Item 1.01 Entry Into Material Definitive Agreements.
On June 2, 2020, the registrant’s
wholly-owned subsidiary, Nashville Speedway, USA, Inc. (“Nashville”), entered into a four year Sanction Agreement with
NASCAR Event Management, Inc. (“NEM”) pursuant to which Nashville will organize and promote NASCAR Cup Series events
for the 2021 to 2024 racing seasons. The date for the 2021 season is tentatively scheduled for June 20, 2021, with subsequent years’
dates to be determined.
On June 2, 2020, the registrant’s
wholly-owned subsidiary, Dover International Speedway, Inc. (“Speedway”), entered into a one year Sanction Agreement
with NEM pursuant to which Speedway will organize and promote a NASCAR Cup Series event for the 2021 racing season, tentatively
scheduled for May 16 or May 23, 2021.
Pursuant to each NEM sanction agreement,
consistent with typical NEM sanction agreements, NEM grants its sanction to a promoter, in this case Nashville and Speedway, respectively,
to organize, promote and hold a particular competition. The promoter sells tickets to the competition, sells or arranges for the
sale of merchandise and concessions, and sells advertising, sponsorships and hospitality services. NEM conducts the competition,
arranges for the drivers, and has sole control over the competition, including the right to require alterations to the promoter’s
facility and the right to approve or disapprove any advertising or sponsorship of the promoter. NEM also has exclusive rights to
exploit live broadcast and certain broadcast and intellectual property rights related to the competition, and exclusive rights
to sponsorship and promotional rights relative to the series to which a particular competition belongs. The promoter must pay the
sanction fee and purse monies and receives a share of the live broadcast revenue contracted for by NEM. The promoter is responsible
for the condition of the facility, for compliance with laws, for control of the public, for fire and medical equipment and personnel,
for security, for insurance and for providing facilities and services required by NEM officials and the live broadcast personnel.
The principal economic terms of the sanction
agreement between NEM and Nashville are as follows: Total purse and sanction fees to be paid by Nashville for the events are approximately:
2021 – $8.6 million, 2022 – $9.0 million, 2023 – $9.4 million and 2024 – $9.9 million. Estimated live broadcast
revenue to be recognized by Nashville for the events is approximately: 2021 – $18.2 million, 2022 – $18.9 million,
2023 – $19.9 million and 2024 – $20.8 million.
The principal economic terms of the sanction
agreement between NEM and Speedway are as follows: Total purse and sanction fees to be paid by Speedway for the 2021 event are
approximately $7.8 million. Estimated live broadcast revenue to be recognized by Speedway for the 2021 event is approximately $15.1
million.
Live broadcast revenue figures are based
on the assumption that all events on the 2021 NASCAR Cup Series schedule take place and that all promoters will be entitled to
their respective percentage allocations as set by NEM.
Nashville Superspeedway was built by
Dover Motorsports, Inc. in 2001 and hosted racing events from several sanctioning bodies from 2001 through 2011. While the
facility remains in good condition, the registrant’s current estimate of capital spending requirements to prepare the
facility to host a NASCAR Cup Series race in 2021 are approximately $7 million to $10 million over the next two years.
The sanction agreements for Speedway’s
and Nashville’s NASCAR Cup Series competitions are attached as exhibits to this Form 8-K as they represent agreements upon
which our business is substantially dependent.