Expanding incidents of coronavirus infections and deaths have led to panic on the world’s stock markets, quarantining of cruise ships and huge cities, closing schools in Japan, banning of international visitors to Saudi Arabian holy sites, and many other severe measures.  Rumors of the possible cancellation or postponement of the Tokyo Olympics have been rampant, although the organizers have denied they are considering doing so. 

British bookmakers are even taking bets on whether the upcoming four-day Cheltenham Festival (steeplechase racing) will go on as planned.  Recent odds have risen from a 28% chance of cancellation to 42%.  The British Horseracing Authority announced that, if necessary, it will implement contingency plans.

Churchill Downs stock (CHDN) has been pummeled by the plunge in the overall stock market.  CHDN is particularly vulnerable should the coronavirus wreak havoc in the United States because its primary revenue sources are Kentucky Derby weekend and casino traffic.  Investors have reacted accordingly, knocking nearly 25% off CHDN’s all-time high, about double the percentage plunge in the overall stock market.

Since coronavirus is a mammalian virus both humans and animals are at risk.  For example, a dog in Hong Kong has tested positive for the virus.  The Triple Crown races are therefore exposed to risk from contagious humans and racehorses…and people’s fear of crowds in the midst of a pandemic.

Medical experts caution that the extent and severity of the contagion is largely unpredictable. Whether a vaccine can be developed quickly and reproduced in mass quantities complicates predictions.

So executives at Churchill Downs, the Stronach Group (Pimlico), and NYRA (Belmont Park) are in the same position as everyone else, not knowing what the situation will be like in May and June.  However, prudent preparation would necessitate that they anticipate the possibility that May and June won’t be business as usual.  Two undesirable scenarios–cancellation or postponement–should be in their contingency plans. 

On a personal note, I don’t know what the five-week period of the Triple Crown would be like without the Triple Crown races.  I have tickets for the Kentucky Oaks and Kentucky Derby and am optimistic that I will be able to use them.  Whether that optimism is justified or not by reality only time will tell.  But, for now, the hope is to join the usual raucous crowd in Louisville on May 2nd. If not, and the race is postponed, we have never experienced a Triple Crown beginning in the late summer or early fall.

(Full Disclosure: I am a CHDN shareholder.)

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