03/17/2005 12:00AM

Hollywood plans remain a question


LEXINGTON, Ky. - Tom Meeker, the chief executive officer of Churchill Downs Inc., responded on Thursday to recent reports about a possible sale of Hollywood Park by saying that Churchill was "exploring its options," but he declined to be more specific.

Meeker, citing a strict company policy not to discuss pending business, said he would not comment specifically about Churchill's plans for Hollywood, but said he felt compelled to respond to concerns "from horsemen, patrons, and our employees." He reiterated that the company's first responsibility was to maximize shareholder value while keeping an eye on the overall health of the racing industry.

Meeker spoke during a conference call to discuss Churchill's 2004 earnings, which declined 62 percent from 2003. Churchill will be "in a better position to comment in a couple of months" on the Hollywood plans, Meeker said.

Despite Meeker's comments, two racing officials, who spoke on the condition of anonymity, said Thursday that Churchill was moving closer to selling Hollywood Park. According to the officials, Churchill is already in discussions with a Japanese company to sell the 240-acre property, which is in Inglewood, Calif., adjacent to Los Angeles International Airport and close to the Los Angeles shoreline and Beverly Hills.

Churchill purchased Hollywood Park in 1999 for $140 million in cash. Drew Couto, the president of the Thoroughbred Owners of California, said earlier this week that the property is likely worth $250 million to $300 million. The TOC asked Churchill to discuss its plans for Hollywood last week during a board meeting, but Churchill officials declined to comment.

During the conference call on Thursday, Meeker was asked whether Churchill might seek to transfer its racing dates to another track in Southern California. Meeker noted that racing dates in California are awarded on a year-to-year basis, casting doubt on whether Churchill would be able to retain any long-term presence in the state if Hollywood were sold.

Churchill, which owns seven U.S. racetracks, reported net income of $8.9 million in 2004, compared with net income of $23.4 million in 2003. During the call, Churchill chief financial officer Mike Miller cited the company's $5.9 million in legislative efforts in California and Florida as "unusual expenses." In California, Churchill lost a ballot referendum on allowing slot machines at racetracks; in Florida, Churchill was able to get a local referendum on the ballot for 2005 to allow slots at its Calder Race Course in Miami. That Dade County ballot measure failed on March 8, although neighboring Broward County voted to legalize slots at its tracks.

Meeker said Churchill expected to get the referendum back on the ballot in 2007, and expected that ballot to pass - a position based on a 2 percent margin of defeat this time and the chance to mount a more effective public relations campaign for 2007. The company plans to open a new slot-machine casino at its Fair Grounds racetrack in New Orleans in early 2006, Meeker said.

Andy Skehan, Churchill's chief operating officer, said the company plans to launch new interactive wagering terminals this year for its luxury suites at Churchill Downs. The company has also developed wireless betting terminals that will be available to other players at all its properties, Skehan said.

In other developments, Meeker said that Churchill was involved in a technology project to update the racing industry's bet-processing network. Churchill's partners in the project include the largest racing companies in North America, including Magna Entertainment, the New York Racing Association, Woodbine Entertainment Group, and the New Jersey Sports and Exposition Authority. Together, those companies account for more than 90 percent of the handle in North America.

The partnership is expected to issue a request for proposals to existing bet-processing companies and other technology companies to build the new system. That request will likely be issued sometime in 2005.

Meeker said the new network would allow racing to develop technologies that would allow for more ways to place a bet, better security, and better marketing.

"It will be the platform for a major transformational change in the racing industry," Meeker said.