Thread: Changes at NHRA

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5/30/2007
Source: HD Partners Acquisition Corporation

NHRA ASSETS SOLD

HD Partners Acquisition Corporation Announces Proposed Acquisition of NHRA Pro Racing From the National Hot Rod Association

SANTA MONICA, CA--(MARKET WIRE)--May 30, 2007 -- HD Partners Acquisition Corporation ("HD Partners") (AMEX:HDP - News) (HDPU - News) (HDPWT - News) and the National Hot Rod Association ("NHRA"), the world's preeminent drag racing organization, today announced the signing of a definitive agreement under which HD Partners will acquire all of NHRA's professional racing assets, including the NHRA POWERade Drag Racing series, together with a broad set of rights to commercialize the NHRA brand. Upon consummation of the transaction, the acquired assets will be held in a wholly owned subsidiary of HD Partners named NHRA Pro Racing. The NHRA, which will remain a non-profit 501(c)(6) corporation, will retain all its non-professional racing, safety and educational activities and continue to be the sanctioning body for all NHRA racing activities, including the NHRA POWERade Drag Racing Series.

Eddy Hartenstein, Chairman and Chief Executive Officer of HD Partners, said, "We are extremely excited by this truly unique sports media and entertainment opportunity, which provides an ideal platform for our management team to leverage their skills and expertise in creating and marketing compelling entertainment experiences and building strong brands. NHRA President Tom Compton and his team have done a remarkable job positioning the NHRA POWERade Drag Racing series as one of the country's top motorsports events. We see tremendous opportunities in working closely with Tom, who will become President and CEO of NHRA Drag Racing, to take the sport of drag racing and the overall NHRA experience to the next level."

Wally Parks, Founder of the NHRA, said, "Today's announcement represents a monumental milestone in the 56-year history of the NHRA. By virtue of the agreements we have reached with HD Partners, we are positioning the NHRA POWERade Series for great future growth and success, while at the same time are assuring the long term vitality of the NHRA."

Upon closing of the transaction, Eddy Hartenstein will serve as Chairman of NHRA Pro Racing, and Tom Compton will assume the role of President and CEO and be a member of the Board. Robert Meyers, HD Partners' current Chief Financial Officer, will become the Chief Financial Officer of NHRA Pro Racing. Peter Clifford, currently Executive Vice President and General Manager of the NHRA, will become executive director of the NHRA, as well as a consultant to NHRA Pro Racing.

Dallas Gardner, Chairman of the Board of NHRA, said, "This transaction provides the best opportunity for NHRA to fulfill its core mandate to protect, preserve and promote the sport of drag racing. It provides long-term financial stability to the NHRA, an unhindered opportunity for the NHRA POWERade Drag Racing Series to flourish and grow, and an important strategic and long-term relationship between the NHRA and NHRA Pro Racing."

Tom Compton, president of the NHRA, said, "While we have made tremendous strides over the last eight years growing the professional side of the sport, today's announcement is the next logical step in the evolution of the sport of drag racing. This new relationship brings with it access to investment capital, additional expertise, relationships and complimentary skill sets to assist the current management team to drive key initiatives to accelerate the growth of the NHRA POWERade Drag Racing Series."

Under the terms of the agreement announced today, HD Partners will acquire:

-- The NHRA POWERade Drag Racing Series and all professional NHRA drag
racing assets and opportunities, including NHRA's existing television
broadcast agreement with ESPN;

-- An exclusive, worldwide, perpetual license to the NHRA brand for
professional drag racing activities;

-- Broad and extensive rights to commercialize the NHRA brand, including:

- Exclusive professional racing and "Official NHRA" sponsorship
and licensing rights;

- Exclusive media exploitation rights in broadcast television, home
entertainment and new media;

- Exclusive merchandising rights relating to both professional
racing and the stand-alone NHRA brand;

-- Four NHRA-owned race tracks, an additional long-term track lease in
Pomona, California and the NHRA headquarters building in Glendora,
California; and

-- A video and photo archive chronicling the history of drag racing,
which includes more than 20,000 hours of video and film.

The NHRA POWERade Drag Racing Series currently consists of 23 national events held at locations across the country. These multi-day events, which can draw as many as 125,000 spectators over three or more days, provide fans, racers and sponsors a unique ability to interact with each other through access to the racer pit area. In addition, NHRA's Nitro Alley display and interactive area located at each national event provides fans with a race-related entertainment experience, including the ability to get behind the wheel themselves in motorcycle and funny car simulators. All 23 national events are aired exclusively on ESPN2.

The NHRA will receive approximately $121 million in total consideration, consisting of approximately $100 million in cash, approximately $9.5 million in HD Partners common stock and the assumption by HD Partners of approximately $11.5 million in debt and liabilities. In addition to retaining its non-professional racing activities and sanctioning role, the NHRA will continue to offer its membership program and publish its weekly publication National Dragster. The closing of the asset purchase and related transactions is subject to stockholder approval, regulatory clearances and other customary closing conditions.

HD Partners will file a Current Report on Form 8-K with the Securities and Exchange Commission, which more fully describes the transaction.

In connection with the proposed acquisition, Morgan Joseph & Co. Inc. served as financial advisor to HD Partners and Latham and Watkins LLC were HD Partners' legal advisors. Duff & Phelps, LLC provided a fairness opinion to the HD Partners board of directors.

A nationally recognized investment banking firm provided a fairness opinion to the NHRA board of directors in connection with the transaction and Morrison and Foerster were the NHRA's legal advisors.

I don't think that will have much of an effect on the ordinary fan, but I wonder what effect it will have on the pros.

If you listen closely, You can hear taps being played.

(The NHRA, which will remain a non-profit 501(c)(6) corporation, will retain all its non-professional racing, safety and educational activities and continue to be the sanctioning body for all NHRA racing activities, including the NHRA POWERade Drag Racing Series.) COPIED FROM NHRA WEBSITE


How can a non-pofit corporation that is said to be MEMBERED OWNED be sold??????? and to who gets the 121 million???? all of the members of NHRA????
I am a member i guess i will be checking the mail box for my share .

Sid

Yeah, look real close every day

Is this one of the Humpy Wheeler companies????

Pretty much all your membership entitles you to is National Dragster, a rule book and some decals. And maybe some insurance. I don't think the members ever owned NHRA.

Pat

i hear it also

Originally Posted by nitrowarrior

If you listen closely, You can hear taps being played.

It's odd that the NHRA is "non-profit" given that they (1) put on 23 national events that draw quite a few people, (2) sign major sponsors who pay major money to advertise, and (3) return such crummy monetary awards back to the racers. How can they NOT make a profit you ask? One way is to pay huge salaries to a select few at the top, run an inefficient, government-like operation that blows money or accumulate a large slush fund....my guess is the first one; the huge salaries. There is a legal difference between a "non profit corporation" and a "not for profit corporation"

It appears that the professional part of the org is separated from the little-guy amateur part....am I reading it right?

Mike in Tucson

Now we get the 100 dollar tee shirts,get to see corny commercials all over the air waves and also get to pay out the nose to get in the track,The vendors at the track will be hit for more money,the parking goes up,and if its not profitable ,no racing in your area.
Also the little guy will have no chance because of the money it will cost to participate.Basically its going commercial like nascar did or selling out if you like that term better.
Garbage advertising and initiate the if you talk bad about us screwin you ,you get fined or banned.
You know how its went in the past when his type of sale/merger goes down...........probably try to get em on unleaded 93octane too

As of this morning, HD's stock was up to 8.26. Initial price was 8.00. Maybe we all ought to buy some stock and get the money back we'll spend at the track.

The capacity for negativism that some possess astonishes me even with all the years I've had to observe it repeatedly.

Here's some info on HD Partners; http://sec.edgar-online.com/2005/12/...3/Section4.asp

If you take the time to read (and learn) you'll see the management team is made up of the principals who built Direct TV. I would guess they see an opportunity to better promote, and grow, the NHRA brand. Given that they are professionals at building entertainment based companies (at least one) their odds of being right are better than those of say...................oh, some hot rodder who's never built any kind of company. Yeah, they could fail too, that's what the free market allows.

At least they're trying to make something happen instead of just sitting around carping. Of course the carpers have nothing to lose. If these guys are successful in making NHRA more popular, and profitable, they'll be hailed as "greedy" (never mind the risk and effort they expend), and if they fail then the nagativistas can say "I told you so".

My question is still who gets the $$$$$$$$$$ ?
NHRA was sold for 121 mill with 10 mill in bills by my math that is a 111 mill profit for somebody with a non-profit corp.

Originally Posted by 1badmofo

My question is still who gets the $$$$$$$$$$ ?
NHRA was sold for 121 mill with 10 mill in bills by my math that is a 111 mill profit for somebody with a non-profit corp.

The answer to the first is.........shareholders of the corp, you know, those folks who knowingly ponied up risk capital in the beginning or along the way with no guarantee of a gain.

The second is a misunderstanding of what profit is. This was an asset sale, those assets had an initial cost, plus possible improvements over time (such as the four tracks). If there is any money over and above the costs (less any depreciation) that would be a capital gain to the share holders (if there's a distribution) and would be taxed accordingly. If there's a loss, the shareholders eat that too.

Wally Parks, Founder of the NHRA, said,

I thought wally was dead? if so how could he comment?

My only worry is they are gonna cheese it out, Right now there is a select crowd that is involved in drag racing, the mainstream public could care less about it, already with the airing of driving force, your starting to see a rockstar effect , im worried with the new media exposure it will get, that it will lose its cool, and these guys will be household names, which is good for the drivers, but ultimatly bad for the die hard fans, look at nascar. I hope that with the new backing it will get better and not worse!