Churchill Pauses Multiyear Spending Plan, Citing Tariff Risks

Posted on: April 24, 2025, 02:34h. 

Last updated on: April 24, 2025, 03:09h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Company halts multiyear expansion plan at Kentucky racetrack
  • Cites tariffs, macroeconomic conditions as reasons for pause

Shares of Churchill Downs (NASDAQ: CHDN) plunged Thursday after the gaming company told investors that it’s pausing a previously announced capital spending plan at its namesake Kentucky racetrack, citing macroeconomic conditions and tariff risks.

hurchill Downs
Churchill Downs Racetrack in Louisville, Ky. The operator is pausing a sizable multiyear spending plan, citing tariff risk. (Image: Churchill Downs Inc.)

In late trading, the gaming stock was lower by almost 16% on volume that was more than quadruple the daily average after the company said a previously announced plan to enhance the Conservatory, the infield, and the Skye will be halted.

The decision to delay these construction projects is due to the increasing uncertainty surrounding construction costs related to tariff and trade disputes as well as current macro-economic conditions,” according to a press release. “In the coming months, CDI will assess the evolving economic landscape and evaluate any changes to the timing and sequencing of these multi-year projects.”

With Thursday’s tumble, Churchill Downs stock is heading toward its lowest closing price since November 2020, extending a dour run in which it’s shed more than a third of its value since the start of 2025.

Company Planned to Spend up to $400M This Year

There’s been ample talk of how tariffs could affect the gaming industry and some evidence that operators of land-based gaming venues are suffering as a result of the White House’s trade gambit, but Churchill Downs is one of the first companies in the space to pull the plug on capital expenditures while overtly citing those issues.

In February, the operator told investors it could spend as much as $920 million through 2028 on improving the Conservatory, the infield, and the Skye at its fabled Kentucky racecourse. At that time, executives estimated $350 million to $400 million of that spending could occur this year. Analysts aren’t sounding alarm bells on the decision to halt the spending program, with at least one noting it could be an opportunity for the operator to focus on delivering its balance sheet.

“Our impression is that the prospective impact on growth, coupled with the elevated leverage within the uncertain environment, is the driver of this decision,” said David Katz of Jefferies in a new report.

Others on the sell side view the halt of the multiyear spending program as an act of prudence by Churchill management, arguing the stock price doesn’t reflect that positive attribute.

“We think management continues to show discipline around capital allocation — holding off on a longer term, sizable set of projects especially as we have not seen much credit awarded in the stock price,” notes Truist Securities analyst Barry Jonas.

Not All Bad News for Churchill Downs Spending

It’s not all gloom and doom for Churchill Downs on the spending front. The company bought back $89.4 million of its stock in the first quarter, and last month, it said it’s expanding a previously announced buyback plan to $500 million.

The operator also pointed out that renovations of the existing Finish Line Suites and The Mansion at Churchill Downs Racetrack are on pace to be finalized next year. Those enhancements are expected to cost $25 million to $30 million.

“The renovation of the Finish Line Suites will update the existing 15 suites on the fifth floor overlooking the finish line at Churchill Downs Racetrack, providing modern interior appointments and amenities while also increasing the capacity to a total of 750 guests,” according to the statement.