NJMP files for Bankruptcy protection

[FocusDude]

FROM THE DAILY JOUNAL:: http://www.thedailyjournal.com/article/20110307/NEWS01/110307001

MILLVILLE — The New Jersey Motorsports Park filed in U.S. Bankruptcy Court today seek-ing Chapter 11 protection from creditors while it reorganizes.

The Motorsports Park’s financial problems surfaced about a month ago when it was disclosed that the Millville Rescue Squad was demanding settlement of bills for the coverage it provides for track events.

The park and squad concluded a private agreement.

Park Manager Brad Scott released the following statement at 2 p.m.:

New Jersey Motorsports Park (NJMP) announced a reorganization plan that includes the re-structuring of debt, addition of new equity, and the filing of Chapter 11 today, in a move that management feels confident will secure the Park’s future operations.

NJMP has additionally agreed to terms with its primary lender that will enable it to restruc-ture its debt through the bankruptcy filing.

NJMP Owner and Managing Partner Lee Brahin stated: “Although the decision to file Chap-ter 11 was a very difficult one, it was deemed necessary to protect future operations and to allow the Park to continue providing employment and other economic support to the local and regional communities.

“Our overall plan for the future is still sound, he continued. “Our renegotiated debt financing will enable us to move forward with our existing operational plan, although we will continue to reduce operating expenses and are in the process of renegotiating debt with vendors. We are also receiving an infusion of new equity from certain investors, which will bolster NJMP’s liquidity position.”

“NJMP General Manager Brad Scott stated that the realignment of debt will not affect em-ployment numbers, chiefly because needed reductions have already occurred.

“We wish to emphasize that none of these changes will affect our scheduled 2011 racing and so-cial events, Drivers Club Memberships, season passes, pre-event ticket sales, gift certificates, deposits or any other NJMP operation,” reported Scott

I have yet to attend a event which pisses me off, but unfortunately auto racing is not a priority of the family. Although it may be one of mine.

[phsdrummer2]

That was fast. It sucks to see that they are having financial struggles this early on. Then again I'm sure auto racing is one of the first hobbies to go during an economic downturn.

[gtsiawd96]

You should have put the last paragraph first.. I damn near had a heart attack thinking they were going to shut down indefinitly.

[R22B]

I was there four times last year. Its a killer track but could definitely use more spectator stands and more well-known series taking place there. I also think the part that makes it awesome also hurts it - its in the middle of freakin' no where.

[oneday]

Its a killer track but could definitely use more spectator stands and more well-known series taking place there. I also think the part that makes it awesome also hurts it - its in the middle of freakin' no where.

More well known series than Grand-Am, ARCA, AMA or RallyCross [OK, that last one is kind of a stretch]? What's left? NASCAR, ALMS, Indy and F1?

Also, have you ever seen a successful year-round road course that is not in the middle of no where? Sound ordinances usually relegate race tracks to back woods areas where there is the least sound pollution impact (there is a anti-race noise group against NJMP that has recordings the sound from race cars more than 2.5 miles from the track and it is pretty loud--enough that I would find it annoying to live with day in and day out).

[PAFirefighter11]

Raced at both of their tracks several times. Their facilities are quite nice and they take care of the track and area very well. Every event I've either raced at or watched has been a ton of fun.

[PAFirefighter11]

More info here:


MILLVILLE -- The fact that New Jersey Motorsports Park got through its 2010 season is a debt it owes, literally and figuratively, to the Millville Rescue Squad.

One result of the federal Chapter 11 bankruptcy protection motion the park filed Monday is the privately owned park's financial picture is now public business. Everything from ownership portions, to mortgage structure to outstanding vendor balances is disclosed -- or soon will be.

According to court papers, the Motorsports Park's largest local creditor is the Millville Rescue Squad. The park fell behind $520,035 on payments to the private nonprofit last year. The squad provides a range of emergency response services, without which the park cannot operate.

"As the debt was accruing, we knew that discontinuing service would stop track operations and cost people jobs," Rescue Squad Chief John Redden said Tuesday.

Last month, with the squad threatening to hold back its services for the 2011 season, an agreement was reached to repay the debt. The terms of the deal require a $200,000 payment to the squad by this Friday, and another $200,000 in July.

The remainder of that debt will be settled in monthly payments, along with concurrent 2011 payments, park and rescue squad officials said.

Among other details contained in the massive bankruptcy filing is the park's gross annual income. Since opening in 2008, it has averaged about $9 million annually from racing events and concessions, a sum an official said is less than projected. The park, which employs 250 full- and part-time workers, has spent more than $45 million on capital improvements, of which half was paid to contractors in Cumberland County, according to the court papers.

Joseph Savaro, a partner in the Motorsports Park, said the recession's impact on residential and commercial real estate depressed the park's earnings. Efforts to sell villas, or townhouses, at the park took a particularly hard hit, he said; only eight are sold.

"We still have faith in the project," Savaro said. "We'll get through this Chapter 11. A lot of companies have been through that."

Savaro said the proposed construction of a motocross facility, called the Field of Dreams, also is important financially.

"That clearly would have helped us," he said. "We tried to create critical mass and have diversity. We're still going to attempt things to turn it around, but the Chapter 11 helps us get on our feet."

Park owners want to restructure their debt and continue to operate the facility, including the upcoming season of scheduled races. But what happens next is up to the judge overseeing the bankruptcy proceedings.

Even the validity of the Motorsports Park deal with the rescue squad now is in question -- thanks to the bankruptcy filing.

An attorney the squad hired to sit in on talks with the park advised the nonprofit squad was is in a "positive position" even if bankruptcy occurred, Redden said. And Motorsports Park officials said their attorneys advise the deal with the squad will stand despite court oversight.

However, the parties acknowledge there is a chance the presiding judge may disagree.

"It's in the hands of the court right now," Redden said. "We'll be consulting with an attorney to determine how we proceed."

Monday's filing lists the park's top 20 creditors -- that is, businesses to whom it owes money. Court documents indicate there are 150 creditors in total.

Topping that list is Merrill Lynch Mortgage Capital Inc., now part of Bank of America. The bank is owed about $30.54 million, although it has "knocked down" the amount to $20 million to aid the park in its reorganization plan, according to the filings.

Other area creditors include Henry Cifaloglio Inc. of Buena, at $14,003; Kavanagh, Kavanagh & DiLazzero LLC of Millville, $9,684; and Waste Management of New Jersey at $8,374.

Also owed money, but in a separate category, is the Cumberland County Empowerment Zone Corp.

The Empowerment Zone, which is federally funded, loaned $425,000 to the park at a 5 percent interest rate to go toward 2010 operating funds.

Jeannine MacDonald, the zone's executive director, said Tuesday the loan is guaranteed with personal notes from park investors Lee Brahin and Harvey Siegel. The bankruptcy proceedings should not have an impact on the debt, she said.

MacDonald said the park paid only interest on the loan through 2010. The principal was due this past December but has not been paid, she said. MacDonald said the park in January started making payments of both principal and interest on a 10-year amortization schedule.

"We are of course concerned about the local vendors and the long-term success of the park," MacDonald said. The zone has met with the park about the loan, but put further talks on hold to let the bankruptcy case proceed further, she said.

Savaro said Tuesday the owners have no interest in selling the establishment and that the park's managing partners remain Lee Brahin and R.J. "Dick" Valentine. However, the reorganization is affecting the ownership structure.

The reorganization plan calls for fresh capital of at least $2 million from an entity identified as NEI Motorsports LLC, a group headed by Valentine. NEI also includes some new investors.

In return for the $2 million, the papers indicate NEI receives enhanced ownership rights.

The filing states the $2 million is meant to meet the costs of the restructuring, including:

# $500,000 for attorneys and other professional consultants.

# $50,000 to "priority" tax claims, which appear to refer to a debt to the state of New Jersey.

# $209,222 to Ovations Food Services.

# $368,000 to pay unsecured creditors.

# $366,000 toward a reserve for insurance, taxes and other debts.

# $500,000 to meet operating costs.

Judge Judith Wizmur is expected hear testimony Thursday on seven motions.

The motions by the park include asking court permission to pay bills, wages, taxes and expenses that were due before Monday's filings and to keep using existing bank accounts, business forms and other procedures.

The park also is asking for an order to allow it pay "critical" vendors, a class that includes the rescue squad.

The bankruptcy filing cites $3 million in unsecured debt, more than half of which is owed to those critical vendors, Brahin said. Some of those critical vendors -- like the squad -- have payment deals in place or are working toward agreements with the park, he said.

The rest of that $3 million in unsecured debt is owed to other vendors and services. It's not clear how much any of the park's creditors would be paid, if the restructuring plan is approved. The court will create a creditors committee that ultimately could decide how much those vendors will recover.

[ndubz]

they really arent in the best location. and they dont really offer too much in the way of mass appeal on their tracks. ie, no track sponsored driving lessons or non club related public track days as many other tracks offer. Thats quite a bit of money they are not bringing in there.

[oneday]

they really arent in the best location. and they dont really offer too much in the way of mass appeal on their tracks. ie, no track sponsored driving lessons or non club related public track days as many other tracks offer. Thats quite a bit of money they are not bringing in there.

The track is an hour from Philly and 2.5 from NYC ... how is that bad location? Where in region could be better? When you answer think about how much open space costs and the problems NJMP had in getting the permits and funding to even break ground in the location they are. If you can think of a better place for less/equal money and tolerant/open to a noisy race track that the track owners didn't then you should send them a resume.

From Newtown I can be to NJMP in 1.5 hours or less depending on time of day, same thing for Pocono and will be the same to get to LBMP when (if) it opens. Monticello is only 2.5 hours for me. None of these tracks are in bad locations.

Compared to Nelson Ledges, VIR, and Carolina Motorsports Park (as well as other facilities) NJMP has an excellent location. NJMP, Pocono, Monti & LBMP are within .5 hours of plenty of hotels, less than .75 hours from major airports and not incredibly far off major interstates. The same can not be said for these other facilities (unless you don't mind one-star fleabag motels) ... even VIR (probably the nicest track facility on the east coast) still requires a 20-30 minute drive from the local Days Inn.

Mind you I'm not saying NJMP couldn't be in a better place, but it's hardly in a bad location.

Please define "non club related public track days"? What tracks do that? I'd seriously like to know. By renting the track to NASA/PDA/SCCA for HPDE/PDX events "the track" does not need to expose themselves legal or financially to the problems of running their own track days. That said they do offer a Safe Driver Clinic (http://www.njmp.com/pdf/SafeDriverClinic.pdf).

[Nick 95 6sp]

I was thinking pretty much what oneday said above. I'm just west of Philly and I can be at NJMP in one hour...hard to beat that convenience, plus the tracks are really pretty nice; while I also like Pocono, NJMP track layouts are far superior and it takes me an additional half hour to drive to Pocono.

It must be financially challenging to make this type of venture pay off since from what I heard, Monticello Motorsports Club is also running tighter than they expected with all sorts of cutbacks and alternative plans in place in an effort to pull through.

[xEJ20x]

I've been a few times for gokarting...its a blast.

[FocusDude]

I'm north of Philadelphia in Levittown, I can get to the track in a hour fifteen doing the speed limit most the way. It's 15 minutes farther then Englishtown, which can't compete from what I understand. And fortyfive minutes closer then Pocono.
It is/was one of the premier non-oval tracks on the east coast-

More well known series than Grand-Am, ARCA, AMA or RallyCross [OK, that last one is kind of a stretch]? What's left? NASCAR, ALMS, Indy and F1?

Also, have you ever seen a successful year-round road course that is not in the middle of no where? Sound ordinances usually relegate race tracks to back woods areas where there is the least sound pollution impact (there is a anti-race noise group against NJMP that has recordings the sound from race cars more than 2.5 miles from the track and it is pretty loud--enough that I would find it annoying to live with day in and day out).

Silly amatuer racing... :eek:
People are still fighting the noise, but other then the track, Millville is a wasteland, I'm sorry. It needs something besides bodegas to survive.

People are still trying to close ATCO and Englishtown, it wont happen.

[ndubz]

I was thinking pretty much what oneday said above. I'm just west of Philly and I can be at NJMP in one hour...hard to beat that convenience, plus the tracks are really pretty nice; while I also like Pocono, NJMP track layouts are far superior and it takes me an additional half hour to drive to Pocono.

It must be financially challenging to make this type of venture pay off since from what I heard, Monticello Motorsports Club is also running tighter than they expected with all sorts of cutbacks and alternative plans in place in an effort to pull through.

Thats because they tend to cater to only a small percentage of their total possible market. Sure the whole exclusive automotive country club thing has its place and it should be there, but unless they start catering to the average person who just wants to learn racing and wants some track time, they will always limit their own profitability.

Argue all u want about insurance and all that ****, that just makes things more difficult to figure out but not impossible.

With that said, I plan on doing their karts program soon with some friends. Karts are great, but its not enough. People dont seem to understand that the way around bad drivers crashing....IS EDUCATION........ which is not offered nearly as widely or as cheaply as it should be. If their worried about people being on the track, then make them pass an extensive driving ability test on the skidpad/autoX course before they could gain track access.

They have a huge attraction taking up alot of real estate, and they aren't using it properly, thats a big part of why their in financial troubles whether they admit it or not.

Look at it this way, Imagine if 6 Flags was only open to 2% of the population.......how long do u think they'd last?

It all needs a big overhaul.

[ndubz]

The track is an hour from Philly and 2.5 from NYC ... how is that bad location? Where in region could be better? When you answer think about how much open space costs and the problems NJMP had in getting the permits and funding to even break ground in the location they are. If you can think of a better place for less/equal money and tolerant/open to a noisy race track that the track owners didn't then you should send them a resume.

From Newtown I can be to NJMP in 1.5 hours or less depending on time of day, same thing for Pocono and will be the same to get to LBMP when (if) it opens. Monticello is only 2.5 hours for me. None of these tracks are in bad locations.

Compared to Nelson Ledges, VIR, and Carolina Motorsports Park (as well as other facilities) NJMP has an excellent location. NJMP, Pocono, Monti & LBMP are within .5 hours of plenty of hotels, less than .75 hours from major airports and not incredibly far off major interstates. The same can not be said for these other facilities (unless you don't mind one-star fleabag motels) ... even VIR (probably the nicest track facility on the east coast) still requires a 20-30 minute drive from the local Days Inn.

Mind you I'm not saying NJMP couldn't be in a better place, but it's hardly in a bad location.

Please define "non club related public track days"? What tracks do that? I'd seriously like to know. By renting the track to NASA/PDA/SCCA for HPDE/PDX events "the track" does not need to expose themselves legal or financially to the problems of running their own track days. That said they do offer a Safe Driver Clinic (http://www.njmp.com/pdf/SafeDriverClinic.pdf).

I guess by comparison its not that bad. I was just sayin cuz Millville is kind of a **** hole lol. Not many people of their target demographic live in a place like that.

ANd Englishtown has the sort of stuff i am talking about. Yea, u have to pay and reserve..... but u dont have to join any clubs to get lessons on the road course, and they have open track days for people with proper qualifications. My point is NJMP is too much of a douchy rich boy's club, and not accessible enough for more normal people. Both groups can be catered to and more money will be made......ALOT more.

[Chris B.]

ANd Englishtown has the sort of stuff i am talking about. Yea, u have to pay and reserve..... but u dont have to join any clubs to get lessons on the road course, and they have open track days for people with proper qualifications. My point is NJMP is too much of a douchy rich boy's club, and not accessible enough for more normal people. Both groups can be catered to and more money will be made......ALOT more.

Half of the groups I've done HPDE/track days with at NJMP don't require any membership. You go online, pay a reasonable price and get 3+ hours of track time with a professional instructor. I've paid under $250 for seven 30 minute sessions in one day with an instructor there when I first started doing track days. The same group has run specials where it was under $200 for the day at NJMP if you signed up early enough. It doesn't get much cheaper than that.

How much cheaper do you want it to be? Do you think it can be done for $25 per person per day?

[phsdrummer2]

Well let's think about this for a second. They built homes on the track property. The vast majority of people who would be interested in purchasing those properties would be those who can afford to race for an entire weekend which isn't cheap, no matter what you race. Therefore, I believe the intention is to create a specialty property for a niche market of racers who can afford to have a 2nd or 3rd home. This allows them to live in the comforts of home, at the racetrack as opposed to getting a hotel. This is also supported by their garage rentals so that individuals can keep their track vehicle there.

It was designed to be funded on the coin of those who could afford to pour money into it, much like a high end golf course. Unfortunately, racing is something that is easily neglected during a time of economic downturn. Golf is not. Executives still continue to schedule tee times with the money they aren't spending driving their sports cars every weekend.

[FocusDude]

I've had more then enough options to run around the tracks at NJMP, unfortunately ****s tight in the wallet.

NJMP also holds SJR SCCA winter series, which isn't much, but is still cool enough for me.

Go try and run at Monticello... although again even they are offering track days-

[Mike@JDSMotoring]

Hope everything works out with and for these guys. I have yet to race the go karts and I want to.

[oneday]

Let me preface my reply to ndubz with this: I do not have the answers to what would make any given racetrack more profitable (other than it should be owned by Bernie "Madder-than-a-Mad-Hatter" Eccelstone or Bill "I've-Got-the-Moonshine" France). But I'm not going to suggest any ignorant hyperbole or speculation as to how to fix it.

Warning: The following reply is rife with sarcasm.
I was just sayin cuz Millville is kind of a **** hole lol. Not many people of their target demographic live in a place like that.

The target demographic does not need to live near it. They only have to be close enough to travel there. Which is why NJMP is an excellent location.

ANd Englishtown has the sort of stuff i am talking about. Yea, u have to pay and reserve..... but u dont have to join any clubs to get lessons on the road course, .
You don’t need to join anything to run at NJMP.

and they have open track days for people with proper qualifications.
I wouldn’t run a track day at E-Town if it cost me $5.

My point is NJMP is too much of a douchy rich boy's club, and not accessible enough for more normal people. .
I may be a bit of a douche, but I am far from a “rich boy.” Would I like to be able to afford more time on the track? Hell yeah. But NJMP charges reasonable rates for the service they provide.

Thats because they tend to cater to only a small percentage of their total possible market. Sure the whole exclusive automotive country club thing has its place and it should be there, but unless they start catering to the average person who just wants to learn racing and wants some track time, they will always limit their own profitability.

You have zero clue what is involved in organizing, operating or managing anything do you? Let alone a motorsport activity? The percentage of the population that is legitimately interested in track day events is incredibly small to begin with. NJMP is not an “exclusive county club.” Anyone can go there and run the track with numerous clubs (BMW CCA, SCCA, NASA, PCA, ARCA, AMA, etc.)

Argue all u want about insurance and all that ****, that just makes things more difficult to figure out but not impossible.

Well, you are partially right, but mostly wrong at the exact same time: Nothing is impossible; with enough money anything is possible. If you can find an insurance company to underwrite a policy to insure a race track on the cheap, you should probably offer your services to every race track in the world.

People dont seem to understand that the way around bad drivers crashing....IS EDUCATION........ which is not offered nearly as widely or as cheaply as it should be .

I very much understand that there are too many bad drivers on the road. I do what I can to promote the educational value of SCCA Solo events, SCCA/BMW CCA Street Survival and SCCA PDX events to help educate drivers. I even instruct at any and all of these events. But since you think you’ve found an untapped market, go for it. Let me know how your business turns out in a few years.

If their worried about people being on the track, then make them pass an extensive driving ability test on the skidpad/autoX course before they could gain track access.
Brilliant. Can’t believe no one thought of that before. Oh, wait. The SCCA did. And you know what … they discovered it costs about $250/person/day to do it. If you want to participate, see this thread. (http://www.tristatetuners.com/forum/showthread.php?t=111142) I admit that the SCCA is not exactly what you are proposing, but is the best example of a working, real-world curriculum similar to what you are proposing. Any more complicated or simplified and it wouldn't work. More complicated means it would cost more. Less expensive and it would be mayhem on the track.

They have a huge attraction taking up alot of real estate, and they aren't using it properly, thats a big part of why their in financial troubles whether they admit it or not.
Oh, I am so relieved that you got to look at the tracks financials. I’m sure they will be incredibly relieved to know you have a solution! Did you advise them how to better make use of the wasted space? Should they put in a roller coaster like Dubai? A ferris wheel like Suzuka or Daytona? Oh, I know…a shooting range? Maybe they shouldn’t have put in so many garages and such a big paddock area and instead put a high-rise hotel in the middle of the track? Or conference rooms—I love attending seminars where there is a constant roar in the background, it helps me to concentrate.


Look at it this way, Imagine if 6 Flags was only open to 2% of the population.......how long do u think they'd last? .

Long enough to go through countless bankruptcies, buy-outs, lay-offs, shut-downs and restructurings. Approximately 2.6MM people attended SFGA in 2009. ( http://www.themeparkinsider.com/flume/201004/1895/) That works out to be .8% of the US population. If you take the top three attended Six Flags parks in the US then that number jumps to a magnificent 2.5% (7.7MM).

I haven’t been to SFGA in a long time. Mostly because I hate crowds, long queues, and spending money on amusement parks (saving for more track time). If there was race track that was accessible to that many people I would not be going there either ... can you imagine the lines? Not that you would know since you’ve never been to one, but when you are on a race track in an HPDE type of event and there are more than 30 cars on the track at a time, it’s can be a procession (especially in the novice groups). That would be no fun.

[l337fpc]

i really hope they sort everything out...NJMP's tracks are really nice.

[Ciotti]

This issue was just discussed Wednesday at South Jersey SCCA's monthly meeting at length and the long and short of it is that in order to save a huge chunk of money with the bank, they had to file for bankruptcy. They should be out of chapter 11 by Labor day and they'll be in the best place financially then they ever have.



Here's an official blurb from South Jersey SCCA...

We wanted to assure everyone that the track has already confirmed for us that our track deposit is safe, the track will operate as normal this season and our events will proceed as scheduled.

The reality is that bankruptcy filings, while never a “good” thing, are often necessary and actually often result in a better situation in the future. One need only look at the recent bankruptcy filed by General Motors to see an example of a company that emerged stronger after a bankruptcy filing.

We also wanted to contact everyone so that there were no rumors and confusion about the situation. The track is not shutting down and we are still fully set for our season at the track. In fact, the good thing about bankruptcy is that no creditors can interfere with the track’s operation or assets while it is in bankruptcy.

Please also pass the word on to anyone you can. The last thing we want to do is to have competitors, workers, spectators, or even other sanctioning organizations, deciding not to attend events at NJMP because of some inaccurate information about what is really taking place. Please tell anyone you can that NJMP will be operational this year and that nothing will appear any different then before.

[Robevo]

feels like money laundering going on or other shady stuff. When i see "bankruptcy" with "reorganization" on the same page.... seems to me "reorganization" is moving a money to a better place ... LOL

[Nick 95 6sp]

I think the bankrupcy filing in this case is not some underhanded b.s. people trying to steal money and get out...like some of the financial institutions went through.

To me it seems more like what Ciotti said above: refinance the debt load under more favorable interest and repayment terms and come out better off but still pay back what you owe.

I hope it works because it is an awesome place for the average person to participate in track days, and not just a high end club for wealthy racetrack condo owners.

[phsdrummer2]

Thank you Oneday for providing a pretty good laugh in response to Ndubz post. I thoroughly enjoyed the sarcasm and the intelligence of the post.

[Robevo]

im going there next saturday and sunday for testing, bankruptcy or not :)

[TSopranoIS300]

I was lucky enough to get a few laps in a LEXUS LFA with Scott Pruet there last spring...:mrgreen:

AWESOME track...

http://www.youtube.com/watch?v=ovfMzq-LUGA

-Marc

[SoStock92]

Sucks to hear - iRacing did a laser scan of the track and said they plan to offer it on the simulator soon, which would be great so I can practice and then go try the course, but only if its open, which might be what iracing is holding out on.

[crazyduckme]

You should have put the last paragraph first.. I damn near had a heart attack thinking they were going to shut down indefinitly.

THIS omg I nearly freaked out. hahaha!!!

My dad races here all the time.