UNITED STATES SECURITIES AND EXCHANGE COMMISSION

OR

Bull Run Corporation

4370 Peachtree Road, N.E., Atlanta, GA 30319
(Address of principal executive offices)      (Zip Code)

(404) 266-8333
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 4,922,804 shares of Common Stock, par value $.01 per share, were outstanding as of June 30, 2004.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BULL RUN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BULL RUN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except per share data)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BULL RUN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (Unaudited)
(Amounts in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BULL RUN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BULL RUN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Bull Run Corporation (“Bull Run” or the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal, recurring adjustments) considered necessary for a fair presentation of the Company’s financial position and results of operations have been included. Operating results for the three-month and nine-month periods ended May 31, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2003.

The accompanying condensed consolidated financial statements include the accounts of Bull Run and its wholly owned subsidiaries, including Host Communications, Inc. (“Host”), after elimination of intercompany accounts and transactions. Bull Run, through Host, provides comprehensive sales, marketing, multimedia, special event and convention/hospitality services to National Collegiate Athletic Association (“NCAA”) Division I universities and conferences, national/global associations, and domestic and international grassroots sports and lifestyle events.

Discontinued Operation - Prior to the current fiscal year, the Company provided consulting services to Gray Television, Inc. (“Gray”), a company in which Bull Run had a significant investment until August 2003 (refer to Note 4), in connection with Gray’s acquisition and divestiture activities. In January 2004, the Company determined that it would not be engaged in such services in the future, with Gray or any other party, and as a result, the Company presents consulting income for all prior fiscal periods as income from discontinued operations. There are no expenses associated with the consulting segment, nor are there any associated assets or liabilities as of May 31, 2004 or August 31, 2003. Unless otherwise indicated, amounts provided in these notes to the consolidated financial statements pertain to continuing operations.

Stock-Based Compensation – The Company follows the provisions of Statement of Financial Accounting Standards No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”). SFAS 123 allows companies to either expense the estimated fair value of stock options or continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), but disclose the pro forma effects on net income (loss) had the fair value of the options been expensed. The Company has elected to continue to apply APB 25 in accounting for its stock option incentive plans. For purposes of the following pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period:

Recent Accounting Pronouncement – In May 2003, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“SFAS 150”). SFAS 150 establishes standards for classification and measurement of certain financial instruments with characteristics of both liabilities and equity. SFAS 150 was effective for the Company as of September 1, 2003 and did not have any impact on the Company’s consolidated financial statements, however future classification of some of the Company’s preferred stock may be affected as a result of SFAS 150 (see Note 8).

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2. LIQUIDITY

As of May 31, 2004, the Company’s negative working capital was $71,615, including $55,932 of bank debt maturing on November 30, 2004. Certain current liabilities, including deferred revenue of $4,034, advances from stockholder of $3,300 and accrued preferred stock dividends of $1,813, do not represent cash obligations or do not represent liabilities expected to be paid in cash prior to the November 30, 2004 maturity date of the bank credit facility. In recent fiscal years, the Company has reported substantial losses and has consumed substantial cash in its operations. The Company has funded its liquidity needs through the issuance of preferred stock, the sale of investment assets, and the receipt of cash advances from the Company’s Chairman. Although management anticipates that the Company will continue to experience negative working capital ranging from approximately $65,000 to $75,000 at least until such time as the bank credit agreement matures or is modified, management believes the Company has sufficient liquidity sources, which include the Company’s Chairman and his affiliates, to meet its cash obligations until the November 30, 2004 maturity date of the bank credit agreement. Under the terms of the current bank credit agreement, the Company may source up to an additional amount of approximately $1,900, if necessary, from its Chairman and/or his affiliates, for the funding of working capital cash requirements. As further discussed in Note 6, the Company’s Chairman has guaranteed repayment of up to $53,500 of the outstanding bank debt.

The Company has commenced discussions with its bank lenders regarding an extension of the agreement or other refinancing plan, including the terms under which additional financing might be made available and the terms under which additional investments might be made by the Company’s Chairman or other affiliated parties, and currently believes that it will be able to extend or refinance the agreement under terms similar to those of the present bank credit agreement prior to the November 30, 2004 maturity date. However, there can be no assurance that the Company will be able to reach an acceptable agreement with its lenders on an extension or expansion of the existing credit facility. If the Company is unable to reach such an agreement with its bank lenders, the Company’s future liquidity needs will be primarily dependent on its Chairman, since management believes that if the Company is unable to reach an acceptable agreement with its lenders, the lenders would then likely exercise their rights under the guaranty agreement with the Chairman, and the Chairman would, as a result of a call of his guaranty, become the Company’s primary creditor.

The Company’s ability to obtain bank financing beyond the November 30, 2004 maturity date of the current agreement is significantly dependent on the continued support of the Company’s Chairman and, in part, on the Company’s future operating results. There can be no assurance that the Company’s future operating results will be sufficient, the Chairman will continue his financial support of the Company, or the Company will ultimately be successful in obtaining bank financing at acceptable terms; however, management currently believes that its Chairman will continue providing financial support to the Company and the Company’s future operating results will not hinder the Company’s ability to reach an acceptable financing agreement with its bank lenders.

3. SUPPLEMENTAL CASH FLOW DISCLOSURES

Supplemental cash flow information follows:

4. INVESTMENT IN AFFILIATED COMPANIES

Prior to August 31, 2003, the Company held investments in Gray common stocks and warrants to purchase additional shares of Gray common stocks. The Company accounted for its investments in Gray’s two publicly traded classes of

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common stock using the equity method. In April 2003, the Company sold the warrants back to Gray for cash proceeds of $5,121. In August 2003, the Company sold its investments in Gray common stocks to Gray and other parties affiliated with the Company, including the Company’s Chairman of its board of directors, for aggregate cash proceeds of $34,297.

In October 2002, Gray completed a public offering of 30,000 shares of its common stock for net proceeds of approximately $231,200, and in November 2002, Gray issued an additional 4,500 shares for additional proceeds of approximately $34,900. As a result of these transactions by Gray, the Company’s ownership of Gray’s outstanding common stock was reduced from 12.9% to 4.0%. Since Gray’s net proceeds per share of issued common stock was an amount which was less than the Company’s carrying value per share of Gray common stock owned prior to such transactions, a loss of $2,339 on the issuance of shares by Gray was reported by the Company in the nine months ended May 31, 2003. Certain executive officers of Gray and certain directors of Gray are also executive officers and directors of the Company; therefore until such time as the Company sold its investments in Gray common stocks, the Company continued to account for its investment in Gray under the equity method subsequent to the issuance of shares by Gray, despite the dilution of the Company’s voting power to less than 20%, since the Company continued to have significant influence in Gray.

The Company sold its investment in Rawlings Sporting Goods Company, Inc. (“Rawlings”) common stock in December 2002 for cash proceeds of $6,764. Prior to the sale, a loss of $1,032 on the Rawlings investment that had been previously reported as “other comprehensive accumulated loss” (a component of the Company’s stockholders’ equity) was expensed, and reported as an investment valuation adjustment in the Company’s results of operations for the nine months ended May 31, 2003.

5. GOODWILL AND OTHER ACQUISITION INTANGIBLE ASSETS

The net change in the carrying amount of goodwill by reportable business segment is as follows:

The net change in the carrying amount of customer relationships and trademarks by reportable business segment is as follows:

The Company recognized an impairment charge of $3,300 at May 31, 2004 based on management’s consideration of current fiscal year operating results and the forecasted operating results and business plans for one of the Company’s business units. The impairment charge is reflected in “Amortization of the acquisition intangibles” in the Company’s condensed consolidated statement of operations for the three months and nine months ended May 31, 2004. An impairment charge of $30,540 (of which, $23,493 was attributable to goodwill, $4,735 to trademarks and $2,312 to customer relationships) was recorded in the Company’s prior year fourth quarter ended August 31, 2003.

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6. LONG-TERM DEBT

Long-term debt and notes payable consist of the following:

As amended in August 2003, the Company’s bank credit agreement provides for (a) two term loans (the “Term Loans”) for borrowings totaling $35,932 and (b) a revolving loan commitment (the “Revolver”) for maximum borrowings of $20,000. All amounts outstanding under the Term Loans and the Revolver are due on November 30, 2004, and bear interest at either the banks’ prime rate or the London Interbank Offered Rate (“LIBOR”) plus 2.75%, payable monthly. The amendment in August 2003 reduced the interest rate charged by the banks and revised the maturity date of the agreement to November 30, 2004 from September 30, 2003. No additional funding for working capital purposes is available under the terms of the credit agreement. As of May 31, 2004, substantially all borrowings under the Term Loans and Revolver were subject to the LIBOR-based rate of 3.85%.

The bank credit agreement, as amended, contains certain financial covenants, including the maintenance of minimum interest coverage ratios determined quarterly. Long-term debt is collateralized by all of the Company’s assets. The Company is presently in compliance with all provisions of the credit agreement as last amended.

In connection with the Company’s bank credit facilities, the Company’s Chairman of the board entered into a guarantee agreement in favor of the banks, for which he receives compensation from the Company in the form of shares of the Company’s common stock. During the nine months ended May 31, 2004, the Company issued approximately 343 restricted shares of the Company’s common stock then valued at approximately $694. During the nine months ended May 31, 2003, the Company issued approximately 158 restricted shares of the Company’s common stock then valued at approximately $1,127. The value of the shares issued to the Chairman is based on an annual compensation rate of 1.625% of the guarantee amount. The guarantee agreement currently requires the Chairman to personally guarantee up to $53,500 of the Company’s outstanding bank debt. The guaranteed amount has historically reduced, and will continue to reduce, dollar for dollar, as the aggregate outstanding amount under the Term Loans is reduced, subject to certain limitations. The guarantee agreement provides that if the Company defaults on its bank loan, the banks have the right to require the Chairman to repay the amount of such loan to the banks up to the maximum amount of his personal guarantee. Under the terms of his guarantee, if the banks exercise their rights to demand repayment from the guarantor, the Chairman has the option to purchase the entire loan from the banks, and thereby becoming the holder of the Company’s debt currently payable to the banks as a secured creditor.

In December 1999, the Company issued 8% subordinated notes in connection with the acquisition of Host, representing long-term debt of $8,693 as of May 31, 2004 and $16,709 as of August 31, 2003. Interest is payable quarterly and the notes, as amended, have a maturity date of January 17, 2006. During the nine months ended May 31, 2004, holders of 8% subordinated notes representing an aggregate face value of $8,016 exchanged their notes for shares of Series E Preferred Stock (refer to Note 8). In May 31 2004, a note having a face value of $3,019 was acquired by the Company’s Chairman from the note holder, and the terms of the note have been modified to amend the maturity date from January 2005 to January 2006, as well as to defer the payment of interest to the maturity date of the note. The Company also has outstanding 9% subordinated notes representing an aggregate amount of $590 having a maturity date of December 31, 2004. Payment of interest and principal on all subordinated notes is subordinate to the Company’s bank credit agreement.

Aggregate maturities of the Company’s long-term debt and notes payable as of May 31, 2004 (including the effects of the note modifications discussed above) in the fiscal years ending August 31, 2004, 2005 and 2006 are, respectively, $0, $56,522 (substantially all of which maturing on November 30, 2004) and $8,693, and none thereafter.

The Company is a party to an interest rate swap agreement terminating on December 31, 2004, which involves the exchange of interest at a fixed rate of 6.71% for interest at a variable rate, determined quarterly, equal to the 90-day LIBOR rate, without an exchange of the $25,000 notional amount upon which the payments are based. The differential paid or received as interest rates change is settled quarterly and is accrued and recognized as an adjustment of interest expense related to the debt.

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7. INCOME TAXES

The differences between the federal statutory tax rate of 34% and the effective tax rate of zero are principally due to increases in the valuation allowance for potentially non-realizable deferred tax assets of $1,076 and $1,475 for the three months ended May 31, 2004 and 2003, respectively, and $2,005 and $3,500 for the nine months ended May 31, 2004 and 2003, respectively.

8. PREFERRED STOCK ISSUANCE AND EXCHANGE

As of May 31, 2004, 12.497 shares of the Company’s series D convertible preferred stock (“Series D Preferred Stock”) were outstanding, having an aggregate face value of $12,497, 5.4 shares of which are currently convertible at the holder’s option into 540 shares of the Company’s common stock. An additional 4.097 shares of Series D Preferred Stock is convertible at the holder’s option into approximately 410 shares of the Company’s common stock beginning in July 2004 and the remaining 3 shares of Series D Preferred Stock are convertible into 300 shares of the Company’s common stock beginning in September 2004. Each holder of the Series D Preferred Stock is entitled to receive dividends at an annual rate of $90.00 per share in cash or in shares of the Company’s common stock at the holder’s option, except that, until the second anniversary of the date of issuance, the Company has the option to pay such dividends in cash or in shares of the Company’s common stock. The liquidation and redemption price of the Series D Preferred Stock is $1,000 per share, and dividends are cumulative. The Company has the option to redeem the Series D Preferred Stock at any time. All shares of preferred stock rank, as to payment of dividends and as to distribution of assets upon liquidation or dissolution of the Company, on a parity with all other currently issue