Back in March, I reported that Churchill Downs Inc. is accepting bids for the property that houses Arlington Park – with zero intention of selling to other racing interests. The short of it: Arlington, one of the nation’s historic tracks, will be closing for good this year. Sunday, Tim Sullivan of the The Louisville Courier-Journal turned his keen eye on the impending closure. Excerpts follow (full piece here).
Though the move [closing, selling] might seem mystifying for a company whose roots are in racing and whose best-known product is the Kentucky Derby…there is nothing counterintuitive about CDI’s pursuit of profit. And, indisputably, there is quite a lot to recommend it. While shifting its emphasis from racetracks to casinos, Churchill management has rewarded investors with a 10-year total return of 1,334% through Friday’s market close…. Moreover, if Arlington is destined for the dustbin of history, as was Hollywood Park following CDI’s 2005 divestiture, this is in keeping with the industry’s trend toward contraction and, arguably, with Churchill management’s fiduciary responsibilities to its stockholders.
“Make no mistake about it, Churchill Downs is a gaming company. Horse racing, except for that day of the Derby, is listed in the ‘other’ category in their corporate reports. That tells you how relevant racing is to Churchill Downs,” said Mike Campbell, president of the Illinois Thoroughbred Horsemen’s Association.
With politicians such as Pennsylvania Gov. Tom Wolf wondering about the wisdom of continuing to subsidize a sport susceptible to allegations of animal abuse and operators eager to decouple their casino investments from a business long in decline, relying on racing as a core enterprise entails considerable risk. [Gaming analyst] Howard Jay Klein has repeatedly urged CDI to distance itself from underperforming assets, claiming the company was “too deeply committed in legacy businesses” with terrible long-term demographics.
Churchill has since shed Florida’s Calder Race Course from its portfolio…. The final race at Calder…was run last November. Barring a sudden reversal, Arlington is next.
Good news, indeed.