The following discussion is based upon and should be read together with the consolidated financial statements and notes thereto included elsewhere in this document.

We classify our revenues as admissions, event-related, broadcasting and other. "Admissions" includes ticket sales for all our events. "Event-related" revenue includes amounts received from sponsorship fees; luxury suite rentals; hospitality tent rentals and catering; concessions and souvenir sales and vendor commissions for the right to sell concessions and souvenirs at our facilities; sales of programs; track rentals and other event-related revenues. "Broadcasting" revenue includes rights fees obtained for television and radio broadcasts of events held at our speedways and ancillary media rights fees.

Revenues pertaining to specific events are deferred until the event is held. Concession revenue from concession stand sales and sales of souvenirs are recorded at the time of sale. Revenues and related expenses from barter transactions in which we receive advertising or other goods or services in exchange for sponsorships of motorsports events are recorded at fair value in accordance with the provisions of ASC Topic 845, "Nonmonetary Transactions." Barter transactions accounted for $337,000 and $787,000 of total revenues for the three and nine-month periods ended September 30, 2009. Barter transactions accounted for $580,000 and $1,094,000 of total revenues for the three and nine-month periods ended September 30, 2008.

Expenses that are not directly related to a specific event are recorded as incurred. Expenses that specifically relate to an event are deferred until the event is held, at which time they are expensed. Our expenses include prize and point fund monies and sanction fees paid to various sanctioning bodies, including NASCAR, labor, advertising, cost of goods sold for merchandise and souvenirs, and other expenses associated with the promotion of our racing events.

Results of Operations

Three Months Ended September 30, 2009 vs. Three Months Ended September 30, 2008

Admissions revenue was $11,196,000 in the third quarter of 2009 as compared to $15,365,000 in the third quarter of 2008. The $4,169,000 decrease was primarily related to changes in our major events schedule, lower admissions revenue at our September NASCAR event weekend at Dover International Speedway and to a lesser extent lower admissions at all other major events we promoted during the third quarter of 2009. There were two changes in our major events schedule during the quarter. First, we promoted an NHRA event at our Memphis facility during the third quarter of 2008. This event was held in the fourth quarter of 2009. Second, the Indy Racing League event at our Nashville Superspeedway that we promoted during the third quarter of 2008 was not promoted in 2009. Additionally, we believe the decrease in attendance was attributable primarily to the general downturn in economic conditions, including those affecting disposable consumer income and corporate budgets such as employment, business conditions, interest rates and taxation rates. We believe that adverse economic trends, particularly credit availability, the decline in consumer confidence and the rise in unemployment have increasingly contributed to the decrease in attendance. Inclement weather during the September NASCAR event weekend at Dover International Speedway also negatively impacted attendance.

Event-related revenue was $7,481,000 in the third quarter of 2009 as compared to $12,073,000 in the third quarter of 2008. The $4,592,000 decrease was primarily related to the changes in our major events schedule discussed above and lower sponsorship revenues at most events we promoted during the quarter and lower luxury suite rentals and concession sales at our September NASCAR Sprint Cup Series event at Dover International Speedway as a result of the lower attendance and the aforementioned economic conditions.

Broadcasting revenue remained consistent between the third quarter of 2009 and the third quarter of 2008 at $12,346,000 and $12,348,000, respectively.

Operating and marketing expenses were $19,159,000 in the third quarter of 2009 as compared to $24,083,000 in the third quarter of 2008. The $4,924,000 decrease primarily related to the changes in our major events schedule discussed above. Additionally, cost savings at all major events promoted during the quarter and a reduction in expenses due to the lower event-related revenues contributed to the decrease in operating and marketing expenses during the quarter.

We recorded an impairment charge of $7,478,000 in the third quarter of 2009 as a result of our review of the long-lived assets of our Memphis facility for impairment. Based on the results of this analysis, we recorded the non-cash impairment charge to write-down the carrying value of long-lived assets at our Memphis facility to fair value.

General and administrative expenses remained consistent between the third quarter of 2009 and the third quarter of 2008 at $3,062,000 and $3,131,000, respectively.

Depreciation and amortization expense was $1,606,000 in the third quarter of 2009 as compared to $1,773,000 in the third quarter of 2008. The decrease resulted primarily from the cessation of depreciation expense at our Memphis

Net interest expense was a negative $244,000 in the third quarter of 2009 as compared to $947,000 in the third quarter of 2008. The decrease was due primarily to the reversal of $1,011,000 of previously recorded interest expense on certain unrecognized income tax benefits which are no longer subject to examination. Excluding the interest expense we record on certain unrecognized income tax benefits, our net interest expense was $710,000 in the third quarter of 2009 as compared to $846,000 in the third quarter of 2008.

Earnings before income tax expense were $83,000 in the third quarter of 2009 as compared to $9,857,000 in the third quarter of 2008. Excluding the non-cash impairment charges, our adjusted earnings before income tax expense were $7,561,000 in the third quarter of 2009.

             Earnings before income tax expense            $    83,000
             Non-cash impairment charges                     7,478,000

             Adjusted earnings before income tax expense   $ 7,561,000

Our effective income tax rates for the third quarter of 2009 and 2008 were 731.3% and 52.3%, respectively. The change in our effective income tax rate from the prior year rate was primarily due to the changes in the mix of taxable income and losses within our various subsidiaries. Certain subsidiaries had state taxable income which resulted in state income tax expense; however, other subsidiaries with state tax losses have no state income tax benefits based upon the valuation allowances that we have recorded in connection with state net operating loss carryforwards.

Nine Months Ended September 30, 2009 vs. Nine Months Ended September 30, 2008

Admissions revenue was $23,149,000 in the first nine months of 2009 as compared to $30,101,000 in the first nine months of 2008. We promoted twelve major events during the first nine months of 2009 and fourteen major events during the first nine months of 2008 as a result of the changes in our major events schedule discussed above. The $6,952,000 decrease was primarily related to lower admissions revenue at our NASCAR event weekends at Dover International Speedway, the changes in our major events schedule discussed above and to a lesser extent lower admissions at all other major events we promoted during the nine months. We believe the decrease in attendance was attributable in part to the aforementioned economic conditions and inclement weather during the September NASCAR event weekend at Dover International Speedway.

Event-related revenue was $16,260,000 in the first nine months of 2009 as compared to $24,425,000 in the first nine months of 2008. The $8,165,000 decrease was primarily related to the changes in our major events schedule discussed above and lower sponsorship revenues at most events we promoted during the first nine months of 2009 and lower luxury suite rentals and concession sales at our NASCAR Sprint Cup Series events at Dover International Speedway as a result of the aforementioned economic conditions.

Broadcasting revenue remained consistent between the first nine months of 2009 and the first nine months of 2008 at $27,284,000 and $27,134,000, respectively.

Operating and marketing expenses were $44,505,000 in the first nine months of 2009 as compared to $50,801,000 in the first nine months of 2008. The $6,296,000 decrease primarily related to the changes in our major motorsports event schedule, cost savings at all major events promoted in the first nine months of 2009 and a reduction in expenses due to the aforementioned lower revenues.

We recorded an impairment charge of $7,478,000 in the first nine months of 2009 as a result of our review of the long-lived assets of our Memphis facility for impairment. Based on the results of this analysis, we recorded the non-cash impairment charge to write-down the carrying value of long-lived assets at our Memphis facility to fair value.

General and administrative expenses decreased slightly between the first nine months of 2009 and the first nine months of 2008 from $9,420,000 to $9,219,000.

Net interest expense decreased to $1,268,000 in the first nine months of 2009 as compared to $3,049,000 in the first nine months of 2008. The decrease was due primarily to the reversal of $1,011,000 of previously recorded interest expense on certain unrecognized income tax benefits which are no longer subject to examination and to a lesser extent a lower average interest rate and lower average outstanding borrowings under our credit facility. Excluding the interest expense we record on certain unrecognized income tax benefits, our net interest expense was $1,973,000 in the first nine months of 2009 as compared to $2,609,000 in the first nine months of 2008.

Loss on sale of investments was $102,000 in the first nine months of 2009 and related solely to losses on the sale of available-for-sale securities.

(Loss) earnings before income taxes were ($513,000) in the first nine months of 2009 as compared to $13,309,000 in the first nine months of 2008. Excluding the non-cash impairment charges, our adjusted earnings before income taxes were $6,965,000 in the first nine months of 2009.

           Loss before income tax expense                ($   513,000 )
           Non-cash impairment charges                      7,478,000

           Adjusted earnings before income tax expense   $  6,965,000

Our effective income tax rates for the first nine months of 2009 and 2008 were (158.1%) and 51.9%, respectively. The change in our effective income tax rate from the prior year rate was primarily due to the changes in the mix of taxable income and losses within our various subsidiaries. Certain subsidiaries had state taxable income which resulted in state income tax expense; however, other subsidiaries with state tax losses have no state income tax benefits based upon the valuation allowances that we have recorded in connection with state net operating loss carryforwards.

Liquidity and Capital Resources

Our operations are seasonal in nature with a majority of our motorsports events occurring during the second and third quarters. However, our cash flows from operating activities are more evenly spread throughout the year, primarily due to the impact of advance ticket sales and other event-related cash receipts, such as sponsorship and luxury suite rentals.

Net cash provided by operating activities decreased to $6,350,000 for the nine months ended September 30, 2009 from $10,906,000 for the nine months ended September 30, 2008 primarily due to the lower earnings in 2009.

Net cash used in investing activities was $637,000 for the nine months ended September 30, 2009 as compared to $8,634,000 for the nine months ended September 30, 2008. Capital expenditures were $1,896,000 in the first nine months of 2009, down from $6,467,000 in the first nine months of 2008. The 2009 additions related primarily to the Monster Makeover project, consisting primarily of racetrack improvements at our Dover facility. The 2008 additions also related primarily to the Monster Makeover project, including the construction of a new entranceway, fan zone and medical center placed in service in the second quarter of 2008, and the renovation and construction of other fan amenities at our Dover facility. Changes in our restricted cash accounts were $1,257,000 and ($2,117,000) for the nine month periods ended September 30, 2009 and 2008, respectively.

Net cash used in financing activities was $5,163,000 for the nine months ended September 30, 2009 as compared to $1,564,000 for the nine months ended September 30, 2008. We had net repayments on our outstanding line of credit of $3,000,000 in the first nine months of 2009. We had an increase in borrowings on our line of credit of $200,000 in the first nine months of 2008. Repayments of our outstanding SWIDA bonds were $1,128,000 for the first nine months of 2009 as compared to $109,000 for the first nine months of 2008. We paid $733,000 in cash dividends in the first nine months of 2009 as compared to $1,638,000 in the first nine months of 2008. During the first

On July 29, 2009, our Board of Directors voted to suspend the declaration of regular quarterly cash dividends on all classes of our common stock. Dividends are prohibited by the most recent amendment to our credit facility and the suspension of our dividend will continue through the end of 2009. We will consider the resumption of a regular dividend in 2010, if permitted by our lenders, after taking into consideration our financial performance and condition, our capital requirements, and general economic and industry conditions at such time.

At September 30, 2009, Dover Motorsports, Inc. and all of its wholly owned subsidiaries, as co-borrowers, were parties to a $73,000,000 secured revolving credit agreement with a bank group. The credit agreement is secured by all of our assets. Effective August 21, 2009, the credit facility was amended to revise certain financial covenants and the interest rate calculation, among other changes. The maximum borrowing limit under the credit facility reduces to $68,000,000 on July 1, 2010 and the facility expires July 1, 2011. It provides for seasonal funding needs, capital improvements, letter of credit requirements and other general corporate purposes. Interest is based, at our option, upon LIBOR plus 350 basis points or the adjusted base rate. The base rate is the greater of the prime rate or the federal funds rate plus 50 basis points or the daily LIBOR rate plus 100 basis points. The adjusted base rate is the greater of 3.75% per annum or the base rate plus 250 basis points. The base rate option is not available for the portion of indebtedness equal to the notional amount under the interest rate swap agreement described below. The terms of the credit facility contain certain covenants including minimum tangible net worth, fixed charge coverage and maximum funded debt to earnings before interest, taxes, depreciation and amortization. In addition, the credit agreement includes a material adverse change clause and prohibits the payment of dividends by us. The credit facility also provides that if we default under any other loan agreement, that would be a default under this credit facility. At September 30, 2009, we were in compliance with the terms of the credit facility.

Material adverse changes in our results of operations could impact our ability to maintain financial ratios necessary to satisfy these requirements. There was $39,200,000 outstanding under the credit facility at September 30, 2009, at a weighted average interest rate of 3.75%. After consideration of stand-by letters of credit outstanding, the remaining maximum borrowings available pursuant to the credit facility were $11,736,000 at September 30, 2009; however, in order to maintain compliance with the required quarterly debt covenant calculations as of September 30, 2009 only $2,365,000 could have been borrowed as of that date. Based on projected future results, we expect to be in compliance with all of the covenants for all measurement periods during the next twelve months.

Effective October 21, 2005, we entered into an interest rate swap agreement that effectively converted $37,500,000 of our variable-rate debt to a fixed-rate basis, thereby hedging against the impact of potential interest rate changes. The notional amount of the swap agreement decreased to $30,000,000 on November 1, 2006, to $20,000,000 on November 1, 2007, and to $10,000,000 on November 1, 2008. The agreement terminated on November 1, 2009. Under this agreement, we paid a fixed interest rate of 4.74%. In return, the issuing lender refunded to us the variable-rate interest paid to the bank group under our revolving credit agreement on the same notional principal amount, excluding the margin of 350 basis points.

Our wholly-owned subsidiary, Midwest Racing, Inc. entered into a stock purchase agreement dated January 28, 2009, to sell Memphis Motorsports Park to Gulf Coast Entertainment, L.L.C ("Gulf Coast"). Under the terms of the agreement, Midwest Racing was to sell all of the stock of its wholly-owned subsidiary, Memphis International Motorsports Corporation, the owner of Memphis Motorsports Park, to Gulf Coast for $10,000,000 in cash and a two percent non-dilutable interest in Gulf Coast. Gulf Coast is the owner of Alabama Motorsports Park, a proposed multi-use entertainment complex expected to be constructed in Mobile, Alabama. Closing under the stock purchase agreement, as amended, had been scheduled for June 29, 2009, but Gulf Coast did not finalize its project financing. In keeping with our obligations under the stock purchase agreement to engage in good faith discussions relative to an extension of the closing date, we had been in negotiations with Gulf Coast relative to an amendment to the stock purchase agreement which would have allowed for an extension of the closing date until September 29, 2009. Those negotiations were unsuccessful and as permitted under the terms of the stock purchase agreement, we terminated the agreement and will retain $165,000 that was paid by Gulf Coast as a non-refundable deposit. Gulf Coast transferred to us a 2% special member interest in Gulf Coast which by its terms is nondilutable and does not require that we advance any monies to maintain our interest. Upon execution of the stock purchase agreement in January 2009, the assets and liabilities of Memphis qualified for held for sale presentation. Since the sale was not completed and the agreement was no longer effective as of September 30, 2009, the assets and liabilities of

On November 2, 2009, our Board of Directors approved the closing of the Memphis facility. NASCAR has approved the realignment of our NASCAR Camping World Truck Series and NASCAR Nationwide Series events from Memphis Motorsports Park to our Nashville and Gateway facilities. We are currently evaluating all of our options relative to the Memphis facility at this time.

Cash provided by operating activities is expected to substantially fund our capital expenditures. Based on current business conditions, we expect to spend approximately $2,000,000 on capital expenditures during 2009. These expenditures primarily relate to our Monster Makeover project. On May 24, 2006, we announced plans for a five-year capital improvement project, referred to as the "Monster Makeover," that will provide new offerings and upgraded amenities for fans, competitors and the media. The project is expected to take up to five years to complete at an estimated total cost of approximately $25,000,000 to $30,000,000, of which approximately $20,800,000 was spent as of September 30, 2009. We continue to review the amount and timing of capital expenditures in light of our current earnings level. Additionally, we expect to contribute approximately $250,000 to our pension plans in 2009 in order to satisfy minimum statutory funding requirements, of which $165,000 was contributed during the nine months ended September 30, 2009. We expect continued cash flows from operating activities and funds available from our credit agreement to provide for our working capital needs and capital spending requirements at least through the next twelve months and also provide for our long-term liquidity.

Contractual Obligations

At September 30, 2009, we had the following contractual obligations and other
commercial commitments:



                                                                     Payments Due by Period
                                         Total         2009      2010 - 2011     2012 - 2013    Thereafter
Revolving line of credit              $ 39,200,000   $      -    $ 39,200,000   $          -    $        -
SWIDA bonds(b)                           2,973,000          -       2,580,000         393,000            -

Total debt                              42,173,000          -      41,780,000         393,000            -
Estimated interest payments on
revolving line of credit(a)              2,610,000     405,000      2,205,000              -             -
Interest payments on SWIDA bonds(b)        335,000          -         317,000          18,000            -
Operating leases                         4,613,000      92,000        503,000         331,000     3,687,000
Pension contributions(c)                    85,000      85,000             -               -             -

Total contractual cash obligations    $ 49,816,000   $ 582,000   $ 44,805,000   $     742,000   $ 3,687,000

(a) The future interest payments on our revolving credit agreement were estimated using the current outstanding principal as of September 30, 2009 and related interest rates. For $10,000,000 of our outstanding borrowings, we used the fixed interest rate per the interest rate swap agreement through the November 1, 2009 swap expiration date, and the current rate as of September 30, 2009 thereafter. For the remaining $29,200,000 of our outstanding borrowings, we used our interest rates as of September 30, 2009.

(b) In 1996, Midwest Racing entered into an agreement with SWIDA to receive the proceeds from the "Taxable Sports Facility Revenue Bonds, Series 1996 (Gateway International Motorsports Corporation Project)," a Municipal Bond Offering, in the aggregate principal amount of $21,500,000, of which $2,973,000 was outstanding at September 30, 2009. SWIDA loaned all of the proceeds from the Municipal Bond Offering to Midwest Racing for the purpose of the redevelopment, construction and expansion of Gateway. The proceeds of the SWIDA bonds were irrevocably committed to complete construction of Gateway, to fund interest, to create a debt service reserve fund and to pay for the cost of issuance of the bonds. The repayment terms and debt service reserve requirements of the bonds issued in the Municipal Bond Offering correspond to the terms of the SWIDA bonds. The bonds are being amortized through February 2012.

(c) We expect to contribute approximately $250,000 to our pension plans for 2009, of which $165,000 was contributed in the first nine months of 2009. For years subsequent to 2009, we are unable to estimate what our pension contributions will be.

In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued $25,900,000 in Variable Rate Tax Exempt Infrastructure Revenue Bonds, Series 1999, to acquire, construct and develop certain public infrastructure improvements which benefit the operation of Nashville Superspeedway, of which $21,700,000 was outstanding at September 30, 2009. Annual principal payments range from $600,000 in September 2009 to $1,600,000 in 2029 and are payable solely from sales taxes and incremental property taxes generated from the facility. These bonds are direct obligations of the Sports Authority and are therefore not recorded on our consolidated balance sheet. If the sales taxes and incremental property taxes are insufficient for the payment of principal and interest on the bonds, we would become responsible for the difference. We are exposed to fluctuations in interest rates for these bonds. A significant increase in interest rates could result in us being responsible for debt service payments not covered by the sales and incremental property taxes generated from the facility. In the event we were unable to make the payments, they would be made pursuant to a $22,064,000 irrevocable direct-pay letter of credit issued by our bank group.

We believe that the sales taxes and incremental property taxes generated from the facility will continue to satisfy the necessary debt service requirements of the bonds through the maturity date in 2029. As of September 30, 2009 and December 31, 2008, $883,000 and $549,000, respectively, was available in the sales and incremental property tax fund maintained by the Sports Authority to pay the remaining principal and interest due under the bonds. During the first nine months of 2009, we paid $1,011,000 into the sales and incremental property tax fund and $677,000 was deducted from the fund for principal and interest payments. If the debt service is not satisfied from the sales and incremental property taxes generated from the facility, a portion of the bonds would become our liability. If we fail to maintain the letter of credit that secures the bonds or we allow an uncured event of default to exist under our reimbursement agreement relative to the letter of credit, the bonds would be immediately redeemable.

We have not included our non current income taxes payable of $4,696,000 which is . . .