Churchill, Magna to join on New York bid

Churchill Downs Inc. and Magna Entertainment Corp., the two largest racetrack companies in the U.S., have joined forces to bid on the franchise held by the New York Racing Association, the two companies announced early on Friday.

The partnership will bring together two publicly traded companies that together own some of the most prominent tracks outside of New York and hold two of the three Triple Crown races. Although the companies are considered competitors, the two reached an agreement earlier this year on a television service that beams North American races into homes in England and Ireland.

"CDI and MEC share a common view regarding the importance of New York racing to the overall success of hose racing in North America," the two companies said in a joint statement.

NYRA's franchise to operate Aqueduct, Belmont, Saratoga and a 4,500-slot machine casino at Aqueduct expires on Dec. 31, 2007. The process to select a new bidder is being overseen by the Ad Hoc Committee on the Future of Racing, which is requiring that bidders respond to its request for proposals to operate the franchise by Aug. 29. The committee will issue its recommendations on the responses by Sept. 29.

Churchill recently hired a new chief executive officer, Robert Evans, who is replacing the company's longtime head, Tom Meeker. In the statement, Evans said: "By working cooperatively, we can dramatically improve and enhance customers' entertainment experience at the three racetracks that make up the New York franchise."

In June, both Churchill and Magna notified the committee that they intended to respond to the request for proposals. Together, the companies own or operate Churchill Downs, Santa Anita Park, Gulfstream Park, Arlington Park, Calder Race Course, Fair Grounds Race Course, Lone Star Park, Pimlico Racecourse, Golden Gate Park, and Laurel Park, among others.

The companies are expected to submit a bid to operate the tracks under a for-profit structure. NYRA is currently structured as a not-for-profit, and much of the debate surrounding the future of the franchise has centered on whether a for-profit or not-for-profit will best serve New York racing. So far, only NYRA has indicated that it intends to retain a not-for-profit structure.

Magna has lost nearly $350 million over the past four years and has $650 million in long-term liabilities on its balance sheet. The company was not expected to be able to make a serious bid for the franchise without a partner with a strong balance sheet.