![](2010071.jpg)
![](http://bloximages.newyork1.vip.townnews.com/stltoday.com/content/tncms/assets/editorial/e/be/7db/ebe7db2e-6202-11df-8186-00127992bc8b.preview-620.gif)
Dissident shareholder wants
Gateway track's parent sold
BY DAVID NICKLAUS •
dnicklaus@post-dispatch.com > 314-340-8213 | Thursday, November 4, 2010
11:21 am
While St. Louis racing fans
mourn the
closing of Gateway International Raceway, shareholders
are engaged in a vigorous discussion about the future of the track's parent
company.
Dover Motorsports
got a letter this week from one shareholder,
East Coast Asset Management, demanding that Dover put itself up
for sale. The Essex, Mass., investment firm calls Dover the "odd man out" in
the motorsports industry and accused it of destroying between $150 million
and $325 million of shareholder value. A fair amount of that loss came in
the 1998 deal to buy Gateway and other assets from racing entrepreneur
Christopher Pook. It has since written off nearly all of
the $91.2 million purchase price, East Coast alleges:
After a decade of operating
losses and sunk capital expenditures, Dover has failed to derive any value
from all of these assets. Thus, the board has proven its inability to
execute intelligent acquisitions or to successfully integrate new assets.
East Coast's main point is
that Dover's main assets, Dover International Speedway and
Nashville Superspeedway, would be more valuable to a bigger
competitor like Speedway Motorsports or
International Speedway Corp. The investment firm also alleges,
though, that Gateway is an undervalued asset:
First, Dover currently
lists ists Gateway property at $1.5 million and its Memphis property at
$2.8 million. Those numbers are understated considering Memphis was nearly
acquired for $10 million in 2009. Furthermore, the Gateway facility that
opened in May 1997, constitutes approximately 416 acres of land just five
mmiles from the St. Louis Archway and offers a capacity of 70,000 seats
along with a national caliber drag strip capable of seating an additional
30,000 people ... Thus, as both venues sit on attractive land close to
expanding metropolises they could easily be acquired and operated
profitably by Dover's competitors or be used as outdoor event venues by
others in the leisure industry.
Yes, the letter really says
"St. Louis Archway." East Coast also seems to be overstating Gateway's
expanse -- the Post-Dispatch lists it as 150 acres and notes that Dover
doesn't control the entire site.
East Coast's letter doesn't
say how many Dover shares it owns. Dover got
a similar letter two weeks ago from Marathon Partners,
holder of 18% of Dover's shares, which asked for
a true open and robust
exploration of all available strategic alternatives to maximize
stockholder value, including an open and full auction process.
|