I was shocked to learn that FreedomRoads CEO Marcus Lemonis has enough time to take on a part-time job running a racetrack in Wisconsin.
The Illinois resident has agreed to take on the role of chairman of the Milwaukee Mile racetrack. It's a motorsports venue under investigation by the State of Wisconsin for a variety of spending and accounting irregularities. I suspect it will take an extraordinary amount of time just to navigate that minefield.
What is interesting is that Lemonis doesn't seem to have enough to do running an empire of 59 RV dealers and 78 Camping World locations (according to the FreedomRoads website) which has more than $350 million in inventory sitting on dealer lots in a down economy.
The news of Marcus' part-time job is especially troubling considering that Affinity Group's bond ratings were lowered to new junk status by Standard and Poors a few weeks ago. At the time, Standard and Poors said the downgrade reflects concerns about the California-based direct marketing company's possible covenant violation from further deterioration in EBITDA and the decline in operating performance from the effects of the weak economy.
They had reason to worry. According to the Affinity Group's most recent financial report issued in May, Camping World stores, which Lemonis heads, were the biggest problem for the company. Store merchandise sales decreased approximately $5.4 million over the first quarter of 2007 due to a same store sales decrease of $8.5 million, or 16.5 percent, compared to a 1.2 percent decrease in same store sales for the first quarter of 2007.
Reports are circulating that Affinity Group will have a tough time refinancing loans in a tightening credit market in which payments of more than $223 million are due this year and next.
In fact, Moody's downgraded Affinity Group to B3 status in April prompted by heightened concern regarding Affinity's pressured liquidity and its reliance upon the recreation vehicle sector, which continues to suffer from weak market conditions and high fuel costs, Moody's said. The negative outlook reflected Moody's concern that Affinity Group may be unable to successfully conclude a refinancing of its senior secured credit facilities on acceptable terms and conditions.
I'm no financial expert, but these reports appear to indicate educated people have serious concerns about the company and it's future. Can our industry afford to have the CEO of FreedomRoads and Camping World investing his time, energy and attention running a racetrack as a side job -- even if Marcus' goal is to build a Camping World store and hold the Affinity Group's rally at the site?
Affinity Group will likely release its most current financial statement in a few weeks. Then we'll be able to see how well the company is doing in addressing the concerns of investors and financial institutions. But, it may be that the writing is on the wall and that Lemonis will be off to the races, literally, in a whole new career.