Cibelli makes own offer for Dover Motorsports shares
by Anthony Noto
Updated 05:43 PM, Nov-13-2009 ET

The fate of Dover Motorsports Inc. may be at a crossroads after one of its dissident shareholders offered to buy a block of stock in the troubled racetrack operator that could shift voting control enough to lead to an auction of assets.
  
Mario Cibelli, managing director of Marathon Partners LP and 16% shareholder of the Dover, Del.-based DMS, sent a letter to the company's chairman, Henry Tippie, and two trustees of RMT Trust, which currently has voting control of DMS through the holdings of Tippie, the Rollins family, which run the trust, and others.

In the letter, which was filed as a Form 13D with the Securities and Exchange Commission on Nov. 11, Cibelli offered to acquire the 8 million shares of non-publicly traded Class A common stock the trust owns in DMS for $18.8 million, or $2.35 per share.
  
In several interviews with the Deal LLC, Cibelli has said he wants to accelerate the auction of DMS assets, or the company as a whole, and his recent move appears to be a way to facilitate that effort by effectively eliminating current management's voting control.
  
Cibelli said in an interview on Friday, Nov. 13, that he's willing to take shares converted to regular common stock. Doing so wouldn't give Cibelli a controlling position in DMS but would counter Tippie by leaving voting decisions on remaining "A" shares up to members of the Rollins family who may act independently of each other.
  
"I'm not sure what the family goal is," Cibelli said. "So I'm offering them an option."
  
Meanwhile, results of a shareholder survey that were announced on Nov. 11 seem to support Cibelli's quest.
  
The survey, sent to all beneficial owners of the company's common stock as of Oct. 23, yielded a percentage scale for investors who would be satisfied with a pre-determined range of prices.
  
The findings, calculated and posted on ShareholderForum.com, show that 59% of the responders feel that $3 per share is a reasonable price for DMS shares. Of those who feel that management should suspend sale efforts until the economy improves, 33% voted in favor of a $2.50 per share as a reasonable price for the shares, versus 65% who want the company to sell now.
  
Insiders largely control DMS. Tippie owns 54% of the preferred shares, each one of which command 10-to-1 voting rights.
  
"It's a very unusual and highly conflicted position," Cibelli said.
  
He feels that Tippie, who could not be reached for comment, is using his positions at both the trust and DMS to quell any criticism he would otherwise receive for not raising shareholder value.
  
DMS has tried selling assets in the past, but with little success.
  
The company attempted to solicit bids on its Memphis Motorsports Park, but the company on Oct. 30 announced that a deal with Mobile, Ala.-based Gulf Coast Entertainment LLC was canceled and that the struggling racetrack in the Tennessee city would shut down, with no events planned for 2010.
  
"They get a $10 million deal and they can't even close that," Cibelli said, referring to the Gulf Coast offer.
  
He added that two other DMS racetracks, one in Nashville and the other in St. Louis, should be auctioned as well.
  
Cibelli's outspokeness and aggressiveness hasn't gone over well with DMS management.
  
"Please understand that you have not offered us a single useful idea or unique insight in any of your letters," wrote DMS senior vice president Klaus Belohoubek in a Sept. 9 letter addressed to Cibelli. "Selling at the absolute bottom of the market might be something you'd like to see us do, but we are not under any pressure to sell."
  
That same letter detailed a negotiation between DMS and an alliance formed by Daytona Beach, Fla.-based International Speedway Corp. and Concord, N.C.-based Speedway Motorsports Inc. But that deal, too, didn't pass muster with DMS management.

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