Latest news with #ChurchillDowns'
Forbes
25-04-2025
- Business
- Forbes
$920 Million Kentucky Derby Renovation Paused Over Tariff Concerns—‘Unquantifiable' Costs Blamed
Churchill Downs' four-year marquee project—announced just two months ago—is already off the burner due to economic uncertainty and a surprising 'hesitancy' in ticket sales for its marquee race. Mystik Dan #3, ridden by jockey Brian J. Hernandez Jr. (R), crosses the finish line ahead of Sierra ... More Leone #2, ridden by jockey Tyler Gaffalione and Forever Young, ridden by jockey Ryusei Sakai to win the 150th running of the Kentucky Derby at Churchill Downs last year. (Photo by Michael Reaves) The parent company of the Kentucky Derby racetrack is temporarily pausing a $920 million four-year expansion of the iconic horseracing venue due to 'increased general economic uncertainty and risk of significant inflation' driven by President Trump's tariffs, which 'has created unanticipated and currently unquantifiable expected cost increases in most materials,' William Carstanjen, CEO of Churchill Downs Inc., told investors on an earnings call Thursday. The project was first announced in the company's previous quarterly financial report in February, but 'a lot has changed in the world in the past nine weeks since that earnings call, including increased general economic uncertainty and risk of significant inflation,' Carstanjen told Wall Street analysts. The Louisville-based gambling and racing company made the announcement as it released first-quarter earnings, which were overall positive with record net revenue up 9% compared to the same period in 2024. 'Derby is their number one asset, and they just don't want to use shareholder capital at the wrong time, particularly when their stock price is where it is,' Chad Beynon, a senior analyst covering gaming, lodging and theaters for Macquarie Capital, told Forbes. Shares of Churchill Downs cratered 16% since Thursday's earnings announcement, and are down 33% year to date. On Churchill Downs' earnings call in late February, the company announced the nearly $1 billion four-year project, which included tearing down and rebuilding the racetrack's Skye Terrace, building new permanent infield venues for premium ticket holders and upgrading amenities for general admissions guests. But President Donald Trump's tariffs have 'created unanticipated and currently unquantifiable expected cost increases in most materials,' Carstanjen told investors. Consequently, Churchill Downs is pausing the project 'to let things settle down so that we can better determine any permanent changes in the cost of this project and better evaluate any changes in the overall economic environment.' Company executives told Wall Street analysts the pause 'could literally mean a quarter or it could mean several quarters,' Beynon said. 'So I think they're just being very disciplined, where this project will get done at some point.' $210.7 million. That was the record amount bet on the 2024 Kentucky Derby race, representing roughly two-thirds of the record $320.5 million wagered on all the races run at Churchill Downs on derby day. 'Year-over-year growth for the event ticket sales subindustry decelerated by approximately 10 percentage points between April 2nd and April 19th, suggesting that consumers are tightening their wallets when it comes to this expensive, very discretionary area—at least for the time being,' Michael Gunther, VP and head of insights at Consumer Edge, told Forbes. His firm analyzes credit and debit card data to track event ticket sales through platforms like Ticketmaster, Stubhub, Seatgeek, Axs, Front Gate, among others. 'The step-down in growth after April 2nd's larger-than-expected tariff announcement is notable, with continued economic uncertainty continuing to pressure spending.' Whether in an environment of reduced discretionary spending, the Derby will draw the enormous crowds it has historically. 'In 2025, in my opinion, [we] took a little bit of a jolt because we didn't have the endless pool of demand that we've seen in prior years,' Carstanjen told investors, noting some 'hesitancy' in sales, particularly for lower-tier tickets, which he pointed out are 'not inexpensive tickets, call them $1,000-plus tickets.' In a note to investors, Beynon wrote: 'For the Kentucky Derby this year, [Churchill Downs] management expects roughly flat EBITDA; recall that this is comping against an impressive $30 million EBITDA increase from last year's Kentucky Derby.' What's On The Kentucky Derby Menu? Chef Robert Lopez Breaks It Down (Forbes)
Forbes
25-04-2025
- Business
- Forbes
Kentucky Derby Racecourse Renovation Paused Due to ‘Risk Of Significant Inflation'
Churchill Downs' four-year marquee project—announced just two months ago—is already off the burner due to economic uncertainty and a surprising 'hesitancy' in ticket sales for its marquee race. Mystik Dan #3, ridden by jockey Brian J. Hernandez Jr. (R), crosses the finish line ahead of Sierra ... More Leone #2, ridden by jockey Tyler Gaffalione and Forever Young, ridden by jockey Ryusei Sakai to win the 150th running of the Kentucky Derby at Churchill Downs last year. (Photo by Michael Reaves) The parent company of the Kentucky Derby racetrack is temporarily pausing a $920 million four-year expansion of the iconic horseracing venue due to 'increased general economic uncertainty and risk of significant inflation' driven by President Trump's tariffs, which 'has created unanticipated and currently unquantifiable expected cost increases in most materials,' William Carstanjen, CEO of Churchill Downs Inc., told investors on an earnings call Thursday. The project was first announced in the company's previous quarterly financial report in February, but 'a lot has changed in the world in the past nine weeks since that earnings call, including increased general economic uncertainty and risk of significant inflation,' Carstanjen told Wall Street analysts. The Louisville-based gambling and racing company made the announcement as it released first-quarter earnings, which were overall positive with record net revenue up 9% compared to the same period in 2024. 'Derby is their number one asset, and they just don't want to use shareholder capital at the wrong time, particularly when their stock price is where it is,' Chad Beynon, a senior analyst covering gaming, lodging and theaters for Macquarie Capital, told Forbes. Shares of Churchill Downs cratered 16% since Thursday's earnings announcement, and are down 33% year to date. On Churchill Downs' earnings call in late February, the company announced the nearly $1 billion four-year project, which included tearing down and rebuilding the racetrack's Skye Terrace, building new permanent infield venues for premium ticket holders and upgrading amenities for general admissions guests. But President Donald Trump's tariffs have 'created unanticipated and currently unquantifiable expected cost increases in most materials,' Carstanjen told investors. Consequently, Churchill Downs is pausing the project 'to let things settle down so that we can better determine any permanent changes in the cost of this project and better evaluate any changes in the overall economic environment.' Company executives told Wall Street analysts the pause 'could literally mean a quarter or it could mean several quarters,' Beynon said. 'So I think they're just being very disciplined, where this project will get done at some point.' $210.7 million. That was the record amount bet on the 2024 Kentucky Derby race, representing roughly two-thirds of the record $320.5 million wagered on all the races run at Churchill Downs on derby day. 'Year-over-year growth for the event ticket sales subindustry decelerated by approximately 10 percentage points between April 2nd and April 19th, suggesting that consumers are tightening their wallets when it comes to this expensive, very discretionary area—at least for the time being,' Michael Gunther, VP and head of insights at Consumer Edge, told Forbes. His firm analyzes credit and debit card data to track event ticket sales through platforms like Ticketmaster, Stubhub, Seatgeek, Axs, Front Gate, among others. 'The step-down in growth after April 2nd's larger-than-expected tariff announcement is notable, with continued economic uncertainty continuing to pressure spending.' Whether in an environment of reduced discretionary spending, the Derby will draw the enormous crowds it has historically. 'In 2025, in my opinion, [we] took a little bit of a jolt because we didn't have the endless pool of demand that we've seen in prior years,' Carstanjen told investors, noting some 'hesitancy' in sales, particularly for lower-tier tickets, which he pointed out are 'not inexpensive tickets, call them $1,000-plus tickets.' In a note to investors, Beynon wrote: 'For the Kentucky Derby this year, [Churchill Downs] management expects roughly flat EBITDA; recall that this is comping against an impressive $30 million EBITDA increase from last year's Kentucky Derby.' What's On The Kentucky Derby Menu? Chef Robert Lopez Breaks It Down (Forbes)
Chicago Tribune
23-04-2025
- Business
- Chicago Tribune
And, it's off! Direct window betting on Kentucky Derby on hold at Hawthorne amid payment dispute
Horse racing fans planning on betting on the Kentucky Derby at Hawthorne Race Course windows this year may have to go online instead. As of Tuesday, Hawthorne –- the only horse track in the Chicago area — no longer offered over-the-counter betting on the Derby or other races at the host track, Churchill Downs, the Tribune has learned. The track in west suburban Stickney is in a dispute over payments to Churchill Downs, officials said. Normally, Hawthorne would pay for Churchill Downs' cable simulcast of its races, allowing gamblers to place bets at its windows at Hawthorne's home track and its 12 off-track betting parlors in the suburbs and downstate. Hawthorne President and CEO Tim Carey issued a statement saying that customers will be able to watch the broadcast of the Derby at Hawthorne facilities and wager on the race through online horseracing apps. Customers who prefer to wager with cash will be able to pay through Xpressbet online accounts with Hawthorne staff at all locations, as well as withdraw winnings as cash. 'We are expecting to once again be at full capacity at all of our venues for the biggest day in horse racing,' Carey said. 'We are working to resolve the interruption of over-the-counter and self-service machine wagering options and are optimistic that this service will also be available for the Derby.' Other horse racing officials said the payment dispute was a result of Hawthorne's inability to get financing to open a casino at its track, which would generate revenue for horse races and simulcasts. They said the news was terrible public relations for the biggest day in racing, when even casual fans pay attention and bet on the sport. 'It's shameful,' said Dave McCaffrey, executive director of the Illinois Harness Horsemen's Association. 'You're slapping your customers in the face.' Chris Block, president of the Illinois Thoroughbred Horsemen's Association, said the news was 'an extremely negative sign.' 'I understand patrons will be quite upset, and that's unfortunate,' he said. Hawthorne was sued by contractors last year for failing to pay millions of dollars for construction and other expenses. Hawthorne officials said they would pay those liens when they get financing to build a casino at the track. But in the nearly six years since state lawmakers gave Hawthorne authority to build a 'racino' in Stickney and another in the south suburbs, officials keep promising they're on the verge of getting financing, but have never done so. Rival groups have proposed building a new racino in the south suburbs. State lawmakers previously gave Hawthorne extraordinary veto power over any track in the area, but have been considering withdrawing that power. Recently, there has been a proposal to build a new racino in downstate Decatur, which would also require legislative action. Harness Association President Jeff Davis again called for opening the state to other operators. 'Enough is enough,' he said. 'This isn't leadership — it's obstruction. It's costing the state hundreds of millions of dollars and holding back an entire agri-business sector that supports thousands of Illinois jobs. We can't afford to keep waiting.' Signs at Hawthorne facilities didn't mention the Derby, but stated that they are offering no wagering on races at Turfway or Fair Grounds tracks, which Churchill Downs owns, and Oaklawn, for which Churchill Downs reportedly contracts to provide simulcast betting. The absence of simulcast betting is more than an inconvenience for horse owners and riders in Illinois. They depend on a cut of remote betting at other tracks, so they would stand to lose out on the biggest betting day in racing. A record $211 million was wagered nationwide on the Derby last year. Hawthorne received an estimated $450,000 in all of 2024 for commissions for wagering on Churchill Downs, and about $468,000 in prize money for races, state officials estimated. Hawthorne was in negotiations with Churchill Downs over settlement of payments, Illinois Racing Board Executive Director Domini Dicera said. 'We're hopeful they can resolve the issue before the Derby,' he said. The news came as the only other horse track in the state, Fairmount Park Casino & Racing, recently opened its 100th season with a new casino at the track in Collinsville, near St. Louis. The only racino in the state offers slots and electronic table games alongside horse racing. Churchill Downs Inc. previously owned Arlington International Racecourse, but shocked racing fans when it closed the track in 2021 to make more money through its majority ownership of Rivers Casino in nearby Des Plaines. The majestic grandstand was demolished by the Chicago Bears to save on property taxes after they bought the site in 2023 for a potential football stadium
