fans to educate them in how to better understand the sport. Core to our customer and consumer strategies, we remain committed to our long-standing ticket sales policy of not discounting once we are in the sales cycle. We are pleased with the level of corporate marketing activity. We have agreements in place for 97% of our gross marketing partnership revenue target for fiscal 2011, which is consistent with where we were at this point last year. And all the available race entitlement inventory for our 2011 Sprint Cup and Nationwide Series events has been sold.

We are encouraged with television ratings, as well as the sports media rights fee landscape. For the first 26 Sprint Cup Series telecasts this season, viewership is up approximately 9% over 2010. This is comparable to viewership NASCAR enjoyed in 2009. Importantly, the 18- to 34-year-old male viewership is up 23% from last season. We are optimistic regarding the prospects of our next media rights agreement for a number of reasons. Specifically, live events provide ratings. Broadcasters want our live sports programming on their networks. Viewers tend to watch these events live and not DVR them, which are preferred by advertisers.

NASCAR also delivers a sizable audience. On average, per event for the most recently completed regular season, NASCAR had the second-largest number of viewers with the largest percentage of female viewers in professional sports. Also in my view, NASCAR's digital rights are not being exploited to their fullest extent. The most recent sports media rights agreements, the NFL and the PGA, all referenced the proliferation of tablets and handheld devices. These agreements provide for a digital platform to showcase those respective sports. So ultimately, we believe NASCAR remains in a strong negotiation -- negotiating position for the next broadcast and ancillary media rights agreements.

As Lesa touched on, our Hollywood Casino at Kansas Speedway opens in February, less than 4 months from now. Located in one of the most visited regions in the area with an estimated 11 million visitors annually, we are confident that this project will create significant value for our shareholders. This is a great example of how we can strategically deploy capital to drive positive long-term results for ISC.

Enhancing the live event experience for our guest is a critical strategy for future growth. We are convinced that our focus on driving incremental earnings by improving the fan experience will lead to increased ticket sales, as well as pricing power in the long term. We compete for the consumers' discretionary dollar with other entertainment options such as concerts and other major sporting events. We must meet the needs of today's consumer or we risk falling behind in our ability to capture market share.

Today's consumer wants easy access into and out of a venue, comfortable and wider seating, clean and available facilities, enhanced audio and visual engagement and social connectivity. We are confident that by delivering memorable guest experiences, along with attractive pricing and fantastic racing, ISC, in time, will generate stronger attendance-related revenues, as well as bottom line results.

Turning our attention to Staten Island. We expect the Department of Environmental Conservation to allow the property to be filled and the remaining environmental remediation to be completed, both of which are necessary precursors for the commercial development of the property. However, we do not anticipate filling activities to commence until after we have sold our interest in 380 Development. We are currently in ongoing discussions with KB Holdings, as well as alternative buyers for the interest in the property. We remain cautiously optimistic that a closing will occur.

Now with that, I'll turn the call over to Dan Houser to discuss the financial performance for the quarter.

Daniel W. Houser

Thanks, John, and good morning, everyone. Our third quarter events, coupled with the reduction, the cost reduction commitments we delivered, have generated financial results that are in line with our expectations. Our results were impacted by the ongoing economic trends, which continue to suppress attendance-related, as well as certain corporate partner, revenues. Also, comparability was affected by the NASCAR Sprint Cup Nationwide and Camping World Truck Series events held at Chicagoland in the third quarter of fiscal 2010, which are held in the fourth quarter of fiscal 2011. The NASCAR Sprint Cup event held at Kansas and the NASCAR Nationwide held at Chicagoland in the third quarter of fiscal 2011 were held in the fourth quarter of fiscal 2010 at Auto Club Speedway. The NASCAR Camping World Truck Series event at Kansas, which was held in the second quarter of fiscal 2010, was held in the third quarter of fiscal 2011, and the IZOD IndyCar series events held at Chicagoland and Watkins Glen in the third quarter of fiscal 2010 were not held in fiscal 2011.

So while revenue was down approximately $10 million year-over-year in Q3, over 2/3 of the decreases are attributable to the net impact of the schedule changes. Other factors impacting comparability of our third quarter 2011 results to the 2010 period include certain carrying costs associated with our Staten Island property, impairment of long-lived assets associated with capital improvement projects and interest rate swap expense and state tax settlements mainly in 2010. All of these are outlined in the earnings news release and are included in our GAAP to non-GAAP reconciliation where appropriate.

Looking at the income statement. Admissions revenue for the third quarter decreased to $36.3 million, largely attributable to the net impact of the previously discussed schedule changes, as well as certain non-comparable operations. Also contributing to the decrease were lower attendance and weighted average ticket prices for certain events. For the quarter, the weighted average ticket price for our comparable Sprint Cup events decreased approximately 0.9%. The decrease in motorsports-related revenues to $98.8 million was primarily driven by the net impact of the previously discussed schedule changes, as well as certain non-comparable operations. This decrease was partially offset by increased television broadcast and ancillary rights, as well as increased sponsorship, suite and hospitality revenue for comparable events held during the period.

For the quarter, ISC's domestic television broadcast and ancillary rights were $61.1 million, with $59.7 million associated with domestic broadcast contracts and $1.4 million of ancillary rights. The increase in food, beverage and merchandise revenue to $12.3 million was primarily attributable to non-motorsports-related event sales of concessions and catering. Partially offsetting the increase was the net impact of the previously discussed schedule changes and lower attendance for certain events.

Prize & Point Fund Monies and NASCAR sanction fees decreased to $37.5 million. The decrease was largely attributable to the reduction in the overall prize and point fees paid for comparable events. The previously mentioned schedule changes also contributed to the decrease. Partially offsetting the decrease was the contracted increase in television broadcast rights fees paid to competitors.

Motorsports-related expense decreased to $37.5 million. The decrease was primarily attributable to the net impact of previously mentioned event schedule and business operation changes, as well as cost containment focused in enhanced margin without negatively impacting our guest experience. Motorsports-related expense, as a percentage of combined admissions and motorsports-related revenue, decreased to approximately 27.8% compared to 31.1% for the same period in the prior year. The margin increase was primarily due to the impact of the previously mentioned focused cost containment.

The increase in food, beverage and merchandise expense to $9.7 million was largely attributable to the previously mentioned non-motorsports event concession sales, schedule changes at Kansas and increases in food and certain other costs associated with concessions and catering strategies to enhance the guest experience for both consumer and corporate customers.

Food, beverage and merchandise expense, as a percentage of food, beverage and merchandise revenue, increased approximately 78.6% as compared to 68.5% for the same period in the prior year. This decreased margin was attributable to the lower margin non-motorsports-related event sales of concessions and catering, as well as the increased food costs and enhanced concessions and catering presentations.

General and administrative expense decreased to $25.8 million for the quarter. The reduction in personnel-related and various other costs driven by our cost-containment initiatives contributed significantly to the decrease. Certain Staten Island carrying costs partially offset the decreases. G&A expenses, as a percentage of total revenues, increased to approximately 17.2% as compared to 16.5% for the same respective period in the prior year. The decreased margin during the quarter was primarily due to lower overall revenue, as well as the Staten Island carrying cost. Depreciation and amortization expense was comparable to the prior year.

The nominal non-cash impairment of long-lived assets is primarily attributable to the removal of certain assets in connection with the repaving of the track and grandstand enhancements at Phoenix. Interest income and interest expense were both comparable to the same period in the prior year. The equity and net loss from equity investments represents certain start-up costs for our 50% equity interest in the Hollywood Casino at Kansas Speedway. Our effective income tax rate for this quarter was approximately 35.5%. Effective rate is below the statutory rate due to certain state tax planning efforts.

Net income for the 3 months ended August 31, 2011, was $9.7 million or $0.20 per diluted share on approximately 47.5 million shares outstanding. However, when you exclude certain carrying costs associated with our Staten Island property, non-cash asset impairments and the equity and net loss from equity investments, we posted earnings of $0.24 per diluted share for our 2011 fiscal third quarter. As described in the release, this is compared to non-GAAP net income for the 2010 third quarter of $0.25 per diluted share. Further, analysis normalizing event schedule changes will reflect an increase in operating income and EPS year-over-year.

As for the balance sheet and future liquidity, at August 31, our combined cash and cash equivalents totaled $95.9 million. Current deferred income was approximately $85 million, and shareholders' equity was $1.2 billion. At the end of the quarter, total debt was approximately $288 million, which includes $152 million in senior notes, $64 million in TIF bonds associated with Kansas, $1 million in revenue bonds, $51 million for a loan to construct our headquarters office building and $20 million in borrowings on our line of credit.

As John mentioned, our Hollywood Casino at Kansas Speedway joint venture is opening in February 2012. As of the end of the third quarter, we funded approximately $72.1 million of the approximately $155 million we estimate to be our share of the capitalized development cost for the project, which is included on our balance sheet as equity investments. We also expect to fund certain working capital needs of the project prior to opening.

In addition, we will continue to incur certain other start-up costs through the casino opening, which will be expensed as equity and net loss from equity investment. As we previously mentioned, it's estimated that the joint venture would generate approximately $50 million in EBITDA in 2013, its first full year of operations. The financial benefit to ISC of our portion of the EBITDA is estimated to be approximately $0.20 per share before debt service.

We currently anticipate, where necessary, funding our contribution to the casino with available capacity on our revolver due to the favorable borrowing terms. For 2012, we expect the casino to be minimally accretive to earnings before the related debt service on the revolver. During the third quarter, we purchased 333,100 shares of our Class A stock for approximately $9 million, bringing the total number of shares purchased from December 2006 through August 2011 to approximately 6 million shares. At the end of the quarter, we had approximately $8.2 million in remaining capacity on our $250 million authorization. It's our expectation that ISC's board will approve additional capacity for future repurchases during the upcoming open-window trading period.

As it relates to capital spending, for the 9 months ended August 31, 2011, we spent $55.1 million on capital expenditures, which includes $46.2 million for projects at our existing facilities. The remaining balance was associated with land purchases and additional capitalized spending for the Staten Island project -- property. At quarter end, we have approximately $65.3 million in capital projects currently approved for our existing facilities. These projects include track repaving at Phoenix and Michigan; grandstand seating enhancements at Watkins Glen, Richmond, Talladega and Daytona; improvements at various facilities for expansion of camping, parking and other uses; and a variety of other improvements and renovations to our facilities that enable us to effectively compete with other sports venues for consumer and corporate spending.

As a result of these approved projects, we expect our total 2011 capital expenditures at our existing facilities will be approximately $65 million to $75 million, depending on the timing of certain projects. As John mentioned, we have exciting opportunities at our facilities as we enhance the live experience for our customers. To accomplish this, we expect to increase our capital spending at existing facilities by 30% to 40% above 2011 levels for a few years, starting in 2013, as we strive to keep pace with our customers' expectations. This increased spending assumes: first, the sale of our Staten Island property; and second, a stable economic environment and credit markets.

While we focus on allocating capital to generate returns in excess of our cost of capital, certain of these improvements don't provide immediate directly traceable positive returns on invested capital but are required to maintain our facilities to be able to host major motorsports events and to secure our position as the leader in the motorsports industry. While it's encouraging to see our business stabilize, we realize that a stronger consumer outlook is necessary for any meaningful improvement to our attendance-related revenues. The bottom line growth we are seeing this year is primarily due to cost-reduction commitments we've outlined in prior years.

Going forward, we do not have significant incremental cost that can be taken out of the business without materially altering the way we operate. We have maintained a solid financial structure and, with some Main Street recovery, are well positioned to grow. In closing, reiterating our operating margin and EPS guidance for the year shows we expect solid improvement over 2010 results despite having lower-than-projected attendance-related revenues. We continue to be optimistic that our future revenues will stabilize and eventually grow, our cost-containment initiatives will be maintained, and the significant financial benefit of our casino together will strengthen our cash flows and bottom line results. We look forward to speaking with you on our next earnings conference call in January, at which point we'll provide 2012 financial guidance.

And with that, I'll turn it back over to the operator for the Q&A portion of the call.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Michael Walsh with Wells Fargo Securities.

Michael K. Walsh - Wells Fargo Securities, LLC, Research Division

Just a couple here. Have race fans more recently been further delaying ticket purchases closer to race day, I guess, more so than the past couple of quarters from what you've noticed the last couple events?

John R. Saunders

Yes, I think we continue to see the pattern ramping up closer to race day. And as I mentioned in my remarks, we're doing a number of things to encourage purchasing prior to the event or certainly well ahead of where we're seeing that activity right now. But again, that's -- we've said that before that, that is a result of people not necessarily having visibility weeks and months out in terms of job, in terms of wallet and making sure that other household expenses are met first before they make decisions on highly discretionary spend. So that pattern is still there. We don't see it getting any worse, but it's still there.

Daniel W. Houser

Yes, as well, Michael, when you look at the deferred revenue and particularly tickets year-over-year, there's -- at August 31, there was a little -- there's some noise because the event’s moving around. But when we look at kind of where we are in comparable events, it really looks pretty encouraging. Again, we're seeing some stabilization there. And one of the things that, I mean, that will impact as folks get later, as we've said, then you become vulnerable to other things such as weather. And if you look back -- our Richmond event was the first event in the quarter. A couple of weeks out from that event, which would have been reflected in our August 31 numbers, number one, they had an earthquake there, and then they had Hurricane Irene blowing through, and half the power on the Atlantic seaboard was out. So those kind of things tend to divert the attention of our ticket buyer public. So there's -- again, we’ve said this multiple times because of the later buying and then you have exposure to those type of occurrences.

Michael K. Walsh - Wells Fargo Securities, LLC, Research Division

Understood. I know you're not going to give 2012 financial guidance until January. But as you kind of just look at the overall environment, I mean, do you think you guys are going to plan for an environment in '12 that's similar to today?

Daniel W. Houser

Well, I mean, I don't see much encouragement out there that things on Main Street are -- we got a lot of upside to look for. Unemployment continues to look pretty stubborn. Job growth gets some sparks here and there. But we really -- one of the best indicators that we find for our business in the consumer piece of it is really your -- is consumer confidence. I mean, as John said, people got to feel like they've got some discretionary income beyond just saving to make mortgage payments and buy groceries, and that's when -- we had that earlier this year, and we started to see some encouraging trends. And then when the economic news started to drag again, it tends to show up in the buying behavior. So we keep an eye on that, but we think that we'll continue to have to work very hard to entice our fans to come on out to the track.

Michael K. Walsh - Wells Fargo Securities, LLC, Research Division

Just last question. You had mentioned the targeted consumer initiatives, and I know it's early and it's something that's hard to track, but -- and just as an example, you had mentioned the youth initiatives. Are you seeing more kids come in recently, 12 and under?

John R. Saunders

Yes, we have, Michael. And all of our tracks are participating in such initiatives that -- quite frankly, 3 or 4 years ago, we didn't have anything available to youth, whether under 12 or under 18 years of age, when it came to Sprint Cup events. And so the programs that have been adopted are resonating well. And then once you get them to the track, it's important that once you get them to the track is that there's a heightened level of fan engagement. These are big facilities. First timers can be somewhat intimidated in terms of traffic and parking, and so there's a -- along with these consumer initiatives to get them to the track, it's equally important that we pair up those initiatives with guest services and fan engagement activities once they're on the property.

Operator

[Operator Instructions] Your next question comes from the line of Joe Hovorka with Raymond James.

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

A couple of questions. You mentioned the increase in CapEx for the next couple of years. Can you maybe talk a little bit on what kind of projects you're going to be pursuing? And which ones will be directly measurable from a return standpoint?

John R. Saunders

Well, Joe, it's John. I think you're going to see our efforts to continue widening seats and having more comfortable seating in our facilities. The standard in our industry for many decades was an 18-inch seat. And in some cases, those seats didn't even have backs to them. And so we've got an effort underway across the company to widen seats upwards of 22 inches or more with backs, and so seating is a critical area. Increasing the ratio of restroom facilities to the total attendees versus where we've been in the past, expansion of points of sale, the tram service, so the distance from parking lots to the gates, these are all things that prior generations of fans didn't mind walking a mile or so to get to the gate of entry, and today's fans' expectations are changing. And now with that, a lot of these projects, as Dan pointed out, may not have project-specific returns, but our expectation is it's the right thing to do. It's the right thing to do for the long term for the company, which ultimately will drive future growth in earnings.

Daniel W. Houser

Yes, Joe. And just on -- I think as well, we'll have things that have upsell opportunities. For example, few years ago, we did a major renovation on the infield here in Daytona, has been a big home run. I mean, we sell that thing, every Cup weekend, we sell it out to capacity. And it's been not only a great revenue and earnings driver, but it gets the fans down closer to the sport. It's just been a win-win all the way around. The reason that we say that we're going to start ramping up the -- that we're anticipating seeing the spend increase in like 2013 rather than 2012 is 2012, we're going to spend some time and some resources looking across a broad range of opportunities that we have and really hone in on the things that we think will have the most impact for the fan and the bottom line, which facilities can drive the most benefit and that sort of thing. So today, we don't have a lot of those answers, and it's really more of a really taking the time to do some detailed planning and evaluation to get us ready to start in 2013.

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

Do you anticipate losing seat capacity going from the smaller to the larger seats or are you going to...

Daniel W. Houser

I think it really depends on the facility and on the market. One of the things that you will see us do as we talk a lot about getting back to this tension of the sellout and driving advance ticket sales. And we believe that, that is a very critical balance that we want to get back to. So the way you manage that some with -- if you’ve got some tailwind from a recovery, you got -- you're managing with capacity and pricing to get that tension point back, then you're able to get people to buy earlier, which takes risk out. You get -- you have an ability to drive then promoting your secondary level of that, and you have an opportunity then to take pricing. And as we look forward then, where if we took capacity out, later on, if we add capacity, we're going to add a better experience. We know today -- I mean, if we had to do it over again, probably wouldn't have built all of the seats back in the back in Daytona, because it is not the experience that you get on the front stretch. So I think that we're going to take time to make sure that we optimize the very valuable dollars that we commit towards this.

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

And just if I heard right, you said a 30% to 40% increase for the next few years, starting in 2013? Is that what it was?

Daniel W. Houser

Yes, I mean, the way we look at it -- way we're looking at it, Joe, is we're -- we look at it more on like a 4- to 5-year time period, and it may jostle around. It's more driven by what the projects may be and when they're ready to go. I don't see us leveraging up to do a bunch of this. As we said here that this is kind of -- key to this is getting Staten Island sold and having some stabilization in better times. If we go into another double-dip recession, where we're not going to be -- put ourselves in a position, where we've got some big train rolling that now we've got to dump cash into and that we don't have the buying power out in the marketplace.

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

And then just another question on your -- you mentioned your ASPs trends are down 0.9%. Is that a comp number, or is that influenced by losing an IndyCar event?

Daniel W. Houser

Well, I'm sorry. What was the first part of the question?

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

The -- you gave the average selling price for the tickets down, I think, it was 0.9% in the quarter.

Daniel W. Houser

That's Sprint Cup.

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

That's just -- that's what I wanted to clarify. I didn't know if that was influenced by the loss of those events. And then one last question. What are your -- what are the recent corporate spending trends looking like? I know you gave some of the stuff about the entitlements, and you've got 97-plus percent of your forecast for this year done, but...

John R. Saunders

Yes, we’re feeling pretty good about this year, as I said, Joe. It's -- we're at 97% of our target. So we're feeling pretty good about that. When we look to 2012, we -- if my memory serves me correctly here, we have one less entitlement, cup entitlement, that needs to be sold than we did in 2011, and I believe one more Nationwide entitlement versus 2011. But on the broader corporate landscape, we're going to see more inventory become available as we have a number of deals that are renewing, and these would be official status-type deals, and so we're well positioned for that. The good news is that these are staggered maturities. You know when they're coming, and the team is ramped up to secure those renewals for 2012.

Daniel W. Houser

A lot of -- Darrell Wilson [ph] and his team have a lot of work to do for next year, but they are extremely energized, and so we're excited along with them.

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

Is there any expansion of officials, status categories for 2012? Are you adding anything, or are you selling the same inventory?

Daniel W. Houser

No, I mean, these guys are wizards in creating inventory. It's -- that's one of the beauties as we have transitioned over the years, we've talked -- we used to talk a lot about how the mix in our corporate business has shifted from race entitlements, which are obviously a finite amount of inventory to this official status type of thing, which is only limited to some extent by the imagination. So we'll continue to exploit that in every way we can do that.

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

Okay, but there’s nothing like -- I mean, a few years back, liquor became one of the things you could sell. There's nothing big like that that's -- it's just the slicing and dicing of what you currently have?

Daniel W. Houser

Well, we're chasing everything. I mean, it's -- things, some things are hot for a while and then cool, but we try to stay on the cutting-edge of watching for companies that are just out there, number one, doing a lot of advertising. This year, it was GEICO, which is a great example, I think. You see a lot -- again, they've got 2 or 3 serious ad campaigns out there. They've become a significant partner for us and really targeting the RV owner. And so it really is the talent, kind of focusing on companies that are out there trying to grow their business and figuring out a match for them with the NASCAR nation.

Operator

And there are no further questions at this time. I would now like to turn the call over to John Saunders for any closing remarks.

John R. Saunders

Well, we just want to thank everybody for joining us on the third quarter call. We still face some challenges from Main Street, but we're seeing stabilization in the business, focusing on the long-term value of the company, and we're very excited in the next 4 months, we'll see our Hollywood Casino come online at Kansas City. So we look forward to talking to you at the end of the next quarter. Thanks, everybody.

Daniel W. Houser

Thanks a lot.

Operator

This concludes today's conference call. You may now disconnect.

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