Motorsports Authentics to seek new business model

The future business model of troubled merchandise giant Motorsports Authentics will be decided soon after its owners explore ways to turn around the company.

In the company's four years in existence, it has been a licensee, a trackside retailer, an apparel company, a novelty company, a die-cast car company and a distributor. But with another year of losses looming, Motorsports Authentics' 50-50 joint owners, International Speedway Corp. and Speedway Motorsports Inc., are now looking at each of those units as part of an overall re-evaluation.

"We're deeply committed to this business," said Roger VanDerSnick, senior vice president at ISC, who will become COO on June 1, and one of four board members at Motorsports Authentics. "We're just trying to figure our way through this economic downturn like every other company. What's important is to figure out what the right model is for the long term, not to change things just because of the downturn. But we are going to see this through."

VanDerSnick said he wouldn't talk specifically about potential changes for Motorsports Authentics, but team and industry officials say several scenarios are being explored.

Might the company reduce itself to a retailer or a die-cast car maker? Will it continue in the apparel and novelty business?

These are among the options in front of the third management team in four years, this one led by interim president Joe Mattes, who was installed in March while retaining his job as vice president of licensing for Dale Earnhardt Jr.'s JR Motorsports. Former CEO Mark Dyer split from the company in February.

This evaluation could lead to sweeping changes in Motorsports Authentics' broad business, and, in turn, change the licensing landscape in NASCAR, specifically the trackside shopping experience for the fan. One scenario on the retail side includes adopting golf's method of building temporary stores on-site, which would move the merchandise out of the trailers and into more of a department-store setting.

"We've adjusted our inventory control and buying cycles and implemented changes to make MA leaner and more efficient," VanDerSnick said. "Now we're in longer-range planning, but there's not a timeline on it. Discussing our business planning publicly is not something we're going to do.

"I wouldn't say everything is on the table. We're not going to flip the business to a private equity. But to the extent that we're committed to a better way of doing things, we're open to a lot of different things."

Motorsports Authentics is expected to lose money again this year, making three years out of four the company has posted losses.

"You look at the two companies that own MA, and they've got to be saying, 'What have we got ourselves into?' " said longtime industry analyst Dennis McAlpine of McAlpine & Associates. "They've got to be looking for a way that they can make some money out of this thing, or at least get their losses down.

"Right now there are a lot of factors. Attendance is down, and that hurts. Are consumers spending all their money just to get to the track and they're buying less merchandise? Eventually, the business will recover, but the downturn is taking its toll."

Indications are that Motorsports Authentics is trying to streamline its business. Officials are expected to meet with VF Corp. in the coming weeks to discuss selling the apparel business, which includes licensed hats and T-shirts. Much of Motorsports Authentics' losses have been tied to a lack of inventory control, according to its owners, especially in the apparel division.

The licensed novelty business also is believed to be on the selling block, possibly to a company such as WinCraft that specializes in items such as keychains, car flags and bumper stickers. (Continued)