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To Build or Buy a Race Track? Expert Advice for Investors & Business Owners

Published: 09-19-23 Category: Buying

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The US motorsport industry topped out at over $5 billion in 2022 and is projected to reach nearly $7.5 billion by 2028. With average NASCAR viewers increasing and a recent surge of interest in Formula 1 racing, the racing industry in the US is on good footing.

As the racing and motorsport industries continue to grow, the forward-thinking entrepreneur might consider buying and opening a race track of their own. Although difficult, building or buying a race track for sale can be a fun and rewarding experience with good profit potential.

Here, we'llcover what commercial real estate investors need to know when looking at race tracks for sale. We'll discuss track costs, land requirements, legal aspects, and profitability.

Let's get started.

How Much Do Race Tracks Cost on Average?

To Build or Buy a Race Track? Expert Advice for Investors & Business Owners

The price of building a race track as opposed to buying a race track for sale varies heavily depending on the city/state, the type of track, and the scope of the surrounding facility. The two main types of race tracks are paved and dirt tracks.

Most track owners can expect to spend at least $100,000 on a small, stand-alone, paved track away from the city, while a full-sized, professional racing track can easily cost millions of dollars.

For example, North Carolina's Concord Speedway sold for $3.2 million in 2017. Aside from the actual track, race tracks might also include other pieces of commercial property, like offices, garages, seating, and more.

If you want to build a new race track from scratch, a low-ball estimate on construction costs would be about $100,000 to $200,000 per mile of paved track. Higher-quality asphalt can cost up to $1 million per mile of track. A dirt race track for off-road vehicles, like ATVs or motorcycles, comparatively costs less to build.

How Many Acres Do You Need to Build a Race Track?

It depends on the size and style of the track you want. A small, private, dirt motocross track might only require one or two acres, while a standard mile-long paved race track will need at least 50 acres, not counting land for parking lots, visitor seating, and other necessary facilities.

If you can't find the right plot of land to build or you can't finance a completed race track, you can look to lease a race track instead. When you lease instead of purchase, you're not tied down to an expensive piece of special-purpose real estate that might be hard to sell later on down the road.

Legal Aspects of Buying a Rack Track for Sale

Motorsports race tracks for sale tend to impact their surrounding environments in significant ways, so most states have fairly strict regulations on where and how you can build them. For example, many states regulate noise pollution from motorsports race tracks.

You also can't forget about zoning. Race tracks need to be built on land zoned for commercial business property or industrial property. Zoning rules might also regulate the hours that your race track can be open.

When buying race tracks for sale, make sure you have a broker and an attorney on your real estate team. A commercial real estate broker can help you negotiate sales contracts and analyze the financial metrics of a particular property, while a real estate attorney can ensure that your race track meets all local regulations and codes.

Race Track Operating Costs

Overall, operating costs for a small race track will most likely cost you tens of thousands of dollars per year. The largest race tracks in the world can cost several millions of dollars per year to run. Below is a quick breakdown of major race track operating costs.

#1 – Maintenance

One of the biggest recurring costs of buying a race track for sale is track maintenance and upkeep. Paved tracks can crack and become uneven, and dirt tracks need shaping so the dirt is level and compact enough for racing.

Track owners also need to maintain any track-owned vehicles. Overall, average track and vehicle maintenance costs come out to about $100,000 a year—the larger the track, the greater the upkeep costs will be.

#2 – Insurance

Another major operating cost for race tracks is insurance. All tracks need some kind of liability insurance, and most race tracks will buy some kind of equipment insurance and event cancellation insurance.

Track owners can expect to pay between $100 and $150 a month for $1 million in general liability coverage. Track owners may also be required to buy workers' compensation insurance as well as liability coverage for environmental exposure and contamination.

How Do Race Track Owners Make Money?

The main source of revenue for track owners is track fees. Track fees can range from $10 to $20 per person for a small go-kart track, while a professional racing track can charge thousands of dollars per person. Tracks might also sell monthly or annual memberships.

Other revenue streams for race tracks include equipment rentals (e.g., cars, tracksuits, helmets), concessions, and private event rentals. Track owners can also make money by creating ad space on their tracks and selling it to those looking to advertise.

Is Owning a Race Track Profitable?

Race tracks for sale can be profitable, but they're difficult to run and tend to carry a lot of risk. Financing for track construction is expensive, maintenance costs for tracks are high, and rental equipment will require regular tune-ups. Additionally, race track operations are seasonal, with most racing events occurring during the spring and summer.

Due to these difficulties, we would not recommend buying a race track as a first-time commercial real estate purchase. However, an experienced investor with in-depth knowledge of the motorsports industry could earn a six-figure salary running a small- to medium-sized race track.

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