goracing.com...Gone As Media
25 May 2000
Action Performance Announces Commerce-Only Strategy at its Internet
Subsidiary goracing.com
PHOENIX--May 24, 2000--Action Performance Companies Inc. Wednesday announced
its intention to re-launch goracing.com, its Internet subsidiary,
as an e-commerce-only marketplace, focusing exclusively on
delivering Action Performance merchandise to motorsports fans across the
Internet.
Consistent with this strategy, Action Performance will no longer offer
content in the form of motorsports news and entertainment on goracing.com.
The company will retain its rights in, and will continue to utilize, the
name and URL ``goracing.com'' to further its ``commerce-only'' strategy.
The company will also retain all of its rights related to marketing,
merchandising and distributing its products over the Internet.
Fred Wagenhals, Action Performance Companies' chairman, president and chief
executive officer, stated, ``We are committed to refocusing our attention
and efforts on those things that we as a company do best -- developing and
delivering the most sought-after licensed merchandise in all of motorsports.
``We intend to let those in the media business do what they do best --
delivering motorsports news coverage and entertainment to the race fans.
``We have built a widely-recognized brand in goracing.com and intend to
utilize this brand in executing our commerce strategy over the Internet. We
have previously taken steps to reduce the fixed costs related to
goracing.com's infrastructure, including personnel, facilities and
equipment.
``The move from a vertical business model to an e-commerce-only strategy
will help to further reduce the cost of operating our Internet site by over
$1.5 million per quarter beginning in the fourth fiscal quarter.
``Developing and delivering content is an expensive proposition,
particularly considering the need to develop and maintain the significant
number of different sites that are part of our existing network. Rather than
creating and distributing our own content, we intend to explore future
relationships with others who are better able to drive traffic on the
Internet.
``Because Action Performance has the most complete line of licensed
merchandise in all of motorsports, we believe we will be provided with
significant opportunities to market and sell our products over the
Internet.''
David Husband, Action Performance Companies' chief financial officer, added,
``There are several large Internet and media companies that are just
beginning to compete for supremacy in the motorsports content arena. It is
difficult at this point to determine the eventual winner or winners.
``By retaining our rights to distribute our products over the Internet, we
have the flexibility to distribute our products through or partner with any
or all of them.
``We have had extensive conversations over the past several months with a
number of proposed Internet partners. Invariably, during our discussions
with each, the subject of exclusivity would surface. Each proposed partner
wanted to limit our ability to sell or distribute our products to others on
the Internet.
``Although the landscape hasn't fully come into focus as it relates to
motorsports on the Internet, we do know that the television networks
covering the sport beginning with the 2001 season will have a strong
motorsports Internet presence in order to compliment their television
coverage.
``At this point, we believe it is more prudent to retain all of our rights
and follow a 'wait and see' approach as it relates to potential strategic
relationships.''
Wagenhals remarked, ``Our business partners -- the drivers and teams -- are
being courted by numerous companies interested in opportunities that involve
the use of the driver's and team's rights to create and distribute content
over the Internet. We intend to support our drivers and teams no matter
which media partner they eventually choose.
``There is a lot of momentum and excitement building in all of motorsports,
particularly in NASCAR in anticipation of the upcoming 2001 season. This
season will be covered by two television networks through their New Media
partners as a result of the blockbuster television contract with NASCAR.
``We look forward to capitalizing on the many and potentially significant
opportunities that will ultimately be presented to us.''
Action Performance has begun the process of restructuring the site and plans
to re-launch goracing.com by the end of the summer racing season. As part of
this restructuring process, the company's future commitments under certain
hosting, advertising and other agreements related to the existing site will
be reviewed and addressed in the coming weeks.
The company will record non-recurring charges of up to $16 million on a
pretax basis in the third quarter ending June 30, 2000 relating to the
write-off of goodwill associated with the acquisition of Tech 2000
Worldwide, endorsements and sponsorships, employee severance and termination
costs, and various other one-time charges.
In parallel, the company will pursue a buyer for its profitable and rapidly
growing Fantasy Cup auto racing game business, which Action acquired in
October 1999. Until an appropriate purchaser is identified, Action will
continue to operate the Internet portion of its Fantasy Cup business through
goracing.com.
Action Performance Companies Inc. is the leader in the design, marketing,
promotion and distribution of licensed motorsports merchandise. Its products
include a broad range of motorsports-related die-cast care replica
collectibles, apparel, souvenirs, and other memorabilia.
The company markets and distributes products through a variety of channels,
including the Racing Collectables Club of America (RCCA), online through
goracing.com, trackside at racing events, mass retail department stores and
a worldwide network of wholesale distribution and specialty dealers.
This press release contains forward-looking statements. The company's actual
results could differ materially from those set forth in the forward-looking
statements.
Factors that might cause such a difference include, among others,
competitive pressures, acceptance of the company's products and services in
the marketplace, the company's ability to implement successfully its
Internet strategy, and other risks detailed in the company's Securities and
Exchange Commission filings, including the company's Form 10-K/A dated Sept.
30, 1999.
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Contact:
Action Performance Companies Inc., Phoenix
David Husband, 602/337-3636
Fred Wagenhals, 602/337-3710