05/28/2014 11:44AM

CDI sells share of HRTV back to Stronach

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Churchill Downs Inc. has reached an agreement to sell its half-share in the racing broadcaster HRTV to the Stronach Group as part of its deal with the company to consolidate racing dates on the South Florida circuit.

A Churchill Downs spokesperson said on Wednesday that the company would have no comment about the agreement to sell Churchill’s stake to the Stronach Group beyond what was contained in a Wednesday release. The companies formed a partnership in the racing broadcaster in 2007, when Churchill was attempting to build up its fledgling account-wagering business, twinspires.com. The business has since gone on to become the largest account-wagering company in the U.S.

HRTV was launched to be a competitor to TVG, the racing broadcast network now owned by Betfair. Its stake in HRTV allowed Churchill to leverage its already considerable weight in the account-wagering market by guaranteeing that its signals had an outlet on a television network, even if that network reached far fewer households than TVG.

Churchill and the Stronach Group will apparently continue to offer each other’s signals, and HRTV will continue to broadcast races from Churchill’s tracks. In the release referring to the sale of the half-stake, the two companies said they had reached an agreement “to provide each other with their respective horse racing content for simulcast and account wagering purposes.” The release did not state how long the two sides had agreed to share content.

The Stronach Group, which is owned by the billionaire owner-breeder Frank Stronach, owns a handful of large tracks, including Santa Anita, Golden Gate, Gulfstream, Laurel, and Pimlico, and it also owns and operates its own account-wagering company, Xpressbet.com. (Xpressbet.com provides account-wagering services for DRFbets.com, a Daily Racing Form company.) To stay balanced in its competition with TVG, Xpressbet.com needs a stable of racetracks that include the Churchill Downs properties and the tracks that have joined with it to negotiate simulcast agreements.

HRTV’s financial health is unclear. According to Churchill’s financial statements, Churchill lost $700,000 on its stake in the company in 2010, compared with a $900,000 loss in 2009. Churchill’s annual financial statements have not clearly stated how the network’s financial performance is calculated, but in its latest statement, the company said that the stake’s investment “improved $0.6 million” in 2013 compared to 2012.

The sale of the stake was announced in a release from Churchill acknowledging that it had reached a deal to lease its Calder Race Course in Miami to the Stronach Group. The deal has been widely reported, and it will allow the Stronach Group to take over Calder’s racing operations, while Churchill retains the operations of its casino at the track.

Under the deal, Gulfstream will run 10 months out of the year, from Dec. 1 through the end of September. Calder will have 40 live race dates, run under Gulfstream’s management, in October and November. The two tracks have been running head-to-head since last summer.