05/13/2014 1:51PM

CDI commits to Fair Grounds improvements

Email

Churchill Downs Inc. has promised Louisiana lawmakers that it will spend almost $1 million on Fair Grounds Race Course in New Orleans by the start of the track’s fall meet, a deal that will give the company a reprieve from a bill that would force the track to commit a portion of its slot-machine revenue each year to track improvements.

The deal, which Churchill officials outlined during a Louisiana Senate hearing Tuesday, will require Churchill Downs to spend $690,000 on improvements to Fair Grounds’s turf course, the target of considerable criticism from horsemen this year. Approximately half of the track’s turf races during the 2013-14 meet were canceled, and horsemen blamed poor drainage.

Churchill also has agreed to spend $100,000 on marketing its horse-racing product at Fair Grounds. Horsemen, who conducted a months-long campaign against Churchill’s management of Fair Grounds beginning this winter, have contended that Fair Grounds has spent far more marketing its slot-machine operations than its horse races. In addition, according to a document Churchill provided to the legislators, Churchill said it would hire more tellers during live racing, replace aging televisions, and replace a broken infield video board.

According to the company’s financial statements, Churchill’s slot-machine operations in Louisiana generated approximately the same amount of net revenue as its horse racing operations in the state. Net revenue for the company’s slot machines in the state was $40.9 million in 2013, according to the statements, compared with net revenue of $40.1 million from horse-racing operations in Louisiana.

Churchill has been seeking to avert the passage of a bill that would require the company to spend 10 percent of its slot-machine proceeds in the state annually on improvements to its racing operations, or about $4 million a year at current revenue levels. The bill passed the House by a vote of 94-0 in April, but last week, a state Senate committee deferred taking action on the bill to give Churchill time to work out a deal with legislators.

In early May, the Louisiana Horse Racing Commission approved a one-year license renewal for Fair Grounds contingent on Churchill fulfilling certain pledges to improve the turf course and spend money on various other initiatives. The conditions included a promise by Churchill to spend $200,000 on the turf course, with a further commitment to spend an additional $600,000 if the initial repairs did not fix the problems with the course.

The conditions imposed by the horse-racing commission gave Churchill the ability to argue that any legislation imposing spending conditions would be partially redundant. At last week’s Senate hearing, several legislators said they wanted to see Churchill spend more money on the track but were wary of government imposing conditions on companies.