03/04/2004 12:00AM

Churchill said to make a $28.5 million offer


NEW ORLEANS - Churchill Downs Inc. has made an offer to buy Fair Grounds, but the sale of the track is not imminent, and Churchill's offer is one among many pieces in Fair Grounds' ongoing financial puzzle.

Thursday's edition of the New Orleans Times-Picayune reported that Churchill had offered $28.5 million for the racetrack. The report, referencing two unnamed sources, said $20 million of the purchase price would go to a Louisiana horsemen's group. Fair Grounds owes the Louisiana Horsemen's Benevolent and Protective Association an undetermined sum from deductions judged to have been improperly taken from video poker machines.

Churchill officials declined to comment on the report, and Bryan Krantz, president of Fair Grounds, would not specifically address the Churchill offer. Krantz said Fair Grounds "was talking to a number of potential plan partners" within and outside the racing industry. "We continue to want to remain as the owner and management of the Fair Grounds," Krantz said.

A Churchill offer would not signal an imminent sale of the track. Fair Grounds declared bankruptcy last fall after the Louisiana Supreme Court ruled in favor of the HBPA in the HBPA's longstanding suit against the racetrack. Depending on calculations, Fair Grounds could be liable for as much as $90 million. A district court judge in Baton Rouge, La., was expected last Monday to issue a judgment on the amount of the damages, but he postponed that decision until March 23. On March 22, the judge will hear a third-party demand filed in 2001 by the Fair Grounds against the state of Louisiana. The demand says the state bears responsibility for the damages because Fair Grounds followed the state's instructions in taking deductions that were later termed illegal.

The district court battle is unfolding as Fair Grounds approaches the March 29 date for filing a reorganization plan in bankruptcy court. Douglas Draper, a bankruptcy attorney representing Fair Grounds, confirmed discussions among Fair Grounds, Louisiana horsemen, and interested outside groups, but said it was premature to "evaluate the numbers that have been put on the table."

Said Draper: "There are so many elements to be put together. We're still in the discussion phase. We're looking at the best plan for the creditor body at large. What the [Fair Grounds] could produce from video poker or slots revenue could be better than an offer on the table."

Fair Grounds has cleared the major hurdles that will bring slots to the racetrack.