Churchill Downs Announces Major Expansion at Iconic Track

Posted on: February 19, 2025, 04:28h. 

Last updated on: February 19, 2025, 04:28h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Operator will enhance site of the Kentucky Derby
  • Company expects to spend $350 million to $400 million in 2025

Churchill Downs (NASDAQ: CHDN) said today it’s embarking upon a multi-year expansion of its namesake racetrack aimed at bringing more fans to the Kentucky Derby.

Churchill Downs, CDI, New York Horseracing Association, NYRA, Horseracing Integrity and Safety Authority, HISA
Churchill Downs in Kentucky. The operator announced major expansion plans for the site of the Kentucky Derby. (Image: Churchill Downs)

In conjunction with the release of its fourth-quarter earnings, the gaming company said the new expansion effort at the famed racetrack will focus on the Conservatory, boosting the infield general admission area, and the Skye project.

The Kentucky-based company forecast spending of $455 million to $465 million for the Skye Terrace, $320 million to $330 million for the Conservatory, $60 million to $70 million for the infield, and $45 million to $55 million on related infrastructure projects. If spending on each of the those four programs comes in at the high end of projections, it’d total $920 million. Churchill Downs told analysts and investors it’s expecting to spend $350 million to $400 million this year.

We have a proven track record of prudently investing capital in the Kentucky Derby to create once-in-a lifetime experiences for our guests while also creating significant long-term value for our shareholders,” said CEO Bill Carstanjen in a statement.

Some phases of the projects could be ready for the 2026 edition of the Kentucky Derby, which is the first leg in horseracing’s triple crown.

Churchill Downs Project Details

Churchill is committing to new amenities at the iconic Kentucky track as an avenue for supporting the broader suite of Derby Week festivities and races. In the 150th edition of the “run for the roses” last year, handle for Derby Week and the Derby itself topped records.

Expansion and enhancement at the Skye Terrace will include raising the number of premium seats to 13,300 from 11,500 while “providing a variety of premium hospitality experiences that include improved track views and upgraded amenities.” The first three floors of that project are expected to be completed in advance of the 2027 Derby with the remainder slated to be complete before the 2028 race. The Conservatory plans are significant as well.

“The Conservatory Project will replace the temporary suites in the infield which line the homestretch of the racetrack. This project will replace 2,100 temporary seats with new permanent structures providing over 7,000 premium experiences for guests including 36 suites,” according to the gaming company.

Phase One of that effort will be ready for the 2026 Derby with the next two phases coming online over the following two years.

The Infield General Admission Project will bring three new structures to that area. It could also be a profit driver for Churchill Downs because it will provide for ticket upgrade opportunities. The three buildings will open one-by-one from 2026 through 2028.

Churchill Downs Expansion Unlikely to Strain Balance Sheet

Gaming is a capital-intensive industry and analysts and investors often apply scrutiny to operators’ spending plans. The good news for Churchill Downs is investors is that the company isn’t signaling issuance of new debt is part of the aforementioned spending program.

The operator said those expenditures will be funded by operating cash flow and previously established revolving credit facility. It added the projects “will lay the foundation for growth over the next decade and create significant shareholder value over the long term.”

At the end of last year, Churchill Downs had $175.5 million in cash and cash equivalents on hand, up from $144.5 million at the close of 2023.