08/24/2006 11:00PM

Churchill's Evans: Change inevitable

Churchill Downs
"This whole engagement model of how the fan is going to engage with racing is going to change dramatically. It will be technology-driven, and if Churchill can be at the forefront of that, then I think we'll be rewarded economically." - Bob Evans

LOUISVILLE, Ky. - After two weeks on the job, Robert Evans is still getting acclimated in one of the most powerful positions in the racing industry: president and chief executive officer at Churchill Downs Inc.

Evans began working Aug. 14, replacing Tom Meeker, the 22-year leader of Churchill. Evans said he has spent most of his time "primarily listening" while trying to "get a sense of what the priorities are and how people think about things."

Evans, 53, comes from a highly diverse business background, having served as a high-ranking executive for such major corporations as Caterpillar, Accenture, Mazda, and Symphony Technology. He has been a racing fan for most of his adult life, saying that whenever he was traveling on business, "I'd figure out some way to get to the track."

Evans, a native of Cincinnati, moved four years ago from northern California to a 260-acre horse farm in Versailles, Ky., that has become Tenlane Farm, a commercial breeding operation. His brother, Tom, a longtime breeder, lives just across the road from him.

Below are excerpts of an Aug. 18 interview with Evans at Churchill.

Coming from the background that you do, i.e., primarily manufacturing and technology businesses, why is it that the CEO position at CDI was something for which you felt qualified?

Evans: When I originally encountered the idea, I probably would've said, "I wasn't." But as I met the board [of directors], and understood what their thinking was about the future and combined that with some of my own thoughts about what we might be able to do with the business, it seemed like some of my past experiences were increasingly relevant.

Rather than thinking about particular industries as "manufacturing" or "technology," think about essentially what I was involved in doing. In most cases, it was either taking an existing business, or starting a new business, and trying to grow it rapidly into something different than what it was in the past. That gets you into redesigning processes, recrafting organizations in terms of the skills and talent you need to make stuff happen - in some cases, applying technology to make that go. But it was really about building a change agenda and making that work. It just happened that I did it in construction equipment, logistics, automotive, software, and private equity. It's the same basic principles, even though the inside industry knowledge is different.

In general terms, what is the vision you have for CDI? You have made frequent references to "technology playing a leading role" in the future of the company.

I don't know that I have a vision at this point. A vision is something you ought to reach in conjunction with other people - not just inside the company, but other people inside the industry. So I'm still doing a bunch of research and trying to learn enough to start formulating a vision. I didn't walk in the door with one specific idea in mind, that this is what the company needs to do.

As far as technology playing a role, I think the fundamental concept wandering around in my head at the moment is that in order for horse racing to attract a new crowd, a younger crowd, we are going to have to change the way that racing engages with that consumer. This isn't something that I have observed inside of racing, it's something you observe elsewhere.

So let's talk about racing for a minute. How do I engage racing as a fan? I'd go over to the gas station, the only one that carried the Daily Racing Form in Versailles, buy one, take it home, read through it, find the tracks I was interested in, make handwritten notes about what I wanted to do. Get up the next morning, look through it again at breakfast, drive to the track, sit in a seat, go up to a parimutuel clerk, physically give him my money, and if I'm lucky or good, I get to go back and get cash for it.

It was a very physical, very atoms-based experience. I don't think the majority of folks 50 years from now will experience racing that way. Down the road, there will be all sorts of information that's accessible, searchable, and able to be analyzed with other technology that's available, so that the customer can make whatever he or she thinks is the best decision. This whole engagement model of how the fan is going to engage with racing is going to change dramatically. It will be technology-driven, and if Churchill can be at the forefront of that, then I think we'll be rewarded economically in terms of revenue growth and profitability, and the shareholders will be happy. I may be wrong, but if I look around at other forms of entertainment, that's what I see going on, I see the engagement model changing considerably.

Regarding CDI's newly announced partnership with Magna and Empire in seeking the New York Racing Association franchise: How involved were you in the decision to enter into that partnership, and how involved will you be in the partnership's future strategies?

Completely involved, and completely involved. Whenever you're trying to make change happen, you need partners. Magna is a smart organization; they see that the industry needs to change as well. We may not agree with them or anyone else on every little detail, but that's not important. At the macro level, I think we need to make change happen in the industry, and I want to work with whatever partners want to work with us to try to foster that agenda and move forward.

We're just going to have to do more of this - not just Churchill and Magna, but everybody in the industry. We're going to have to do this if we're going to have a bright, prosperous future. I've been in the business long enough to know that there are a lot of different constituencies and they all have their own points of view on how things should be done. We all, Churchill included, have our own set of parochial needs; we all have things that we need to do, most of them economic. And the challenge will be, can we find enough leadership among all the players in the industry to formulate a path forward where folks, in some cases, can put aside their short-term interests in order to get to a bigger future? Who knows? Other industries have done it successfully, and perhaps other industries have not done it successfully, because no one's assured of continued life forever in business. I think it's up to us to try to find a way to make these things happen, and what we've done with Magna and Empire around New York, I think, makes sense.

How critical do you think it is for CDI, and the Kentucky racing industry as a whole, to win approval of alternative gaming at state racetracks in the near future, and do you have any general idea about how to succeed in doing so?

I was taught in business that you should never base your business plan on things you can't control, so I think we have to think and act as if this may never happen, and do the best we can in that environment. Having said that, I think it would be quite unfortunate if we don't get some rational structure around alternative gaming in Kentucky - and this issue goes beyond Kentucky, too.

I don't have a clear path forward on this yet, but the issue is this: Society - the state of Kentucky and others - have decided that gambling, gaming, is an acceptable thing to do, in certain locations. What we have to insure is that it's done fairly, that everyone who is competing for the same consumer dollar has the same opportunity to capture it. And if one entity has certain advantages because they're afforded the opportunity to do certain types of games, and the other entity is not, well, that's not a level playing field. Nobody should be advantaged simply because they're operating in one state, or they have a set of rules in one state that other folks can't play by.

Beyond that, I don't know what the path forward is, but basically these things get sorted out over time. It just usually takes longer than anybody hopes.

How would you describe your style of leadership? Your predecessor, Tom Meeker, was a former Marine known for being a stern taskmaster. Would you say you might be more laid-back in your dealings with CDI employees and other people involved in the racing industry?

I've been accused in the past of being laid-back, I suppose, if you want to use that term, but I've had a number of people say that, in a way, that's a harder thing for people to live with in that management style. I'm not going to make every decision. I'm not going to think every thought. Every bit of activity that goes on is not going to run through me.

But, that doesn't mean I'm not going to hold people accountable for producing outstanding results. Some people will take that challenge on and be lifted up by it, and it will make their jobs more interesting and more fun. Everybody likes to set a course, sail it, and see if you can get where you want to go. If you create that opportunity for people in their jobs, that's a fun thing. But I also say it can intimidate some people, because it puts the burden on them to think the thoughts, take the action, and achieve the results.

On a more personal note, tell us about your interest in racing, and how that might translate into a passion for your new undertaking as CDI president.

For whatever reason, I like this business. It beats the heck out of me why it appeals to me - there are so many choices available to the consumer today, right?

Maybe my interest is genetic. My dad was interested in racing, and my brother has made his whole career in it. Part of it is, it has many of the same challenges as venture capital . . . you wait and you wait and make more decisions, and five or 10 years later, you find out whether or not you've made a good decision.

I also like the fact that racing is part art, part science. The people who can put those two together really well seem to be successful over time, and the other ones aren't. But why horse racing? I don't know. It's not like I grew up on the back of a horse.