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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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International Speedway Corp: Talladega daze

C. HUYGENS - Tuesday, October 29, 2013
In an article on the cheating scandal at Richmond International Raceway that rocked NASCAR more than a month ago, Viv Bernstein of the New York Times wrote that the impact "continues to be felt in a sport whose credibility has been questioned by fans, the news media and even its drivers."

For spectators, aka customers, sporting events are for entertainment. For the sponsors, they are bait for spectators. For suppliers, they themselves are customers and for creditors, they are debt servicers. All is well as long as spectators are entertained. As was noted in an article in CFO.com last year with respect to the NFL, much of the entertainment value revolves around notions of fairness - ethical behavior by competitors and quality performances by officials responsible for enforcing ethics.

At Richmond, the race was to set the field for the Sprint Cup playoff. However, the race was manipulated by drivers at Michael Waltrip Racing to try to help Truex qualify at the expense of others. Last week, reports Bernstein, "Michael Waltrip Racing announced it was eliminating 15 percent of its staff, including the No. 56 race team and Martin Truex Jr., a driver at the center of the scandal, who has paid the highest price even though it appears he did nothing wrong."

The reputational value metrics from reputation insurer Steel City Re are sensitive to the aggregate expections of stakeholders. Those expectations comprise NASCAR's current reputation; the behaviors stakeholders take in light of those expectations have economic consequences that comprise NASCAR's reputational value. Seen through the management prism of Consensiv LLC, a licensee of Steel City Re's big data and a provider of reputation value controls whose monthly league table is now published by CFO.com, Bernstein's premise is substantiated.

As one of 52 constituent companies of the Movies/Entertainment sector, International Speedway Corp (a subsidiary of NASCAR) is a reasonable proxy for its parent. The data show that its Reputation Premium has been deteriorating for a few weeks and now stands at the 59th percentile. Over the past few weeks, that deterioration as been accelerating as confusion has slowly been creeping into the expectations of stakeholders, evidenced by a rise in the Consensus Trend to 1.9%.

While the impact is still being felt, however, it is only just beginning to push ISCA's reputational health out of the healthy zone into the less certain zone of caution. The data suggest that while not sanguine, stakeholders expect NASCAR to clean up the mess and will forgive past iniquities. Forgiven and forgotten, as they say, provided events going forward don't expose new scandals. Reputation resilience has its limits.



For more background on the Consensiv reputation controls, click here.

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