Churchill Downs to Resume Racing May 16, Pandemic Delays $300 Million Hotel Project

Posted on: May 4, 2020, 09:45h. 

Last updated on: May 4, 2020, 10:41h.

Churchill Downs will begin racing on May 16, just five days after the Louisville track opens for trainers and their thoroughbreds. The races will be held without fans, per state guidelines, to control the spread of COVID-19.

Churchill Downs Reopening
Churchill Downs was almost empty on what should have been the Kentucky Derby weekend, but racing will resume at the Louisville track on May 16. (Image: Churchill Downs/Twitter)

Track officials released their first condition book, which lists the schedule of the meet’s races, over the weekend.

Racing will take place every Thursday through Sunday each week through June 27. In addition, Churchill Downs will host a special holiday card on Memorial Day.

The spring meet at Churchill Downs was scheduled to start on April 25, but track officials delayed it due to the coronavirus pandemic. When tracks in Arkansas, California, Florida, Nebraska, and Oklahoma demonstrated success with racing without fans, Kentucky horsemen and advocates began pushing for racing to resume in the Bluegrass State.

Gov. Andy Beshear announced the reopening last week after approving the track’s plan to limit attendance to only essential employees and licensed trainers, jockeys, veterinarians, and other backstretch workers.

First Quarter Earnings, Profits Down

Churchill Downs Inc., the parent company, announced its first quarter earnings last week. Like other gaming companies, Louisville-based CDI saw revenue and profits drop sharply. While casinos were only closed over the last weeks of March, fewer people visited in the weeks prior, as the number of COVID-19 cases began to rise nationwide.

After states began closing casinos, Churchill Downs Inc. announced furloughs at 10 of its gaming properties.

For the first quarter of 2020, Churchill Downs Inc.’s net revenue was $252.9 million, compared to $265.4 million during the first quarter of 2019. Quarterly net income fell from $25.5 million last year to just $2 million this year.

While the closures have had a significant impact on the company and will almost certainly affect the second quarter financials even more, company executives told analysts during a conference call on Friday that CDI and its properties were still in position to weather the crisis.

As you can calculate from the numbers I’ve provided, you can see that even with this significant level of project capital and an ongoing property closure scenario, we have cash liquidity well beyond the next 12 months, with the flexibility to adjust the capital spending as necessary in the coming months,” said Marcia Dall, CFO for Churchill Downs Inc.

Dall added that besides an annual $4 million loan payment, the company does not have any long-term debt that matures for more than four years.

$300M Hotel Project on Hold

Still, the COVID-19 epidemic is forcing the company to make some adjustments to its development plans.

While Churchill Downs Inc. will finish construction on its Oak Grove harness track, historical racing (HHR) parlor and hotel in western Kentucky, other projects will be on the back burner. That includes the planned $300 million hotel and HHR venue at the company’s flagship property.

CDI CEO Bill Carstanjen told analysts that the company is committed, but will re-evaluate the project after the 2021 Derby.

“We expect to return to a growth trajectory for this company that is similar to what we’ve done over the last number of years,” he said. “But we have to do so prudently. We don’t have a crystal ball, either.”