United StatesUNITED STATES

Securities and Exchange CommissionSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

xQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 20192020

or

¨ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to ________

Commission file number 1-11929001-11929

Dover Motorsports, Inc.

(Exact name of registrant as specified in its charter)

1131 North DuPont Highway, Dover, Delaware 19901

(Address of principal executive offices)

(302) 883-6500

(Registrant’sRegistrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes x No o¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o¨ No x

As of October 28, 2019,2020, the number of shares of each class of the registrant’sregistrant's common stock outstanding is as follows:

Part I —– Financial Information

Item 1. Financial Statements

DOVER MOTORSPORTS, INC.

CONSOLIDATED STATEMENTS OF (LOSS) EARNINGSOPERATIONS

AND COMPREHENSIVE INCOME (LOSS) INCOME

In Thousands, Except Per Share Amounts

(Unaudited)

The Notes to the Consolidated Financial Statements are an integral part of these consolidated financial statements.

2

DOVER MOTORSPORTS, INC.

CONSOLIDATED BALANCE SHEETS

In Thousands, Except Share and Per Share Amounts

(Unaudited)

The Notes to the Consolidated Financial Statements are an integral part of these consolidated financial statements.

3

DOVER MOTORSPORTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

In Thousands

(Unaudited)

The Notes to the Consolidated Financial Statements are an integral part of these consolidated financial statements.

4

DOVER MOTORSPORTS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 —– Basis of Presentation

References in this document to “we,” “us” and “our” mean Dover Motorsports, Inc. and/or its wholly owned subsidiaries, as appropriate.

The accompanying consolidated financial statements have been prepared in compliance with Rule 10-01 of Regulation S-X and U.S. generally accepted accounting principles, and accordingly do not include all of the information and disclosures required for audited financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our latest Annual Report on Form 10-K filed on March 1, 2019.5, 2020. In the opinion of management, these consolidated financial statements include all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods presented. Operating results for the three and nine-month periods ended September 30, 20192020 are not necessarily indicative of the results that may be expected for the year ending December 31, 20192020 due to the seasonal nature of our business.

NOTE 2 —– Business Operations

Dover Motorsports, Inc. is a public holding company that is a leading marketer and promoter of motorsports entertainment in the United States. Through our subsidiaries, we own and operate Dover International Speedway^® in Dover, Delaware and Nashville Superspeedway^® near Nashville, Tennessee. In 2019, we celebrate our 50th anniversary of racing and, as of the date of this filing, ourOur Dover facility promotedwas scheduled to promote the following six events during 2019,2020, all of which werewould be under the auspices of the premier sanctioning body in motorsports - the National Association for Stock Car Auto Racing (“NASCAR”):

·                  2 NASCAR Monster Energy Cup Series events (May and October);

·                  2 NASCAR Xfinity Series events (May and October);

·                  1 NASCAR Gander Outdoors Truck Series event (May); and

·                  1 NASCAR K&N Pro Series East event (October).

Due to the impacts of the COVID-19 pandemic, our May NASCAR weekend was postponed and the three events originally scheduled for that weekend were held in combination with our already scheduled August NASCAR weekend events. On July 25, 2020 Delaware state officials notified us that due to public safety and health concerns, they would not approve our request to host a limited number of fans at our August NASCAR Weekend. As a result, all of our 2020 events were held with no fans in attendance during the third quarter of 2020. A NASCAR Monster Energy Cup Series event, a NASCAR Xfinity Series event and a NASCAR Gander RV & Outdoors Truck Series event were held at Dover International Speedway during the second quarter of 2019 and 2018.2019. A NASCAR Monster Energy Cup Series event, a NASCAR Xfinity Series event and a NASCAR K&N ProARCA Menards Series East event were held at Dover International Speedway during the fourth quarter of 20192019. There are no reliable estimates of how long the pandemic will last or how many people are likely to be affected by it. For that reason, we are unable to predict the long-term impact of the pandemic on our business at this time. The extent to which COVID-19 impacts our results will depend on future developments, but the continued spread of COVID-19 and 2018.associated economic impacts could have a material adverse effect on our future financial condition, liquidity, results of operations and cash flows.

We have hosted the Firefly Music Festival (“Firefly”) on our property in Dover, Delaware for eight consecutive years and it iswas scheduled to return on June 18-21, 2020. Due to the COVID-19 pandemic, this year’s event was cancelled. The inaugural three day festival with 40 musical acts was held in July 2012 and the 2019 event was held on June 21-23, 2019 with overapproximately 120 musical acts. In September 2014, Red Frog Events LLC formed RFGV Festivals LLC - a joint venture with Goldenvoice that promotes Firefly.  Goldenvoice is a company of AEG Presents, LLC, a subsidiary of Anschutz Entertainment Group, Inc.  AEG Presents, one of the world’s largest presenters of live music and entertainment events, announced on July 18, 2018 that it had acquired the remainder of RFGV Festivals LLC from Red Frog.  Our amended agreement with RFGV Festivals LLC grants them two 5 year options to extend our facility rental agreement through 2032 in exchange for a rental commitment to secure our property.  In addition to the facility rental fee, we also receive a percentage of the concession sales we manage at the events.

We have not promoted a major motorsports event at our Nashville Superspeedway no longer promotes motorsportssince 2011.   On June 3, 2020, we announced that we would be moving one of our NASCAR Cup Series events and has nothistorically held at Dover International Speedway to Nashville Superspeedway beginning in 2021. We entered into a four-year sanction agreements withagreement to promote a NASCAR since 2011.Cup Series event in Nashville for the 2021 to 2024 racing seasons. We leasealso entered into a one-year sanction agreement to promote a NASCAR Cup Series event at Dover International Speedway for the facility on a short term basis to third parties from time to time.    2021 season.

On August 17, 2017, we entered into an agreement with an entity owned by Panattoni Development Company (“buyer”)

5

relative to the sale of approximately 147 acres of land at our Nashville property at a purchase price of $35,000 per acre. On March 2, 2018, we closed on the sale of the property with proceeds, less closing costs, of $4,945,000. Net proceeds after taxes were approximately $4,150,000.$4,150,000 resulting in a gain of $2,512,000. On September 1, 2017, we also awarded to the buyer a three yearthree-year option for 88.03 additional acres at a purchase price of $55,000 per acre. That option agreement has been amended twice since: first, on February 9, 2018, to extend its term and to add additional acreage; and second, on June 25, 2019, in connection with the purchaser’sbuyer’s exercise of its option on two parcels, we adjusted the acreage and further extended the term of the option on a third parcel.  On July 26, 2019, the purchaserbuyer closed on the sale of the first two parcels, comprising approximately 133 acres, which yielded to us proceeds, less closing costs, of $6,397,000.  Net proceeds after taxes were approximately $5,314,000 resulting in a gain of $4,186,000. OneOn July 29, 2020, the buyer closed on the sale of the third parcel of 97.17approximately 97 acres remains underat our Nashville property.  Proceeds from the option agreement withsale, less closing costs, were approximately $6,460,000.  Net proceeds after taxes were approximately $5,290,000 resulting in a purchase pricegain of $66,685 per acre.approximately $4,843,000.  The purchaserbuyer had previously paid to us a $500,000 for the extension of this option until March 1, 2022, and this non-refundable payment would bedeposit that was credited to the purchase price atprice.  None of the closing of that option parcel.  While management remains committedacreage sold extends to selling the remaining Nashville Superspeedway propertyland on which consists ofour superspeedway is sited and we continue to hold approximately 1,000 acres we do not believe it is probable thatof commercial real estate in Nashville, including the remaining property will be sold within the next twelve months.  At September 30, 2019 and December 31, 2018, $21,292,000 and $23,567,000 was reported as long term assets in our consolidated balance sheets, respectively.  At December 31, 2018, $531,000 was reported as assets held for sale in our consolidated balance sheet.superspeedway.

On February 28, 2019, we entered into an agreement to sell 7.63 acres of land at our Nashville facility for proceeds, less closing costs, of $267,000. The sale closed in the first quarter of 2019 and resulted in a gain of $139,000, which we have reported as gain on sale of land in our consolidated statements of (loss) earnings.operations and comprehensive loss for that period.

During September 2018, we entered into negotiations to sell the last remaininga parcel of land we owned near St. Louis.  The sale resulted in a loss of $99,000, which we reported as loss on sale of land in our consolidated statements of (loss) earnings. The sale closed in the first quarter of 2019 with proceeds, less closing costs, of $531,000.  At December 31, 2018, the fair value of the land was reported as assets held for sale in our consolidated balance sheet.

NOTE 3 – — Summary of Significant Accounting Policies

Property and equipment—Property and equipment is stated at cost. Depreciation is provided using the straight-line method over the asset’s estimated useful life. Accumulated depreciation was $66,232,000$69,617,000 and $63,042,000$67,328,000 as of September 30, 20192020 and December 31, 2018,2019, respectively.

In the third quarter of 2019, management approved plans to remove certain grandstand seating following the completion of our 2019 race season.  As a result, we adjusted the service lives of those assets to properly reflect their shortened estimated useful life.  We recorded accelerated depreciation expense of $879,000 in the three and nine-month periods ended September 30, 2019 related to these assets.  We expect to record additional depreciation expense of approximately $293,000 during the fourth quarter of 2019 related to these assets, at which point the assets will be fully depreciated.

Leases—Effective January 1, 2019, we account for leases under Accounting Standards Codification 842, Leases.  Under this guidance, arrangements meeting the definition of a lease are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or our incremental borrowing rate.

During the second quarter of 2019, we entered into certain operating leases with 36 month terms.  At September 30, 2019, our consolidated balance sheet included a right of use asset of $206,000, a long-term lease liability of $131,000, and a short-term lease liability, which is included in accrued liabilities, of $75,000.

Revenue recognition—We classify our revenues as admissions, event-related, broadcasting and other. “Admissions” revenue includes ticket sales for our events. “Event-related” revenue includes amounts received from sponsorship fees; luxury suite rentals; hospitality tent rentals and catering; concessions and vendor commissions for the right to sell concessions and souvenirs at our events; sales of programs; track rentals; broadcasting rights other than domestic television broadcasting revenue, and other event-related revenues. Additionally, event related revenue includes amounts received for the use of our property and a portion of the concession sales we manage from

6

the Firefly Music Festival. “Broadcasting” revenue includes rights fees obtained for domestic television broadcasts of events held at our speedway.

All of our revenues are typically based on contracts with customers and, with the exception of certain track rentals, relate to two NASCAR event weekends and the Firefly Music Festival held at our Dover facility. However, due to the COVID-19 pandemic, this year our revenues are primarily related to one combined NASCAR event weekend. Our contracts are typically for specific events or a racing season. We have several multi-year sponsorship contracts for our racing events and our contract with the promoter of the Firefly Music Festival is multi-year. Revenues pertaining to specific events are deferred and recorded as contract liabilities in our consolidated balance sheets until the event is held. All of our 2020 racing events were held on the same weekend from August 21-23. On July 25, 2020 Delaware state officials notified us that due to public safety and health concerns, they would not approve our request to host a limited number of fans at our August NASCAR weekend. As a result, all of our 2020 events were held with no fans in attendance. As of September 30, 2019,2020, $1,345,000 of contract liabilities inon our consolidated balance sheets of $4,279,000 and $247,000sheet relate to 20192021 events and 2020 events, respectively.$80,000 relates to 2022 events. As of December 31, 2018,2019 contract liabilities inon our consolidated balance sheets relatesheet related to 2019 events.2020 events, although customers have since applied some of these amounts to 2021 events or received a refund due to the events being held without fans. As of September 30, 2020, we have issued approximately $1,383,000 in refunds and credits to our patrons and customers for our event weekends.  Patrons who previously purchased tickets were given the option to receive a full refund or to apply their funds to Dover International Speedway’s 2021 NASCAR weekend, with a 20% bonus value. Concession and souvenir revenues are recorded at the time of sale. Revenues and related expenses from barter transactions in which we provide sponsorship packages in exchange for goods or services are recorded at fair value. Barter transactions accounted for $261,000$213,000 and $239,000$261,000 of total revenues for the nine-month periods ended September 30, 20192020 and 2018,2019, respectively.

The following table summarizes the liability activity related to contracts with customers for the three and nine-month periods ended September 30, 2020 and 2019 and 2018:(in thousands):

We have contracted future revenues representing unsatisfied performance obligations. These contracts contain initial terms typically ranging from one to three years, with some for longer periods, excluding renewal options. We have excluded unsatisfied performance obligations for future NASCAR broadcasting revenue with contract terms through 2024. WeAs of September 30, 2020, we anticipate recognizing unsatisfied performance obligations for the calendar year ending 20202021 and beyond of approximately $3,852,000 at September 30, 2019.$3,115,000. 

Under the terms of our sanction agreements with NASCAR, we receive a portion of the broadcast revenue NASCAR negotiates with various television networks. NASCAR typically remits payment to us for the broadcast revenue within 30 days ofafter the event being held. NASCAR retains 10% of the gross broadcast rights fees allocated to each NASCAR-sanctioned event as a component of its sanction fee. The remaining 90% is recorded as revenue. We areThe event promoter is required to pay 25% of the gross broadcast rights fees to the event as part of the awards to the competitors, which are recordedwe record as operating expenses.

Expense recognition—The cost of advertising is expensed as incurred. Advertising expenses were $4,000 and $54,000 and $465,000 and $1,011,000 and $539,000 and $1,144,000 for the three and nine-month periods ended September 30, 20192020 and 2018,2019, respectively. Certain direct expenses pertaining to specific events, including prize and point fund monies and sanction fees paid to NASCAR, and other expenses associated with our racing events are deferred until the event is held, at which point they are expensed.

7

Net earnings (loss) earnings per common share—Nonvested share-based payment awards that include rights to dividends or dividend equivalents, whether paid or unpaid, are considered participating securities, and the two-class method of computing basic and diluted net earnings (loss) earnings per common share (“EPS”) is applied for all periods presented. The following table sets forth the computation of EPS (in thousands, except per share amounts):

NOTE 5 —– Pension Plans

We maintain a non-contributory tax qualified defined benefit pension plan that has been frozen since July 2011. All of our full time employees were eligible to participate in the qualified plan. Benefits provided by our qualified pension plan were based on years of service and employees’employees' remuneration over their employment period. Compensation earned by employees up to July 31, 2011 is used for purposes of calculating benefits under our pension plan with no future benefit accruals after this date. We also maintain a non-qualified, non-contributory defined benefit pension plan, the excess plan, for certain employees that has been frozen since July 2011. This excess plan provided benefits that would otherwise be provided under the qualified pension plan but for maximum benefit and compensation limits applicable under federal tax law. The cost associated with the excess plan is determined using similar actuarial methods and assumptions as those used for our qualified pension plan. The assets for the excess plan aggregate $1,134,000$1,197,000 and $995,000$1,182,000 as of September 30, 20192020 and December 31, 2018,2019, respectively, and are recorded in other assets in our consolidated balance sheets (see NOTE 7 —– Fair Value Measurements).

The components of net periodic pension benefit for our defined benefit pension plans are as follows:

The net periodic pension benefit is included in other income, net in our consolidated statements of operations and comprehensive income (loss) earnings..

While weWe have no minimum required pension contributions for 2019, we will consider making contributions during the remainder of the year.  We contributed $750,000 and $1,750,000 to our defined benefit pension plans during the three and nine-month periods ended September 30, 2018, respectively.2020.

We also maintain a non-elective, non-qualified supplemental executive retirement plan (“SERP”) which provides deferred compensation to certain highly compensated employees that approximates the value of benefits lost by the freezing of the pension plan which are not offset by our enhanced matching contributions in our 401(k)  plan.  The SERP is a discretionary defined contribution plan and contributions made to the SERP in any given year are not guaranteed and will be at the sole discretion of our Compensation and Stock Incentive Committee. In the three and nine-month periods ended September 30, 20192020 and 2018,2019, we recorded expenses of $30,000 and $90,000 and $27,000 and $81,000, and $21,000 and $68,000, respectively, related to the SERP. During the three and nine-month periods ended September 30, 20192020 and 2018,2019, we contributed $0 and $108,000,$120,000 and $0 and $85,000$108,000 to the plan, respectively. The liability for SERP pension benefits was $81,000$90,000 and $108,000$120,000 as of September 30, 20192020 and December 31, 2018,2019, respectively, and is included in accrued liabilities in our consolidated balance sheets.

We maintain a defined contribution 401(k) plan that permits participation by substantially all employees. Our matching contributions to the 401(k) plan were $28,000 and $93,000 and $31,000 and $90,000 and $35,000 and $101,000 in the three and nine-month periods ended September 30, 20192020 and 2018,2019, respectively.

9

NOTE 6 —– Stockholders’ Equity

Changes in the components of stockholders’ equity for the nine-monthsthree and nine-month periods ending September 30, 2020 are as follows (in thousands):