NASCAR Collectible Market A Bust

Charlotte, NC, Jan 4, 2010 – The dictionary defines a collectible as any item saved for a hobby, display, or as an investment whose value may appreciate. If you are a race fan with a large collection of NASCAR diecast, clothing or other related items, you’d better forget the appreciable investment part of this definition.

Like those who have lost significant personal housing and retirement wealth with the recent economic downturn, NASCAR memorabilia collectors have taken a direct financial hit. Thanks to an overproduced, massive glut of inventory, overinflated prices and now a soft economy, the NASCAR collectible market is a bust.

The latest indication of that fact came last week when Motorsports Authentics – the top producer of NASCAR team diecast and clothing in the sport – filed an extension with the United States Securities and Exchange Commission. Jointly owned by Speedway Motorsports Inc. And International Speedway Corporation (NASCAR’s parent), Motorsports Authentics is on the verge of bankruptcy losing more than $20 million in the final nine months of 2009.

MA’s recent financial hemorrhaging is just the latest round of bad news for the company which was created in 2005 when SMI and ISC spent nearly $250 million to buy the then struggling Team Caliber and Action Performance companies. Since then, Motorsports Authentics has been a huge cash black hole losing $7.878 million in 2006 and $42.975 million in 2007 (not including a massive business write down of $69.499 million that year). The company then turned a small $3.199 million profit in 2008 before the wheels completely came off last year.

Motorsports Authentics indicated in Wednesday’s filing that the company has an additional $23.4 million in guaranteed debt still to be paid – including seven-figure sums to several top NASCAR teams including Roush-Fenway, Dale Earnhardt Jr., Hendrick Motorsports and Stewart-Haas Racing. Much of the company’s financial issues are reportedly tied to large quantities of unsold Earnhardt, Jr. merchandise and a bankruptcy filing could cost SMI alone upwards of $12 million.

The problems at Motorsports Authentics are just the latest in the long troubled NASCAR souvenir industry. When it exploded on the scene in the middle 1980’s, the new NASCAR collectible market was a cash cow for top stars like Dale Earnhardt, Darrell Waltrip and Rusty Wallace – drivers who quickly realized they could make untold millions of dollars off the track hawking everything from toy cars to toilet paper.

The industry was at full throttle by the middle 1990’s as fans scrambled to get the latest special edition diecast car or leather jacket of their favorite driver. Forget the fact that it was insane to pay over $100 for a 1/24-scale metal diecast car or $250 or more for a jacket. NASCAR fans were the most loyal in all sports and they laid down the cash to prove it.

Eventually, the fans got wise. They figured out that a ‘special’ paint job for The Winston (now the Sprint All-Star race) was little more than a guise to sell more diecast. By the end of the 1990’s, the fan with more than 100 various sized Earnhardt or Waltrip diecast was tapped out – both financially, and in the knowledge that no matter how many cars they collected, they’d never have then all.

And that exclusive $250 leather coat? It wasn’t so exclusive when a couple thousand other people the track were wearing one too.

Additionally, greed fueled millions of like-kind, knock-off items of just about every diecast or clothing item produced and were being sold at a fraction of the price at places like K-Mart by 2000. The glut of cheap, overproduced items of all kinds eventually left the souvenir manufacturers and vendors in a red ink sea of unsold product. Companies came and went, most with massive debts in their wake. Motorsports Authentics is just the latest of these.

Meanwhile, the biggest losers have proven to be the fans and collectors who thought they had purchased something special when they laid down a $100 bill for the latest diecast. Today, most of those items are worth as little as 10 percent – or less – of the original purchase price.

If you were thinking about sending your kid to college or retire by liquidating your Dale Earnhardt collection someday, forget it. It’s not going to happen. Even in unopened, pristine condition, that No. 3 diecast you bought in 1990 isn’t going to be worth much even now or even 20 years from now because a gazillion of them were produced. Trust me – I know this firsthand. My wife’s massive Darrell Waltrip collection went for pennies on the dollar last year – or didn’t sell at all. Frankly, it would have been easier to give it away. Don’t believe me? Just take a look at the thousands of unsold NASCAR souvenir items on E-Bay these days.

Of course, none of this will stop a hoard of NASCAR collectible and souvenir vendors from descending on Daytona next month in an attempt to sell fans the latest ‘must-have’ item. Despite its problems with Motorsports Authentics, SMI and ISC are said to be forging forward with several new business plans on the table including one that would emulate NFL Properties, the unified licensing agency of the National Football League.

Whatever the final disposition of Motorsports Authentics, somebody will make a lot money this year selling thousands of souvenir items to fans looking to support their favorite driver. Just remember – whatever you purchase, consider it a souvenir and not a collectible. Wear, play with and use it now because if history has shown us anything, the odds are your NASCAR ‘collectible’ will be overpriced, overproduced to the max, and never be worth more than what you just paid for it.

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