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Dover Motorsports: Change Is A Good Thing

Vince Martin profile picture
Vince Martin


  • DVD stock has been dead money for nearly a decade, as a seemingly obvious case for Dover as a takeover target hasn't played out.
  • But a reopened track in Nashville, upheaval in the NASCAR schedule, and changes to Dover's ownership suggest there should be some urgency around a sale.
  • A rally over the past year-plus adds a bit of risk, and lessens reward, but Dover stock still seems like it should have more upside ahead.

Checkered flag and motor speedway

nycshooter/E+ via Getty Images

At some point, investors will wake up to find that Dover Motorsports (NYSE:DVD) has been sold. The question is when that sale happens, and at what price DVD stock is acquired.

A sale simply makes

This article was written by

Vince Martin profile picture
Overlooked Alpha launched April 2022 - subscribe at overlookedalpha.com. Some OA articles are also available here at Seeking Alpha.I've been contributing to Seeking Alpha and other investment websites since 2011, with a general (though far from rigid) focus on value over growth. I got my Series 7 and 63 back in 1999, and watched the dot-com bubble peak and then burst in real time at a small, tech-focused retail brokerage in NYC.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of DVD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (16)

Vince Martin profile picture
OK, I'm retiring from SA, going out on top - best wishes everyone!
@Vince Martin as I reported to you last week after you wrote the article, I had lost track of this one--after years of frustration in and out. I built a starter position (including buying yesterday)---so thank you for a lot of free lunches......take the victory lap----
Vince Martin profile picture
@Searching Thoughtfully well, investing will make you feel stupid sometimes. Writing about investing will make you look stupid sometimes. So when you get one right, you've got to enjoy it a little bit.

But not too much - that's tempting fate, especially during earnings season.
SnufferBottle profile picture
@Vince Martin Congrats! Can't beat that call/analysis.
Corporate Governance Cowboy profile picture
Interesting take on this long undead zombie. Some anecdotal information related to this story.

- Infighting in the Rollins family was a big factor in the sale of DDE. I can only imagine some of the Rollins heirs have blown through their inheritance and want Act 2 to be a DVD transaction.

- Management and the Board liked being BSDs around Dover, DE which demotivated them from doing anything other than the status quo.

- before the financial crisis, the nascar races in Dover DE would triple the population of the city for three weeks. With NASCARs slow bleed, nobody really cares anymore which hurts the narcissistic tendencies of management and the BoD.

In short, even the anecdotal evidence points to a potentially imminent sale.

Thanks for the coverage of this one. It is a fun read.
Vince Martin profile picture
@Corporate Governance Cowboy from the outside, I thought the DDE sale might signal more openness toward a DVD sale, with some patience probably required as the ISC and SMI deals were completed. I also thought it took off the table one "kick the can" option for mgmt and the board: trying again to merge DDE and DVD back together after the first attempt failed in 2010.

interesting to hear the insider stuff - having some familiarity with those kinds of families, can't at all say it's surprising. the stereotype is that it's the third generation that causes the problem: the first generation earned the wealth, the second was raised to respect the wealth, the third just expects the wealth. And I'd guess the third generation of the Rollins family should be right about old enough to start making some noise.

funny about the reputational stuff in the city - makes some sense. Those companies were much bigger deals 15 years ago.

I had gotten a similar sense about Dover as a track in researching the sport over the years...there were a lot of fan comments along the lines of "it isn't what it used to be", etc. off hand, they've reduced capacity by over 50% I think.

all great stuff, thanks.
Firstlawofnature profile picture
I've been waiting for these guys to sell for $6/$7 since the original spin-off but I ended up dying before they did anything so now even if they do sell I won't benefit. So sad.

These guys couldn't hit the broad side of a barn with a loaded shotgun.
Vince Martin profile picture
@Firstlawofnature dying?

honestly, I'm not sure how much I'd blame management here. It does seem like they could have done a lot more to utilize the facility outside of NASCAR (for the first time, we got standalone #s for their music festival since that was the only event in Q3, and they seem reasonably good).

But they're not to blame for the long decline in NASCAR. They didn't have any options to expand (not that that would have helped). They could have tried to sell at $5 in 2007 but shareholders then would have gone bananas. They're mediocre, comp seems high for two weekends a year (and, for years, they were getting paid by DDE too), but this was kind of going to go the way it went regardless, at least in my quite humble opinion.
horowitzcpa profile picture
Ferko was a case brought against NASCAR and it’s affiliated entities. SMI was not a party to this lawsuit - in fact most insiders suspected (then) that SMI financed Ferko’s lawsuit. Thus, SMI is not bound to its agreement. ISC does not exist, it was folded into NASCAR, a private entity. SMI is operated wholly by Marcus Smith. Marcus has not expressed interest in acquiring DVD. DDE was merged with a Connecticut entity and ceased to be a public company - its now run by Bally’s with some cross-agreements located in the DVD 10-K. DVD also owns ~ 850 acres in Dover along with the above-mentioned acreage in Nashville. The DVD voting shares are controlled by Henry Tippie, thus no change of ownership can occur without his authorization.
Vince Martin profile picture
@horowitzcpa Ferko was an SMI shareholder, correct? I'm not sure it matters that SMI is not bound to the agreement - the point I'm making is that NASCAR can't unilaterally can't pull a race from Dover and give it to itself (I wrote that sentence poorly). Is that incorrect? (asking sincerely bc it's important if it is incorrect).

(as an aside - the story of Ferko is truly awful. he had like a lottery winner's curse without, you know, winning the lottery.)

I know ISC has been acquired, that's in the article. I'm using it as a placeholder for the "former ISC tracks now owned by NASCAR"; perhaps that too is written poorly but I'm probably writing it that way bc when I first wrote about this case ISC was still independent (as was SMI).

I know about Bally's, that's briefly mentioned, as is the acreage. Tippie is mentioned as well via the trust.
@Vince Martin Thanks for highlighting this one. I too have been waiting for over 15 years for something to happen and in the past year or two DVD fell through the cracks....wasn't aware of the Nashville re-opening. Will pick away on weakness....
Vince Martin profile picture
@Searching Thoughtfully the Nashville news is really interesting and was really surprising.
MikeFromNZ profile picture
Interesting! Have you ever looked at Contran Corp. (KRO/NL/VHI)?
Vince Martin profile picture
@MikeFromNZ not closely, I'm sort of vaguely aware of the story there, but my sense was that it always went in the "too hard" pile, particularly because of the TiO2 aspect of KRO.
MikeFromNZ profile picture
@Vince Martin The Simmons family controls Contran Corp., which consists of two publicly traded operating companies (CIX and KRO) and two publicly traded holding companies (NL and VHI).

NL consolidates CIX. If you net out CIX's cash, NL owns ~ $245M of CIX, ~ $510M of KRO, ~ $30M of VHI, and has ~ $67M of cash vs. accrued environmental liabilities of ~ $93M and a litigation settlement of ~ $50M, all of which sum to ~ $700M vs. NL's $315M market cap. There may be risk of additional environmental liabilities, but that's a big discount.

VHI consolidates NL. If you net out NL's net assets and liabilities, VHI owns ~ $830M of KRO, ~ $265M of NL, and has net debt of ~ $195M, which sums to $900M vs. VHI's $700M market cap. If NL is significantly undervalued, then VHI's NL stake is worth a lot more than its market value.

Is TiO2 a good business? KRO's public comps are CC, TROX, and VNTR. There has been substantial consolidation in the business, with TROX acquiring a major competitor, which should be favorable for industry pricing. APO is rumored to be formulating a bid for TROX; meanwhile CC, TROX, and VNTR have all initiated ambitious restructuring/cost savings programs, which should significantly improve the profitability of their businesses. If you believe that we are in the early stages of a global inflationary cyclical rebound, then all these companies are significantly undervalued. KRO, TROX, and VNTR, for example, trade at ~ 50%, 25%, and 86% discounts to their cyclical highs. (VNTR has a lot of debt, so the equity is essentially an option).

Contran Corp. is a bit like DVD in the sense that no one outside the Simmons family knows when and how they might choose to unwind the holding company structure and monetize the value of the operating companies, but neither the sisters who control the family trusts nor their relatives are getting any younger, and there is clearly risk of higher capital gains and inheritance taxes.

I'd welcome you or anyone else checking my math and investigative reporting.
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