Archives for March 2014


Churchill Downs Incorporated (CDI) reported record net revenues for 2013 of $779.3 million, for an increase of 7% over 2012, and the company’s common stock surged by 35% during the year. While adjusted EBITDA grew by 11% from the previous year, to $176.2 million, diluted earnings per share fell in 2013 to $3.06 from $3.34 in 2012. The erosion in earnings per share reflected an increase of 36% in gaming expenses and 13% in selling expenses and overhead.

Net revenues at CDI racetracks from racing operations decreased to $274.3 million in 2013, or by 9%. Net revenues at Churchill Downs racetrack grew by 7%, whereas net revenues from horse racing at Arlington Park, Calder Race Course, and Fairgrounds Race Course dropped by 7%, 44%, and 8%, respectively. Calder held 22% fewer live races in 2013 than in 2012 and ran concurrently with nearby Gulfstream Park during the fourth quarter.

CDI opened another racetrack/casino in December 2013, Miami Valley Gaming & Racing, a 50/50 joint venture north of Cincinnati, Ohio, presenting harness racing.

Online business had a slight uptick in net revenues in 2013 of 1% to $184.5 million. Online encompasses TwinSpires, United Tote, Bloodstock Research and Information Services, and an interest in HRTV. Online handle was damaged when CDI stopped accepting wagers from Texas in September of 2013 after an unsuccessful challenge to state law that the company is appealing.

Net revenues from gaming at CDI casinos soared to $297.5 million in 2013. The 33% increase was attributable to CDI acquisitions of Riverwalk Casino in Mississippi in October 2012 and Oxford Casino in Maine in July 2013. CDI casinos associated with racetracks–Calder Casino and Fair Grounds Slots—experienced little change in net gaming revenues during 2013—Calder had a 1% increase and Fair Grounds had a 2% decrease.

Net revenues from racing operations and online services accounted for 58.9% of total CDI net revenues in 2013, down from 66.4% in 2012.

An adapted version of this analysis appeared in the Blood-Horse magazine of March 8, 2014. Copyright © 2014 Blood-Horse Publications. Used with permission.


Saturday’s  Dubai World Cup is the richest race on the globe. Every year, the event’s advertising agency comes up with a novel video clip capable of holding the interest of even non-racing fans and this year is no different. It would be difficult for anyone to view this short video without staying through to the end to see what was coming.

Compliments to the creative individuals behind this video.

Click here to watch.


Ask a friend you know who owns a Toyota or a GM brand whether he or she would purchase another car from one of these companies because of their rogue behavior. General Motors is accused of covering up an ignition defect resulting in 12 deaths and 31 crashes and Toyota paid a fine of $1.2 billion for concealing information about faulty parts. How about Target, do you avoid this retailer over the data breach that compromised the information of millions of accounts? Would you refuse your doctor’s prescription for a Merck drug over the Vioxx cover-up? Do you bypass BP or Exxon service stations for major oil spills?

No doubt that such incidents cause some people to not do business with the companies involved. However, as time goes by, the negative publicity has less and less of an effect. Tylenol, Firestone, and many other prominent brands have come back strongly from horrendous episodes of damage to their customers (in the case of Tylenol, the company was an innocent victim of criminal wrongdoing). People tend to forgive and/or forget—in the years following World War II, many Americans would not have considered buying a Japanese or German car, now assembled in Georgetown, Chattanooga, Marysville, and other U. S. venues.

A recent poll by HorsePlayerNow showed that 92.3% of 801 bettors on horse racing had heard of the recent PETA allegations arising from an undercover investigation of the Steve Asmussen stable. Of these, 78.1% said the PETA revelations would have “no impact on my betting habits” versus 13.4% who indicated they will bet less and 1.2% who will no longer bet on horse racing.

The damage to betting handle will likely be much less than this survey portrays. The vast majority of pari-mutuel handle is accounted for by a very small percentage of bettors. It is unlikely that these obviously loyal individuals will be as swayed by the PETA video as the general public or smaller, recreational bettors.

The danger to horse racing is in the longer run. The egregious behavior in the Asmussen stable sullies the image of horse racing among the general public and this is likely to mean fewer casual fans from which racing can attract more bettors. It will be informative to see what happens to the television ratings for the Kentucky Derby, while the PETA video and the resultant publicity are still fairly current.

The American people are mostly tolerant of companies and individuals who have encountered troubles and then turned around their situations. In fact, the vast majority of Americans admire redemption. For instance, former president Bill Clinton is currently very popular, even though he was guilty of personal foibles with an intern and lying under oath.

Horse racing should use the PETA expose to take the substantive steps necessary to improve the sport’s standing, such as on medication, whip use, and banishing bad actors. If the industry does not, however, the sport/business will contract. While people generally are inclined to forgive, they eventually run out of patience.

Horse racing is on double-public probation, so to speak. Recidivism is a possibility but is not preordained.

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