We account for goodwill in accordance with the provisions of FASB Statement No. 142,Goodwill and Other Intangible Assets. Goodwill is not amortized but is subject to an annual (or under certain circumstances more frequent) impairment test based on its estimated fair value. Based on the factors noted above related to the long-lived assets impairment, we completed an assessment of goodwill for potential impairment and determined that there was an impairment loss related to the goodwill balance of $2,487,000 associated with our Midwest operations. As a result of this analysis, we also recorded a non-cash impairment charge of $2,487,000 in the third quarter of 2006 to write-down to zero the carrying value of our goodwill.

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Additionally, in October 2006 we authorized the sale of our corporate aircraft. We entered into an agreement of sale on October 27, 2006 that indicated that the fair value of the aircraft was less than its carrying value of $4,792,000. As a result, we recorded a non-cash impairment charge of $722,000 in the third quarter of 2006. The sale was completed in December 2006 and resulted in an additional loss on disposal of $18,000. Net proceeds from the sale were $4,098,000.

Competition

The Company’sOur racing events compete with other racing events sanctioned by various racing bodies and with other sports and recreational events scheduled on the same dates. Racing events sanctioned by different organizations are often held on the same dates at different tracks. The quality of the competition, type of racing event, caliber of the event, sight lines, ticket pricing, location and customer conveniences, among other things, differentiate the motorsports facilities.

Seasonality

The Company derivesWe derive a substantial portion of itsour total revenues from admissions, television broadcast rights and other event-related revenue attributable to its major motorsports events held from April through October. As a result, the Company’sour business is highly seasonal.

Employees

As of December 31, 2005, the Company2006, we had approximately 125131 full-time employees and 1415 part-time employees. We engage temporary personnel to assist during our motorsports racing season, many of whom are volunteers. We believe that we enjoy a good relationship with our employees.

Available Information

We file annual, quarterly and current reports, information statements and other information with the United States Securities and Exchange Commission (the “SEC”). The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site ishttp://www.sec.gov.

Internet Address

We maintain a website where additional information concerning our business and various upcoming events can be found. The address of our Internet website ishttp://www.dovermotorsports.com. We provide a link on our website, under Investor Relations, to our filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports.

Agreements with NASCAR

Dover International Speedway, Inc. has entered into two Sanction Agreements with NASCAR pursuant to which Speedway will organize and promote two NASCAR NEXTEL Cup Series competitions in 2006. Our business is substantially dependent on these two agreements.

Sanction agreements are entered into with NASCAR on an annual basis. Pursuant to the typical NASCAR sanction agreement, NASCAR grants its sanction to a promoter, such as Dover International Speedway, 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. NASCAR 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. NASCAR 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 NASCAR. 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 NASCAR officials and the live broadcast personnel.

Concurrently with the execution by Dover International Speedway of the two NASCAR NEXTEL Cup Series Sanction Agreements, various other subsidiaries of the registrant entered into sanction agreements with NASCAR for the 2006 season. These and other sanction agreements are made in the ordinary course of our business. The following is a listing of sanction agreements that we have with NASCAR for 2006:

Sanction agreements are entered into with NASCAR on an annual basis. The economic terms of the two sanction agreements between NASCAR and Dover International Speedway relative to its 2006 NASCAR NEXTEL Cup Series competitions are as follows: Total purse and sanction fee to be paid by Dover International Speedway—$6,278,635 for the June event and $5,577,943 for the September event. Estimated live broadcast revenue to be received by Dover International Speedway—$13,419,421 for the June event and $11,114,125 for the September event. Live broadcast revenue figures are based on the assumption that all events on the 2006 NASCAR NEXTEL Cup Series schedule take place and that all promoters will be entitled to their respective percentage allocations as set by NASCAR.

Item 1A.Risk Factors

Disclosure regarding the most significant factors that may adversely affect our business, operations, industry or financial position or our future financial performance is set forth under the section entitled, “Factors That May Affect Operating Results; Forward-Looking Statements,” beginning on page 15.19.

Item 1B.Unresolved Staff Comments

We have not received any written comments that were issued more than 180 days before December 31, 2005,2006, the end of the fiscal year covered by this report, from the SEC staff regarding our periodic or current reports under the Securities Exchange Act of 1934 that remain unresolved.

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Item 2.Properties

Dover International Speedway

Dover International Speedway is located in Dover, Delaware, on approximately 770 acres of land owned by the Company.we own. Use by Gaming of the Company’s 5/8-mileour ⁵/8-mile harness racing track is under an easement granted by the Companyfrom us which does not require the payment of any rent. Under the terms of the easement, Gaming has exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of the following year, together with set up and tear down rights for the two weeks before and after such period. The harness track is located on our property owned by the Company and is on the inside of itsour one-mile motorsports superspeedway. Gaming’s indoor grandstands are used by the Companyus at no charge in connection with itsour motorsports events. The CompanyWe also leases itslease our principal executive office space from Gaming. Various easements and agreements relative to access, utilities and parking have also been entered into between the Companyus and Gaming relative to theirour respective Dover, Delaware facilities.

Gateway International Raceway

Gateway International Raceway is located on approximately 350306 acres of land in Madison, Illinois, five miles from the Gateway Arch in St. Louis. The Company ownsWe own approximately 130149 acres and hashave three long-term leases with purchase options (expiring in 2011, 2025 and 2070) for approximately 200157 additional acres. The Company isWe are also a party to a ten-year lease (with four five-year renewals) for 20 acres for the purpose of providing overflow parking for major events on a neighboring golf course. The Company hasWe have granted a first mortgage lien on all the real property owned and a security interest in all property leased by the Companywe lease at Gateway to Southwestern Illinois Development Authority (“SWIDA”) as security for the repayment of principal and interest on itsour remaining $5.8$4.9 million loan from SWIDA.SWIDA bonds.

Memphis Motorsports Park

Memphis Motorsports Park is located on approximately 350375 acres of land owned by the Companywe own approximately ten miles northeast of downtown Memphis, Tennessee. The facility is encumbered by a first trust deed to First Tennessee Bank for the purpose of securing a stand-by letter of credit issued by First Tennessee Bank to Gateway International Motorsports Corporation to satisfy its debt service reserve fund obligation to SWIDA.

Nashville Superspeedway

Nashville Superspeedway is located on approximately 1,4651,386 acres of land owned by the Companywe own in Wilson County and Rutherford County, Tennessee.

Intellectual Property

We have various registered and common law trademark rights, including, but not limited to, “Dover,” “Dover Motorsports,” “Dover International Speedway,” “Nashville Speedway,” “Nashville Superspeedway,” “Gateway International Raceway,” “Memphis Motorsports Park,” “Gateway Motorsports Club,” “Gateway Guy,” “Monster Mile,” “Velocity,” “Monster Bridge,” “The Most Exciting Seat in Sports!,” “Concrete Monster,” “Miles the Monster,” “Take a Kid to the Races.” We also have limited rights to use the names and logos of NASCAR, various sponsors, drivers and other businesses in connection with promoting our events and certain merchandising programs. Due to the value of our intellectual property rights for promotional purposes, it is our intention to vigorously protect these rights, through litigation, if necessary.

Item 3.Legal Proceedings

The Company isWe are a party to ordinary routine litigation incidental to itsour business. Management does not believe that the resolution of any of these matters is likely to have a serious adverse effect on our results of operations, financial condition or cash flows.

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Item 4.Submission Of Matters To A Vote Of Security Holders

No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders.

Part II

Item 5.Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities

The Company’sOur common stock is listed on the New York Stock Exchange under the ticker symbol “DVD.” The Company’sOur Class A common stock is not publicly traded but is freely convertible on a one-for-one basis into common stock at any time at the option of the holder thereof. As of February 28, 2006,2007, there were 16,411,37716,476,734 shares of common stock and 19,918,22519,764,975 shares of Class A common stock outstanding. There were 1,1711,122 holders of record for common stock and 1513 holders of record for Class A common stock.

The high and low sales prices for the Company’sour common stock on the New York Stock Exchange and the dividends declared per share for the years ended December 31, 20052006 and 20042005 are detailed in the following table:

Our revolving credit agreement allows us to pay dividends in the ordinary course of business consistent with past practices as long as we are not in default under the agreement.

Equity Compensation Plan Information

The Company hasWe have a 1996 stock option plan (the “1996 Plan”) which provided for the grant of stock options to itsour officers and key employees. The Company’sOur Board of Directors has frozenfroze the 1996 Plan and no additional option grants may be made under the 1996 Plan. The Company hasWe have a 2004 stock incentive plan (“the 2004 Plan”) which provides for the grant of up to 1,500,000 shares of common stock to our officers and key employees through stock options and/or awards valued in whole or in part by reference to our common stock, such as restricted stock awards. Refer to NOTE 10 – Stockholders’ Equity of the consolidated financial statements included elsewhere in this Annual Report on Form 10-Kdocument for further discussion.

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Securities authorized for issuance under equity compensation plans at December 31, 20052006 are as follows:

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
		(a)		(b)			(c)
Equity compensation plans approved by security holders		804,596		$	5.66		1,212,043
Equity compensation plans not approved by security holders		—			—		—
Total		804,596		$	5.66		1,212,043

On July 28, 2004, the Company’sour Board of Directors authorized the repurchase of up to 2,000,000 shares of the Company’sour outstanding common stock. The purchases may be made in the open market or in privately negotiated transactions as conditions warrant. The repurchase authorization does not obligate the Companyus to acquire any specific number of shares and may be suspended at any time. As

The following table details our purchases of equity securities for the three months ended December 31, 2005, there have been no repurchases2006 (the average price paid per share does not include nominal brokerage commissions):

Common Stock Performance

The graph below compares the cumulative total return of outstanding common stock pursuant to the authorization.following:

On August 10, 2005,

The peer index we selected consists of the following companies engaged in the motorsports business: Dover Motorsports, Inc., Speedway Motorsports, Inc. and International Speedway Corporation. The graph assumes that the value of the investment in our common stock and upeach index was 100 at December 31, 2001 and all dividends were reinvested. Appropriate adjustment has also been made relative to 2,323,019our spin-off of Dover Downs Gaming & Entertainment, Inc. on April 1, 2002. This spin-off is treated as a special dividend and the value of the shares acquired in the spin-off assumed to have been reinvested. The comparisons in this table are required by the Securities and Exchange Commission and, therefore, are not intended to forecast or be necessarily indicative of its Class Aany future return on our common stock at a fixed price of $7.00 per share. The offer expired on September 8, 2005. The Company purchased 1,706,543 shares of its common stock and 2,311,960 shares of its Class A common stock for $28,562,000, including expenses, in connection with the tender offer.stock.

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Item 6. Selected Financial Data

The following table summarizes certain selected historical financial data and should be read in conjunctiontogether with management’s discussionManagement’s Discussion and analysisAnalysis of financial conditionFinancial Condition and resultsResults of operationsOperations and the consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K.document. The historical financial information presented below is not necessarily indicative of the results of operations or financial position that the Companywe would have reported if itwe had operated exclusive of itsour discontinued gaming operation during the yearsyear ended December 31, 2002 and 2001.2002.

Five Year Selected Financial Data

(a)	The Company We recorded an impairment charge of $743,000 in the fourth quarter of 2003 related to the impairment of long-lived assets.

We recorded impairment charges of $62,131,000 and $2,487,000 in the third quarter of 2006 related to the impairment of long-lived assets and goodwill, respectively.

Effective March 31, 2002, the Company completed the tax-free spin-off of Dover Downs, Inc., its gaming business, by contributing 100% of the issued and outstanding common stock of Dover Downs, Inc. to Gaming, a newly formed wholly owned subsidiary of the Company. On the effective date of the spin-off, the Company distributed all of the capital stock of Gaming to the Company’s stockholders on a pro-rata basis.

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Item 7.Management’s Discussion And Analysis Of Financial Condition And Results Of Operation

The following discussion is based upon and should be read in conjunctiontogether with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.document.

The Company classifies itsWe classify our revenues as admissions, event-related, broadcasting and other. “Admissions” includes ticket sales for all Companyour events. “Event-related” revenue includes amounts received from sponsorship fees; luxury suite rentals; hospitality tent rentals and catering; concessions and souvenir sales and vendor commissions for the right to sell concessions and souvenirs at our facilities; sales of programs; track rentals and other event-related revenues. “Broadcasting” revenue includes rights fees obtained for television and radio broadcasts of events held at the Company’sour speedways and ancillary rights fees. “Other” revenue includes other miscellaneous revenues.

Revenues pertaining to specific events are deferred until the event is held. Concession revenue from concession stand sales and sales of souvenirs are recorded at the time of sale. Revenues and related expenses from barter transactions in which the Company receiveswe receive advertising or other goods or services in exchange for sponsorships of motorsports events are recorded at fair value in accordance with Emerging Issues Task Force (“EITF”) Issue No. 99-17,Accounting for Advertising Barter Transactions. Barter transactions accounted for $1,207,000, $1,438,000 $1,323,000 and $1,311,000$1,323,000 of total revenues for the years ended December 31, 2006, 2005 2004 and 2003,2004, respectively.

Expenses that are not directly related to a specific event are recorded as incurred. Expenses that specifically relate to an event are deferred until the event is held, at which time they are expensed. Our expenses include prize and point fund monies and sanction fees paid to various sanctioning bodies, including NASCAR, labor, advertising, cost of goods sold for merchandise and souvenirs, and other expenses associated with the promotion of our racing events.

Results of Operations

Year Ended December 31, 2006 vs. Year Ended December 31, 2005

Admissions revenue was $35,070,000 in 2006 as compared to $37,195,000 in 2005. We promoted fifteen major events during 2006 and 2005. The $2,125,000 decrease resulted from lower admissions revenue at nine of the fifteen major events we promoted in 2006 as compared to 2005, primarily due to a decrease in attendance attributable to inclement weather.

Event-related revenue was $25,585,000 in 2006 as compared to $27,061,000 in 2005. The $1,476,000 decrease was primarily due to the lack of a title sponsor for our September NEXTEL Cup Series event at Dover International Speedway.

Broadcasting revenue was $30,436,000 in 2006 as compared to $26,267,000 in 2005. The $4,169,000 increase resulted primarily from higher television broadcasting rights related to our NASCAR sanctioned events promoted during 2006. Pursuant to the terms of our sanction agreements, NASCAR retains 10% of the gross broadcast rights fees allocated to each NASCAR NEXTEL Cup Series or NASCAR Busch Series event as a component of its sanction fees and remits the remaining 90% to the event promoter, which we record as revenue.

Other revenue was $183,000 in 2006 as compared to $476,000 in 2005. The decrease resulted from lower revenues related to the rental of our aircraft and from the rental of our Gateway facility for parking area.

Operating and marketing expenses were $54,178,000 in 2006 as compared to $52,793,000 in 2005. The $1,385,000 increase primarily related to higher operating and marketing expenses at our major motorsports events, most notably an increase in contractually specified sanction fees and purse expenses.

During the third quarter of 2006, we reviewed the long-lived assets of each of our three Midwest facilities for impairment. Based on the results of this analysis, we recorded non-cash impairment charges of $16,170,000, $7,882,000 and $37,357,000 to write-down the carrying value of long-lived assets at our Nashville, Memphis and

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Gateway facilities, respectively, to fair value. Based on the factors related to the long-lived assets impairment, we completed an assessment of goodwill for potential impairment and determined that there was an impairment loss related to the goodwill balance of $2,487,000 associated with the Midwest operations. As a result of this analysis, we recorded a non-cash impairment charge of $2,487,000 to write-down to zero the carrying value of our goodwill. Additionally, we entered into an agreement of sale on October 27, 2006 that indicated that the fair value of our corporate aircraft was less than its carrying value of $4,792,000. As a result, we recorded a non-cash impairment charge of $722,000 in the third quarter of 2006 to write-down the carrying amount of our corporate aircraft to fair value.

General and administrative expenses were $12,626,000 in 2006 as compared to $13,697,000 in 2005. The $1,071,000 decrease resulted primarily from lower wages and benefits costs and legal expenses. Partially offsetting these decreases was an increase in stock-based compensation expense from the adoption of FASB Statement No. 123R effective January 1, 2006.

Depreciation and amortization expense was $8,726,000 in 2006 as compared to $9,433,000 in 2005. The decrease resulted primarily from a reduction in our depreciable asset base from the impairment charge discussed above.

Net interest expense was $3,963,000 in 2006 as compared to $3,515,000 in 2005. The increase resulted primarily from higher average outstanding borrowings on our credit facilities during 2006 as compared to 2005 used to primarily fund our self tender in the third quarter of 2005.

The loss from continuing operations before income tax benefit was $52,837,000 in 2006 as compared to earnings from continuing operations before income tax expense of $8,387,000 in 2005. The 2006 loss resulted from the aforementioned non-cash impairment charges of $64,618,000. During 2005, we redeemed $11,908,000 of our outstanding SWIDA bonds and recorded a loss on extinguishment of debt of $3,174,000. We believe that excluding the impact of these items will enhance comparative analysis of our operating results. The following table reconciles and compares results reported in accordance with Generally Accepted Accounting Principles (“GAAP”) for 2006 and 2005 with results excluding the non-cash impairment charges and the impact of the loss on extinguishment of debt:

Excluding the 2006 non-cash impairment charges and the 2005 loss on extinguishment of debt, our adjusted earnings from continuing operations before income taxes increased $220,000 to $11,781,000 in 2006 as compared to $11,561,000 in 2005. Adjusted earnings from continuing operations decreased $99,000 to $5,650,000 in 2006 as compared to $5,749,000 in 2005. The decrease was due mainly to a change in our effective income tax rate, as discussed below, partially offset by a decrease in general and administrative and depreciation and amortization expenses.

Our effective income tax rates related to continuing operations for 2006 and 2005 were 33.1% and 52.6%, respectively. The decrease in the effective income tax rate from the comparable period in the prior year is due primarily to the fact that the recording of the non-cash impairment charges during the third quarter of 2006 resulted in minimal state income tax benefit based upon the valuation allowances that we have recorded in connection with state net operating loss carryforwards.

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Year Ended December 31, 2005 vs. Year Ended December 31, 2004

Admissions revenue was $37,195,000 in 2005 as compared to $34,624,000 in 2004. The CompanyWe promoted fifteen major events during 2005 and 2004. The $2,571,000 increase resulted from higher admissions revenue at twelve of the fifteen major events we promoted by the Company in 2005 as compared to 2004, primarily due to an increase in attendance.

Event-related revenue was $27,061,000 in 2005 as compared to $27,263,000 in 2004. The $202,000 decrease was primarily due to a decrease in hospitality revenue at most of the NASCAR sanctioned events we promoted by the Company in 2005 as compared to 2004 because fewer corporate customers purchased hospitality packages in 2005.

Broadcasting revenue was $26,267,000 in 2005 as compared to $22,220,000 in 2004. The increase resulted from higher television broadcasting rights related to the Company’sour NASCAR sanctioned events promoted during 2005. Pursuant to the terms of the Company’sour sanction agreements, NASCAR retains 10% of the gross broadcast rights fees allocated to each NASCAR NEXTEL Cup Series or NASCAR Busch Series event as a component of its sanction fees and remits the remaining 90% to the event promoter, which the Company recordswe record as revenue.

Other revenue was $476,000 in 2005 as compared to $81,000 in 2004. The increase resulted from revenues related to the rental of the Company’sour aircraft and from the rental of itsour Gateway facility for parking area.

Operating and marketing expenses increased by $2,629,000, or 5.2%, in 2005 as compared to 2004. The increase primarily related to higher operating and marketing expenses at the Company’sour major motorsports events, most notably a $1,456,000 increase in contractually specified sanction fees and purse expenses and a $390,000 increase in advertising and promotion expenses due to an increase in the amount of advertising utilized by the Company.our advertising.

General and administrative expenses increased $112,000 from $13,585,000 in 2004 to $13,697,000 in 2005. The increase was primarily due to higher wages and fringe benefit costs (including stock-based compensation) and pension costs. General and administrative expenses in 2004 included $267,000 for a legal claim.

Depreciation and amortization expense increased $235,000 from $9,198,000 in 2004 to $9,433,000 in 2005, primarily due to assets being placed in service related to the installation of Steel and Foam Energy Reduction System (“SAFER”) barriers at all of our facilities.

Net interest expense was $3,515,000 in 2005 as compared to $3,427,000 in 2004. In May 2004, the Companywe received $481,000 of interest from the Internal Revenue Service related to an income tax refund for prior years. During 2005, the Company’s average outstanding borrowings on itsour credit facilities decreased and itwe reversed $128,000 of interest that was accrued in 2004 related to a judgment that was settled in 2005 for less than originally anticipated.

On October 6, 2005, the Company’s wholly owned subsidiary, Midwest Racing redeemed $11,908,000 of the outstanding SWIDA loanbonds for $14,587,000 (including a $2,676,000 premium to the bondholders), plus accrued interest. The CompanyWe wrote-off $495,000 of deferred bond costs as a result of the redemption. The redemption resulted in a loss on extinguishment of debt of $3,174,000. The Company believesWe believe that excluding the impact of this item will enhance comparative analysis of itsour operating results. The following table reconciles and compares results reported in accordance with Generally Accepted Accounting Principles (“GAAP”)GAAP for 2005 and 2004 with results excluding the impact of the loss on extinguishment of debt:

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Excluding the loss on extinguishment of debt, adjusted earnings from continuing operations before income taxes increased $3,747,000, or 48.0%, to $11,561,000 in 2005 as compared to $7,814,000 in 2004, and adjusted earnings from continuing operations increased $1,982,000, or 52.6%, to $5,749,000 in 2005 as compared to $3,767,000 in 2004. The increase was due mainly to an improvement in operating results for twelve of the fifteen major events we promoted by the Company during 2005, partially offset by the increase in general and administrative expense and depreciation expense.

The Company’sOur effective income tax rates related to continuing operations remained relatively similar for 2005 and 2004 at 52.6% and 51.8%, respectively.

Year Ended December 31, 2004 vs. Year Ended December 31, 2003

Admissions revenue was $34,624,000 in 2004 as compared to $33,273,000 in 2003. The $1,351,000 increase resulted from higher admissions revenue at thirteen of the fifteen major events promoted by the Company in 2004 as compared to 2003, primarily from an increase in attendance.

Event-related revenue was $27,263,000 in 2004 as compared to $24,971,000 in 2003. The $2,292,000 increase resulted from increases in event-related revenue at thirteen of the fifteen major events promoted by the Company in 2004, primarily from corporate sponsorships, hospitality tent rentals and catering and concessions sales.

Broadcasting revenue was $22,220,000 in 2004 as compared to $18,250,000 in 2003. The $3,970,000 increase resulted primarily from an increase in television broadcasting rights related to the Company’s June and September NASCAR event weekends at Dover International Speedway.

Other revenue was $81,000 in 2004 as compared to $1,050,000 in 2003. Other revenue for 2003 included $900,000 related to the settlement of a contractual dispute with a vendor.

Operating and marketing expenses increased by $1,987,000, primarily as a result of an increase in sanction fees and purse expenses at all of the Company’s NASCAR-sanctioned events promoted in 2004.

General and administrative expenses increased by $1,486,000 to $13,585,000 in 2004 from $12,099,000 in 2003. Higher wages and fringe benefits, and legal, audit and consulting expenses related to the Company’s compliance with the Sarbanes-Oxley Act of 2002 represented the largest increases in 2004. Additionally, general and administrative expenses for 2004 included a $267,000 judgment, which the Company appealed, relating to a subcontractor’s claim that arose during the construction of the Company’s Nashville facility in 2000. The year ended December 31, 2003 included $355,000 related to the settlement of a legal claim at Gateway International Raceway.

Depreciation and amortization expense remained similar between 2004 and 2003 at $9,198,000 and $9,140,000, respectively.

Net interest expense decreased by $1,661,000, primarily as a result of the decrease in the outstanding borrowings on the Company’s credit facility in 2004 as compared to 2003 and the receipt in May 2004 of $481,000 of interest from the Internal Revenue Service related to an income tax refund for prior years. Interest expense in 2004 included $115,000 for interest related to the judgment discussed above.

The Company reported earnings from continuing operations before income taxes of $7,814,000 in 2004 as compared to $2,297,000 in 2003. The $5,517,000 increase was due mainly to an improvement in operating results for fourteen of the fifteen major events promoted by the Company in 2004 and the decrease in net interest expense, partially offset by the $900,000 settlement of a contractor dispute that increased earnings in 2003 and the increase in general and administrative expenses.

The Company’s effective income tax rates for 2004 and 2003 were 51.8% and 99.0%, respectively. In 2003, the rate was affected by state income tax expense attributable to valuation allowances established on state net operating losses.

Liquidity and Capital Resources

Our operations are seasonal in nature with a majority of our motorsports events occurring during the second and third quarters. However, our cash flows from operating activities are more evenly spread throughout the year, primarily due to the impact of advance ticket sales and other event-related cash receipts, such as sponsorship and luxury suite rentals. The non-cash impairment charges we recorded in the third quarter of 2006 had no impact on our liquidity for the year ended December 31, 2006. As discussed in NOTE 2 – Impairment Charges of the consolidated financial statements included elsewhere in this document, the cost approach utilized for the valuation of our Midwest facilities long-lived assets assumed that these three facilities will continue to operate as racetracks and that is our present intention. These facilities have generated negative cash flows for several years and we expect that these negative cash flows will continue at a declining rate as we monitor industry and Busch series changes made by NASCAR while continuing to reduce operating expenses and increase revenues.

Net cash provided by operating activities of continuing operations was $17,525,000 in 2006 as compared to $18,854,000 in 2005 as compared toand $17,579,000 in 2004. The increasedecrease in 2006 was primarily due to an increase in earnings from continuing operations from $3,767,000 in 2004 to $3,975,000 in 2005, and the timing of invoicing to and receipts from customers.customers and the timing of invoicing from and payments to vendors.

Net cash used in investing activities of continuing operations was $2,717,000 in 2006 as compared to net cash provided by investing activities of continuing operations wasof $6,828,000 in 2005 as compared to net cash used in investing activities of $4,964,000 in 2004.2005. Capital expenditures were $6,331,000 in 2006, down from $8,675,000 in 2005. The 2006 additions related primarily to the construction of new luxury skybox suites and the renovation of other fan amenities at our Dover facility. The 2005 up from $4,826,000 in 2004, andadditions related primarily to the purchase of property adjacent to our Dover facility for $6,000,000 and the installation of SAFER barriers at all of our tracks. Proceeds from the Company’s tracks.sale of our corporate aircraft, net of transaction costs, were $4,098,000 in 2006. Proceeds from the sale of assets of our Midwest Racing subsidiary, net of transaction costs, were $15,132,000 in 2005.

Net cash used in financing activities of continuing operations was $23,215,000$15,319,000 in 20052006 as compared to $18,411,000$23,215,000 in 2004.2005. We made net repayments on our outstanding line of credit of $10,100,000 in 2006 as compared to net borrowings of $22,100,000 in 2005. The increase in net cash used in financing activities of continuing operationsborrowings in 2005 was primarily due toalong with the use of proceeds from the sale of assets of our Midwest Racing subsidiary were used primarily to repay outstandingfund stock repurchases under our self tender of $28,562,000 and to redeem debt and the repurchase of 4,018,503 shares of the Company’s outstanding common and Class A common stock for $28,562,000, including expenses, during 2005. On August 10, 2005, the Company commenced a tender offer to purchase up to 1,706,543 shares of its common stock and up to 2,323,019 shares of its Class A common stock at a fixed price of $7.00 per share. The offer expired on September 8, 2005. The Company purchased 1,706,543 shares of its common stock and 2,311,960 shares of its Class A common stock$14,587,000. We paid $2,179,000 in connection with the tender offer. The Company paid $1,957,000 in regular quarterly cash dividends in 20052006 as compared to $1,605,000$1,957,000 in 2004.2005. In 2006, we used $1,954,000 to purchase and retire 370,236 shares of our outstanding common stock.

On January 25, 2006, the Company’s24, 2007, our Board of Directors declared a quarterly cash dividend on both classes of common stock of $0.015 per share. The dividend was paidis payable on March 10, 20062007 to shareholders of record at the close of business on February 10, 2006.2007.

At December 31, 2005, the Company2006, Dover Motorsports, Inc. and all of its wholly owned subsidiaries, as co-borrowers, are parties to an $80,000,000a $73,000,000 unsecured revolving credit agreement, as amended effective October 12, 2005,November 8, 2006, with a bank group that expires July 1, 2008. Provisions of the credit agreement adjust the commitment to $73,000,000 on July 1, 2006 andit to $65,000,000 on July 1, 2007. The facility provides for seasonal funding needs, capital improvements, letter of credit requirements and other general

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corporate purposes. Interest is based, at the Company’sour option, upon LIBOR plus a margin that varies between 125 and 200 basis points depending on the ratio of funded debt to earnings before interest, taxes, depreciation and amortization (the “leverage ratio”) or the base rate (the greater of the prime rate or the federal funds rate plus 0.5%) plus a margin that varies between -50 and +25 basis points depending on the leverage ratio.ratio, except that the base rate option is not available for the portion of indebtedness equal to the notional amount under the interest rate swap agreement described below. The terms of the credit facility contain certain covenants including minimum tangible net worth, fixed charge coverage and maximum funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”). The credit facility also provides that aif we default by the Company or any of its wholly owned subsidiaries under any other loan agreement, that would constitutebe a default under this credit facility. At December 31, 2005, the Company was2006, we were in compliance with the terms of the facility.

Material adverse changes in the Company’sour results of operations could impact itsour ability to maintain financial ratios necessary to satisfy these requirements. There was $49,100,000$39,000,000 outstanding under the facility at December 31, 2005,2006, at a weighted average interest rate of 6.2%6.5%. After consideration of stand-by letters of credit outstanding, borrowings of $6,498,000$10,106,000 were available pursuant to the facility at December 31, 2005.2006. Based on operating results to date and projected future results, the Company is expectedwe expect to be in compliance with all of the covenants for all measurement periods over the next twelve months.

Industry-wide live broadcast revenue will be approximately 12% lower in 2007 than it was in 2006. Based on our 2007 sanction agreements with NASCAR, our 2007 live broadcast revenues will be approximately $3,500,000 lower than in 2006, consequently impacting our liquidity in the form of lower cash receipts. This will be partially offset by lower purses payable to NASCAR, approximately $500,000 lower in 2007 than in 2006.

Effective October 21, 2005, the Companywe entered into an interest rate swap agreement that effectively convertsconverted $37,500,000 of itsour variable-rate debt to a fixed-rate basis, thereby hedging against the impact of potential interest rate changes. The notional amount of the swap agreement decreasesdecreased to $30,000,000 on November 1, 2006, and decreases to $20,000,000 on November 1, 2007 and to $10,000,000 on November 1, 2008. The agreement terminates on November 1, 2009. Under this agreement, the Company willwe pay a fixed interest rate of 4.74%. In return, the issuing lender will refundrefunds to the Companyus the variable-rate interest paid to the bank group under itsour revolving credit agreement on the same notional principal amount, excluding the margin that varies between 125 and 200 basis points depending on the leverage ratio.

Cash provided by operating activities, less capital expenditures and maintenance of a dividend, if any, is expected to generate between $15,000,000-$2,000,000-$17,000,0004,000,000 in excess cash in 2006.2007. Based on current business conditions, the Company expectswe expect to makespend approximately $9,000,000-$11,000,000 on capital expenditures of approximately $6,000,000 during 2006.2007. These expenditures primarily relate to the construction of new luxury skybox suites and renovations to existing skybox suites at theour Dover facility and other fan amenities. On May 24, 2006, we announced plans for a five-year capital improvement project, referred to as the “Monster Makeover,” that will provide new offerings and upgraded amenities for fans, competitors and the media. The project is expected to take up to five years to complete at an estimated total cost of approximately $25,000,000, of which $3,900,000 was spent as of December 31, 2006. Additionally, the Company expectswe expect to contribute $1,000,000 to itsour pension plans in 2006.2007. We expect continued cash flows from operating activities and funds available from our credit agreement to provide for our working capital needs and capital spending requirements at least through the next twelve months, as well as any cash dividends our Board of Directors may declare, and also provide for our long-term liquidity.

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Contractual Obligations

At December 31, 2005, the Company2006, we had the following contractual obligations and other commercial commitments:

The future interest payments on our revolving credit agreement were estimated using the current outstanding principal as of December 31, 2006 and related interest rates.

Although we have no required minimum contribution related to our pension plans for 2007, we expect to contribute approximately $1,000,000 into the plans.

We have an $80,000,000a $73,000,000 revolving line of credit agreement. At December 31, 2005, $49,100,0002006, $39,000,000 was outstanding under the facility. After consideration of stand-by letters of credit outstanding, borrowings of $6,498,000$10,106,000 were available pursuant to the facility at December 31, 2005.2006.

In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued $25,900,000 in Variable Rate Tax Exempt Infrastructure Revenue Bonds, Series 1999, to acquire, construct and develop certain public infrastructure improvements which benefit the operation of Nashville Superspeedway, of which $24,000,000$23,500,000 was outstanding at December 31, 2005.2006. Principal payments range from $500,000 in September 2006 to $1,600,000 in 2029 and are payable solely from sales taxes and incremental property taxes generated from the facility. These bonds are direct obligations of the Sports Authority and are therefore not recorded on the Company’sour consolidated balance sheet. If the sales taxes and incremental property taxes are insufficient for the payment of principal and interest on the bonds, the Companywe would become responsible for the difference. In the event the Company waswe were unable to make the payments, they would be made pursuant to a $24,402,000$23,894,000 irrevocable direct-pay letter of credit issued by the existingour bank group.

The Company believesWe believe that the sales taxes and incremental property taxes generated from the facility will continue to satisfy the necessary debt service requirements of the bonds. As of December 31, 2006 and 2005, $779,000 and 2004, $734,000, and $936,000, respectively, was available in the sales and incremental property tax fund maintained by the Sports Authority to pay the remaining principal and interest due under the bonds. During the year ended December 31, 2005, $1,538,000 was2006, we paid by the Company$1,361,000 into the sales and incremental property tax fund and $1,740,000$1,316,000 was deducted from the fund for principal and interest payments and to reimburse the Company for fees associated with maintaining the letter of credit.payments. If the debt service is not satisfied from the sales and incremental property taxes generated from the facility, the bonds would become a liability of the Company.our liability. If we fail to maintain the letter of credit that secures the bonds or we allow an uncured event of default to exist under our reimbursement agreement relative to the letter of credit, the bonds would be immediately redeemable.

In 1996, the Company’s wholly owned subsidiary, Midwest Racing entered into an agreement with SWIDA to receive the proceeds from the “Taxable Sports Facility Revenue Bonds, Series 1996 (Gateway International Motorsports Corporation Project),” a Municipal Bond Offering, in the aggregate principal amount of $21,500,000, of which $5,778,000$4,906,000 was outstanding at December 31, 2005.2006. SWIDA loaned all of the proceeds from the Municipal Bond Offering to Midwest Racing for the purpose of the redevelopment, construction and expansion of Gateway, and the proceeds of the SWIDA loanbonds were irrevocably committed to complete construction of Gateway, to fund interest, to create a debt service reserve fund and to pay for the cost of issuance of the bonds. The repayment terms and debt service reserve requirements of the bonds issued in the Municipal Bond Offering correspond to the terms of the SWIDA loan.bonds. The bonds are being amortized through February 2014.

The Company has

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We have established certain restricted cash funds to meet debt service as required by the SWIDA loan,bonds, which are held by the trustee (BNY Trust Company of Missouri). At December 31, 2005, $3,200,0002006, $3,684,000 of the Company’sour cash balance was restricted by the SWIDA loanbonds and is appropriately classified as a non-current asset in the accompanyingour consolidated balance sheet. The SWIDA loan isbonds are secured by a first mortgage lien on all the real property owned and a security interest in all property leased by Gateway. Also, the SWIDA loan isbonds are unconditionally guaranteed by Midwest Racing. The SWIDA loan bearsbonds bear interest at varying rates ranging from 8.75% to 9.25% with an effective rate of approximately 9%. Interest expense related to the SWIDA loanbonds was $456,000, $1,447,000 $1,696,000 and $1,761,000$1,696,000 for the years ended December 31, 2006, 2005 2004 and 2003,2004, respectively. On October 6, 2005, Midwest Racing redeemed

$11,908,000 $11,908,000 of the outstanding SWIDA loanbonds for $14,587,000 (including a $2,676,000 premium to the bondholders), plus accrued interest. The CompanyWe wrote-off $495,000 of deferred bond costs as a result of the redemption. The redemption resulted in a loss on extinguishment of debt of $3,174,000. The loan is being amortized through February 2014. AAn existing stand-by letter of credit forwas reduced to $1,467,000 as a result of the redemption, which is secured by a trust deed on the Company’sour facilities in Memphis, Tennessee, also was obtainedand is available to satisfy debt service reserve fund obligations. In addition, a portion of the property taxes to be paid by Gateway (if any) to the City of Madison Tax Incremental Fund have been pledged to the annual retirement of debt and payment of interest.

Related Party Transactions

See NOTE 12 – Related Party Transactions of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a full description of related party transactions.document.

Critical Accounting Policies

The accounting policies described below are those the Company considerswe consider critical in preparing itsour consolidated financial statements. These policies include significant estimates made by management using information available at the time the estimates are made. However, asAs described below, these estimates could change materially if different information or assumptions were used.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. The Company recordsWe record a valuation allowance to reduce itsour deferred tax assets to the amount that is more likely than not to be realized. Currently, the Company maintains aAs of December 31, 2006, our valuation allowance was $6,889,000, which increased by $1,350,000$3,168,000 in 2005 to $3,721,000,2006, on deferred tax assets related to certain state net operating loss carry-forwards. The Company hasWe have considered ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. In the event the Companywe were to determine that itwe would be able to realize all or a portion of these deferred tax assets, an adjustment to the valuation allowance would increase earnings in the period such determination was made. Likewise, should the Companywe determine that itwe would not be able to realize all or a portion of itsour remaining deferred tax assets in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination was made.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided for financial reporting purposes using the straight-line method over estimated useful lives ranging from 5 to 10 years for furniture, fixtures and equipment and up to 40 years for facilities. These estimates require assumptions that are believed to be reasonable. The Company performsWe perform reviews for impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would beis measured as the amount by which the carrying amount of the asset exceeds its fair value. Generally, fair value will beis determined using valuation techniques such as the present value of future cash flows.flows and the use of outside independent valuations, as appropriate. See NOTE 2 – Impairment Charges of the consolidated financial statements included elsewhere in this document for further discussion.

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Recent Accounting Pronouncements

See NOTE 34 — Summary of Significant Accounting Policies of the consolidated financial statements included elsewhere in this Annual Report on Form 10-Kdocument for a full description of recent accounting pronouncements including the respective expected dates of adoption and effects on results of operations, financial condition and financial condition.cash flows.

Factors That May Affect Operating Results; Forward-Looking Statements

In addition to historical information, this Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to our financial condition, profitability, liquidity, resources, business outlook, proposed acquisitions, market forces, corporate strategies, consumer preferences, contractual commitments, legal matters, capital requirements and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. To comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ substantially from the anticipated results or other expectations expressed in our forward-looking statements. When words and expressions such as: “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “could,” “should,” “might,” “likely,” “enable” or similar words or expressions are used in this document, as well as statements containing phrases such as “in our view,” “there can be no assurance,” “although no assurance can be given” or “there is no way to anticipate with certainty,” forward-looking statements are being made.

Various risks and uncertainties may affect the operation, performance, development and results of our business and could cause future outcomes to differ materially from those set forth in our forward-looking statements, including the following factors:

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We undertake no obligation to publicly update or revise any forward-looking statements as a result of future developments, events or conditions. New risk factors emerge from time to time and it is not possible for us to

predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ significantly from those forecast in any forward-looking statements. Given these risks and uncertainties, stockholders should not overly rely or attach undue weight to our forward-looking statements as an indication of our actual future results.

Our Relationships With and the Success of Various Sanctioning Bodies Is Vital To Our Success In Motorsports

Our continued success in motorsports is dependent upon the success of various governing bodies of motorsports that sanction national racing events and our ability to secure favorable contracts with and maintain a good working relationship with these sanctioning bodies, including NASCAR, IRL and NHRA. Sanctioning bodies regularly issue and award sanctioned events and their issuance depends, in large part, on maintaining good working relationships with the sanctioning bodies. Many events are sanctioned on an annual basis with no contractual obligation to renew, including our agreements with NASCAR. By awarding a sanctioned event or a series of sanctioned events, the sanctioning bodies do not warrant, nor are they responsible for, the financial success of any sanctioned event. Our inabilitysuccess is directly tied to our ability to negotiate favorable terms to our sanction agreements, including the amount of the sanction fee and purse, and our ability to continue to derive economic benefits from such agreements, such as our share of live broadcast revenues.

Our ability to obtain additional sanctioned events in the future and to maintainnegotiate favorable terms to our sanction agreements at current levels would likely result in lower than anticipated revenues from admissions, broadcast rights, sponsorships, hospitality, concessions and merchandise, which could have a material adverse effect on our business, financial condition and results of operations. A substantial portion of our revenues is derived from the broadcast revenues received through the arrangements that NASCAR has made with various broadcast media, many of which expire in 2014. The success of a particular sanctioning body in attracting drivers and teams, signing series sponsors and negotiating favorable television and/or radio broadcast rights is dependent on many factors which are largely outside of our control. As our success depends on the terms of our sanction agreements and the success of each event or series that we are promoting, a material change in the terms of a sanction agreement or a material adverse effect on a sanctioning body, such as the loss or defection of top drivers, the loss of significant series sponsors, or the failure to obtain favorable broadcast coverage or to properly advertise the event or series could result in a reduction in our revenues from live broadcast coverage, admissions, luxury suite rentals, sponsorships, hospitality, concessions and merchandise, which could have a material adverse effect on our business, financial condition and results of operations.

We Rely On Sponsorship Contracts To Generate Revenues

We receive a substantial portion of our annual revenues from sponsorship agreements, including the sponsorship of our various events and our permanent venues, such as “title,” “official product” and “promotional partner” sponsorships, billboards, signage and skyboxes. Loss of our existing title sponsors or other major sponsorship agreements or failure to secure such sponsorship agreements in the future could have a material adverse effect on our business, financial condition and results of operations.

Of the fifteen major events we have scheduled for 2006, we currently have secured title sponsors for ten events. We are in negotiations with various potential sponsors for theseour 2007 events, including one oftitle sponsors for our two NASCAR NEXTEL Cup Series events and two NASCAR Busch Series events at Dover International Speedway.

Our Motorsports Events Face Intense Competition For Attendance, Television Viewership And Sponsorship

We compete with other auto speedways for the patronage of motor racing spectators as well as for promotions and sponsorships. Moreover, racing events sanctioned by different organizations are often held on the same dates at different tracks. The quality of the competition, type of racing event, caliber of the event, sight lines, ticket pricing, location and customer conveniences, among other things, distinguish the motorsports facilities. In addition, all of our events compete with other sports and recreational events scheduled on the same dates. As a result, our revenues and operations are affected not only by our ability to compete in the motorsports promotion market, but also by the availability of alternative spectator sports events, forms of entertainment and changing consumer preferences.

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The Sales Tax And Property Tax Revenues To Service The Revenue Bonds For Infrastructure Improvements At Nashville May Be Inadequate

In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued $25,900,000 in revenue bonds to build local infrastructure improvements which benefit the operation of Nashville Superspeedway, of which $24,000,000$23,500,000 was outstanding on December 31, 2005.2006. Debt service on the bonds is payable solely from sales taxes and incremental property taxes generated from the facility. As of December 31, 2006 and 2005, $779,000 and 2004, $734,000, and

$936,000, respectively, was available in the sales and incremental property tax fund maintained by the Sports Authority to pay the remaining principal and interest due under the bonds. During the year ended December 31, 2005, $1,538,000 was2006, we paid by the Company$1,361,000 into the sales and incremental property tax fund and $1,740,000$1,316,000 was deducted from the fund for principal and interest payments and to reimburse the Company for fees associated with maintaining the letter of credit.payments. These bonds are direct obligations of the Sports Authority and are therefore not recorded on our consolidated balance sheet. In the event the sales taxes and incremental property taxes are insufficient to cover the payment of principal and interest on the bonds, the Companywe would become responsible for the difference. In the event the Company waswe were unable to make the payments, they would be made under a $24,402,000$23,894,000 irrevocable direct-pay letter of credit issued by the existingour bank group pursuant to a reimbursement and security agreement under which we have agreedgroup. We would be responsible to reimburse the banks for any drawings made under the letter of credit. Such an event could have a material adverse effect on our business, financial condition and results of operations.

The Seasonality Of Our Motorsports Events Increases The Variability Of Quarterly Earnings

Our business has been, and is expected to remain, seasonal given that it depends on our outdoor events for a substantial portion of revenues. We derive a substantial portion of our motorsports revenues from admissions and event-related revenue attributable to six NASCAR-sanctioned events at Dover, Delaware which are currently held in June and September. This has been offset to some degree by our other motorsports events, but quarterly earnings will vary.

Our Insurance May Not Be Adequate To Cover Catastrophic Incidents

We maintain insurance policies that provide coverage within limits that are sufficient, in the opinion of management, to protect us from material financial loss incurred in the ordinary course of business. We also purchase special event insurance for motorsports events to protect against race-related liability. However, there can be no assurance that this insurance will be adequate at all times and in all circumstances. If we are held liable for damages beyond the scope of our insurance coverage, including punitive damages, our business, financial condition and results of operations could be materially and adversely affected.

Bad Weather Can Have An Adverse Financial Impact On Our Motorsports Events

We sponsor and promote outdoor motorsports events. Weather conditions affect sales of tickets, concessions and souvenirs, among other things at these events. Although we sell many tickets well in advance of the outdoor events and these tickets are issued on a non-refundable basis, poor weather conditions may adversely affect additional ticket sales and concessions and souvenir sales, which could have an adverse effect on our business, financial condition and results of operations.

We do not currently maintain weather-related insurance for major events. Due to the importance of clear visibility and safe driving conditions to motorsports racing events, outdoor racing events may be significantly affected by weather patterns and seasonal weather changes. Any unanticipated weather changes could impact our ability to stage events. This could have a material adverse effect on our business, financial condition and results of operations.

Postponement And/Or Cancellation Of Major Motorsports Events Could Adversely Affect Us

If one of our events is postponed because of weather or other reasons such as, for example, the general postponement of all major sporting events in this country following the September 11, 2001 terrorism attacks, we

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could incur increased expenses associated with conducting the rescheduled event, as well as possible decreased revenues from tickets, food, drinks and merchandise at the rescheduled event. If such an event is cancelled, we could incur the expenses associated with preparing to conduct the event as well as losing the revenues, including live broadcast revenues associated with the event.

If a cancelled event is part of the NASCAR NEXTEL Cup Series or NASCAR Busch Series, we could experience a reduction in the amount of money received from television revenues for all of our NASCAR-sanctioned events in the series that experienced the cancellation. This would occur if, as a result of the cancellation, and without regard to whether the cancelled event was scheduled for one of our facilities, NASCAR experienced a reduction in broadcast revenues greater than the amount scheduled to be paid to the promoter of the cancelled event.

Due to Our Concentrated Stock Ownership, Stockholders May Have No Effective Voice In Our Management

We have elected to be treated as a “controlled corporation” as defined by New York Stock Exchange Rule 303A. We are a controlled corporation because a single person, Henry B. Tippie, the Chairman of our Board of Directors, controls in excess of fifty percent of our voting power. This means that he has the ability to determine the outcome of the election of directors at our annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of our voting power. Such a concentration of voting power could also have the effect of delaying or preventing a third party from acquiring us at a premium. In addition, as a controlled corporation, we are not required to comply with certain New York Stock Exchange rules.

Item 7A.Quantitative And Qualitative Disclosures About Market Risk

The Company isWe are exposed to financial market risk resulting from changes in interest rates. The Company doesWe do not engage in speculative or leveraged transactions, nor hold or issue financial instruments for trading purposes.

At December 31, 2005,2006, there was $49,100,000$39,000,000 outstanding under the Company’sour revolving credit agreement. The credit agreement bears interest at the Company’sour option, upon LIBOR plus a margin that varies between 125 and 200 basis points depending on the leverage ratio or the base rate (the greater of the prime rate or the federal funds rate plus 0.5%) plus a margin that varies between -50 and +25 basis points depending on the leverage ratio. Therefore, the Company iswe are subject to interest rate risk on the variable component of the interest rate. Historically, the Companywe managed itsour mix of fixed and variable-rate debt by structuring the terms of itsour debt agreements. Effective October 21, 2005, the Companywe entered into a $37,500,000 interest rate swap agreement effectively converting this portion of the outstanding variable-rate borrowings under the revolving credit agreement to fixed-rate securities, thereby hedging against the impact of potential interest rate changes. Under this agreement, the Company willwe pay a fixed interest rate of 4.74%. In return, the issuing lender will refundrefunds to the Companyus the variable-rate interest paid to the bank group under itsour revolving credit agreement on the same notional principal amount, excluding the margin that varies between 125 and 200 basis points depending on the leverage ratio. The notional amount of the swap agreement decreasesdecreased to $30,000,000 on November 1, 2006, and decreases to $20,000,000 on November 1, 2007 and to $10,000,000 on November 1, 2008. The agreement terminates on November 1, 2009. As of December 31, 2005,2006, the interest rate swap had no value.a fair value of $176,000. An increase in interest rates of one percent would result in the interest rate swap having a value of approximately $800,000$729,000 at December 31, 2005.2006. A decrease in interest rates of one percent would result in the interest rate swap being reported as a liability of approximately $376,000 at December 31, 2006. A change in interest rates will have no impact on the interest expense associated with the $37,500,000$30,000,000 of borrowings under the revolving credit agreement that are subject to the interest rate swap agreement. A change in interest rates of one percent on the outstanding borrowings under the revolving credit agreement at December 31, 20052006 not subject to the interest rate swap would cause a change in total annual interest costs of $116,000.$90,000. The borrowings under the Company’sour revolving credit agreement bear interest at the variable rate described above and therefore approximate fair value at December 31, 2005.2006.

At December 31, 2005,2006, our outstanding balance of the Company’s long-term debtSWIDA bonds had a carrying value of $5,778,000$4,906,000 and an estimated fair value of $7,078,000.$6,010,000. The fair value was determined based on recent arms-length transactions.

In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued $25,900,000 in Variable Rate Tax Exempt Infrastructure Revenue Bonds, of which $24,000,000$23,500,000 was outstanding at December 31, 2005.2006. These bonds are direct obligations of the Sports Authority and are therefore not recorded on the Company’sour consolidated

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balance sheet; however, the Company iswe are exposed to market risks related to fluctuations in interest rates for these bonds. A significant change in interest rates could result in the Companyour being responsible for debt service payments not covered by the sales and incremental property taxes generated from the facility.

Item 8.Financial Statements And Supplementary Data

The Company’sOur consolidated financial statements and the Report of Independent Registered Public Accounting Firm included in this report are shown on the Index to Consolidated Financial Statements on page 29.33.

Item 9.Changes In And Disagreements With Accountants On Accounting And Financial Disclosure

None.

Item 9A.Controls and Procedures

Our management is responsible for the preparation, integrity and objectivity of the consolidated financial statements and other financial information included in this Form 10-K. The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles and reflect the effects of certain estimates and judgments made by management.

Our management also is responsible for establishing and maintaining a system of internal controls designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded and executed in accordance with management’s authorization. The system is regularly monitored by direct management review and by internal auditors who conduct an extensive program of audits throughout the Company.our organization. The Director of Internal Audit reports directly to the Audit Committee of our Board of Directors. We have confidence in our financial reporting, the underlying system of internal controls, and our people, who are objective in their responsibilities and operate under the Company’sour Code of Business Conduct and with the highest level of ethical standards. These standards are a key element of the Company’sour control system.

The Audit Committee of our Board of Directors, which is comprised entirely of independent directors, has direct and private access to and meets regularly with management, our internal auditors and our independent registered public accounting firm to review accounting, reporting, auditing and internal control matters.

Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedure may deteriorate.

(a) Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that relevant, material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company’sour financial reports and to other members of senior management and the Board of Directors.

Based on their evaluation as of December 31, 2005, the2006, our Chief Executive Officer and Chief Financial Officer of the Company have concluded that as a result of the material weakness in internal control over financial reporting discussed below, the Company’sour disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were notare effective to ensure that the information we are required to be disclosed by the Companydisclose in the reports that it fileswe file or submitssubmit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

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The Company’s(b) Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The CompanyWe conducted an evaluation of the effectiveness of itsour internal control over financial reporting based on the framework inInternal Control—Control – Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the Company’sour evaluation, management of the Company has concluded as a result of the material weakness in internal control over financial reporting discussed below, that the Company’sour internal control over financial reporting was not effective as of December 31, 2005.

A “material weakness” is a significant deficiency (within the meaning of Public Company Accounting Oversight Board Auditing Standard No.2), or combination of significant deficiencies, that results in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Management’s assessment identified the following material weakness in the Company’s internal control over financial reporting as of December 31, 2005. The Company’s policies and procedures did not provide for adequate management oversight and review of the Company’s accounting for income taxes in interim periods. This deficiency resulted in errors in the Company’s income tax expense in the Company’s interim consolidated financial statements for the second and third quarters of 2005. Management corrected the draft financial statements, in each case, prior to their issuance. Management has concluded that this deficiency resulted in more than a remote likelihood that a material misstatement of the Company’s interim consolidated financial statements would not be prevented or detected.