March 19th, 2009 
T.C. So I don’t know how many of you have seen this, but apparently Marcus Smith (you know, son of Bruton Smith and President of Lowes Motor Speedway) might not have actually graduated from the University of North Carolina at Chapel Hill. This story appeared yesterday from Bloomberg and cites a University official. The story was a bit shocking when I first saw it, and I actually discussed it with some folks on Twitter. But after thinking about it for a while, I realized that if Journo hadn’t alerted me to it, I would have never known about it. And you know why? Because not a soul in the NASCAR media has written anything about it.
I searched all over including Jayski (my apologies to Jayski, it was in his Track News section), SceneDaily, and ESPN and couldn’t find it. The only places that have anything are the Charlotte Observer, ThatsRacin, and the ”Insider” section of ESPN.com. But there you can’t even read it without an “Insider” subscription.
The gist of the story from Bloomberg is that Smith attended UNC for four years, majoring in journalism and mass communications, but never graduated. Smith didn’t give a definitive answer about graduating, saying only that he was “checking with the university.”
Now some might ask if this is really that big of a deal if he did actually attend UNC, but the problem lies in his representation. In the press release from SMI (which is a publicly traded company) announcing his promotion to President of Lowes Motor Speedway, it clearly states that Smith graduated from UNC with a Bachelor of Arts degree in advertising. That is a clear misrepresentation of his credentials.
Again though, I think the bigger shock about this situation is the fact that nobody in the NASCAR media felt it necessary to report on this. And this is the same group of folks that put a front page story on ESPN.com about Jimmie Johnson cutting his finger prior to Daytona!
I’m not going to say there is some shady underlying conspiracy going on here, but I do think it’s very odd that nobody is talking about this. Where is Ed Hinton? David Newton? Jenna Fryer? Lee Spencer? Dave Moody?
This is real news here people. Instead of writing another lame bit on Dale Jr. and Tony Jr. or yet another set of “Power Rankings” (what are power rankings anyway?), how about you actually be a journalist?
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I read about it on SportBusinessDaily. I think it’s a big deal…but at the same time he was going to get to where he is with or without a degree based on who his father is.
He should have just been honest about it. Pretending he thought he did graduate is ridiculous and, actually, quite insulting if he thinks fans are dumb enough to believe that you could possibly not know whether or not you graduated.
It was posted on Jayski ALL day Thursday 2am thru 1am Friday in the Race tracks section, with a link from the top, PLUS on the Track News page and the LMS page, so it was on the CupNews page, so didn’t search too far on the site
You see, this is why this site is so doggone intriguing. Like you said T.C. the real travesty here is that the mainstream media is so concerned about “loosing” the “inside track” (no pun intended) w/ the players to be, that they end up reporting on nothing but fluff, while ignoring the real stories of the sport.
TNI keep up the balanced reporting and above all your anonymity!
T.C.
Have you seen this on Bruton Smith?
Friday, March 20, 2009
Close ties hurt Sonic and SMI
Charlotte Business Journal – by John Downey Senior staff writer
Bruton Smith’s closely knit business empire may be fraying, with financial problems bleeding over from one part to another.
With the recession hitting hard at the auto and entertainment industries that make up much of Smith’s businesses, investors are chafing more about transactions among Smith’s various ventures.
The difficulties at Smith’s Sonic Automotive Inc. are well known. The company owns 140 car dealerships in an economy where cars aren’t selling. It has put off reporting its year-end 2008 financial results as it faces the possibility that it may need to renegotiate debt agreements or face a default.
Some of that debt is backed by 5 million shares of Speedway Motorsports Inc. That has Speedway shareholders asking what impact Sonic Automotive’s problems could have on the motorsports company.
“The investment community as a whole is paying more attention to interrelations and vulnerabilities,” says analyst Erik Kolb, who follows Speedway for Standard & Poor’s.
Meanwhile, Speedway faces problems of its own from weakening NASCAR ticket and souvenir sales. Also, Speedway has finally had to give up on the oil and gas trading business that has proved a disastrous sideline for the company.
The role of Sonic Financial
At the core of the Smith businesses is the family’s privately held Sonic Financial Corp., which owns the controlling shares of both Sonic Automotive and Speedway. Through Sonic Financial and private holdings, Smith controls about 67% of Speedway’s voting shares and 74% of Sonic Automotive.
Sonic Financial leases offices to Sonic Automotive as well as planes to both companies. Another privately held Smith business, Chartown Partnership, leases space to Speedway and has previously been involved in the purchase of Sonic Automotive dealerships. Chartown also develops real estate, including land at Lake Norman.
A bankruptcy at Sonic Automotive, which observers now consider possible, could directly affect Sonic Financial. In 2007, the last year for which figures are available, Sonic Automotive paid Sonic Financial more than $570,000 in office leases and more than $1 million for use of aircraft.
And it appears Sonic Financial has problems with another line of business. Its Provident American Insurance Co. has seen substantial losses for the last five years, requiring Sonic Automotive to put significant capital into it. Provident had A.M. Best Co. remove it from Best’s insurance company ratings in June after Best gave it a poor financial strength rating and a weak bond credit rating.
Marc Cohodes of Copper River Management is among Speedway’s investors who have pressed company executives for information about the Speedway stock put up as loan collateral. He finds the response unsatisfying. The company says 10 million to 14.4 million shares have been used to back loans, but it doesn’t specify what loans they are collateral for beyond the 5 million shares supporting Sonic Automotive.
“All of a sudden, there are no answers,” Cohodes says.
Speedway declined to comment for this story beyond what its executives said on the company’s recent earnings call.
Earnings report delayed
Sonic Automotive appears the most troubled business in the Smith stable. Its earnings have been weak as the recession has evaporated much of the demand for cars.
Last week, the company abruptly canceled its quarterly earnings report. In a filing with federal regulators, the company said it could meet all the requirements of its debt agreements through the end of 2008. But it is not sure it will be able to do so this year.
Its auditors have raised the possibility that they will have to pose questions about Sonic Automotive’s ability to continue as a “going concern.”
Sonic Automotive is negotiating with creditors to try to ensure that such a finding would not trigger an immediate calling of company debt.
Morningstar Inc. analyst David Whiston says if the company can’t get such agreements, that could force it into bankruptcy court. He says creditors generally try to avoid that, but any resolution is likely to make Sonic Automotive’s debt much more expensive.
“There is no real good outcome for shareholders here,” Whiston says. “The worst-case scenario is a Chapter 11 filing.”
Sonic Financial put up the 5 million shares of Speedway stock as collateral for Sonic Automotive’s $1.2 billion credit facility arranged in 2006. That debt comes due next year. If the facility goes in default, the stock could be turned over to Sonic Automotive’s creditors.
Whiston says depending on how the collateral agreement is worded, additional stock could be necessary if the stock value — currently trading at about a third of its 52-week high of $29.31 — is insufficient to cover the collateral offered.
Standard & Poor’s analyst Kolb thinks even that extreme situation would have only a temporary affect on Speedway’s stock price. He says the greater impact could be psychological, as investors learned that problems in Smith’s businesses had forced the sale of some stock.
But Kolb maintains a “hold” rating on Speedway’s stock and says it appears the company’s current financial weakness — significantly less severe than Sonic Automotive’s — is caused primarily by the struggling economy, not problems at the company.
Research director Amy Shapiro contributed to this report.
jdowney@bizjournals.com
I think you just cemented your reputation as the only Nascar related outlet not to whitewash anything. Personally, I really appreciate that. Thanks for the news, and keep up the good work.
Jayski: I did search your site pretty thoroughly, as usually news is either listed on the Cup page or story links page. I apologize for not scrolling to the bottom. This post will be corrected.
TC, welcome to my world! i am beyond frustrated by the “nascar media partners” who seem determined to be buddies and pals instead of journalists. as much as we complain about nascar, we seem more than ready to give these folks a pass when it comes to tracking down solid information and doing responsible reporting. (and Journo? as i don’t know who you are, i choose to believe you are one of the few who actually work at your profession!)
so who to turn to for solid reporting and accurate information? well, jayski is bookmarked and has been for years. when it’s nascar and the media, it’s ALWAYS the daly planet. then there’s mike mulhern and hardcore race fans and rowdy — as well as several other sites that actually care about the sport and not about keeping their hard card on a weekly basis.
so, keep working it like the professionals you are, guys: it’s greatly appreciated by this fan . . . and others!
How can you not know if you graduated, seems a little ridiculous to me. I guess no one checked his references, last time I checked this was enough to get you fired something tells me that won’t happen. Interesting all around, I guess since he’s not a driver or crew chief media thinks we might not be interested. TC I missed it on Jayski too guess I’ll have to pay more attention from now on.
Jayski: Jeez….excuse TC for the mistake, may have been busy?
Anyway, this is the first I have heard of it. Kind of shocking…
The first I have seen about this at any racing related site, and there sure was a lot of press on BSmith right before the Atlanta race. In fact this year I have seen no mention from any of the mainstream media about the fact that BSmith, Rick Hendrick, and Roger Penske all control dealer networks among the 10 largest auto dealer networks in the USA and whether auto industry problems might affect their racing activities. Thanks.
I really can understand a scenario where Marcus qualified to participate in graduation at UNC, but failed to complete some requirement, and never cured the situation – so it might have appeared and he might have thought he did graduate.