08/01/2013 1:48PM

Churchill Downs Inc.'s numbers hurt by Florida competition


Upheaval on the Florida racing circuit is beginning to take a toll on Churchill Downs Inc.’s bottom line, Churchill officials said during a conference call on Thursday morning to discuss the company’s second-quarter results.

Though Churchill posted record earnings and revenues during the quarter, company officials said that revenues at its Calder Race Course property in Miami have been down by $5.1 million this year because of a change in host-track status for other Florida parimutuel properties, including Gulfstream Park, which is running head-to-head against Calder for the first time this year.

Under Florida statutes, racetracks that are designated as host tracks have the ability to sell simulcast signals to other parimutuel facilities in the state and share in the revenues from simulcasting at those facilities. Calder used to be the sole host track in the state for at least six months of the year, but this year, Gulfstream and Tampa Bay Downs both earned host-track status by holding isolated race cards outside of their traditional meets.

The $5 million loss in revenue to Calder had a marked impact on Churchill’s quarterly racing revenues, which fell by $3 million compared to the same quarter last year, to $157.4 million. In addition, handle at Calder is off this year as it competes with Gulfstream for the first time, leading to long-term concerns about Calder’s financial performance.

“It may very well take a couple of years before this is resolved,” said CDI chief executive Bob Evans on the conference call, about the dates overlap between Gulfstream and Calder.

Overall, Calder’s problems weren’t enough to seriously impact Churchill’s numbers for the quarter. Total revenues from the company’s four tracks, four casinos, and its online gambling operations were a record $283.8 million, up 5 percent over the record revenue posted in last year’s second quarter. Net income was also a record, at $50.3 million.

As is the case every year, the second-quarter results were juiced by the financial returns from the Kentucky Oaks and Kentucky Derby, the two most high-profile days of racing in Churchill’s entire portfolio. While Churchill did not release exact revenue figures for the two days, the company said that earnings before interest, taxes, depreciation, and amortization for the two days was up $5.8 million compared to last year’s events.

Clearly, Churchill is succeeding in its effort to leverage the Derby and Oaks into the company’s most important money-maker. To that end, it opened a luxury seating area, The Mansion, for this year’s Oaks and Derby, and the company said that it sold the area out at a cost of at least $7,500 for each ticket.

Said Evans: “The financial returns [from The Mansion] were excellent, as was our customers’ response.”