Churchill Downs is best known for being the host track of the Kentucky Derby but their ownership has a wide variety of gaming related businesses. They’re trying to get rid of at least one of them–a report in Sunday’s Baton Rouge Advocate newspaper said that Churchill Downs, Inc. (CDI) is looking to sell Louisiana’s Fair Grounds Race Track.
CDI acquired Fair Grounds out of bankruptcy in 2004 for approximately $47 million. The facility has been profitable due primarily to a slots and video poker parlor on the premises. Despite a nice revenue stream already in place Fair Grounds has never really been a priority for CDI. Earlier this year CDI was strongly criticized by a number of Louisiana entities about how they’ve managed the Fair Grounds facility. Most vociferous among these was the Louisiana State Legislature who threatened to withhold the necessary regulatory approval and licensing to run live racing at Fair Grounds due to a failure to reinvest profits from casino gambling back into the horse racing product.
That embroglio was eventually settled due in large part to CDI’s promise to make some significant investment in the long suffering Fair Grounds physical plant. Two new video boards are already in the works as well as a renovated turf course–a sore point since it hadn’t drained properly for years and was essentially useless. Whatever the motivation behind CDI’s investment it has been praised by the Louisiana Racing Commission, the legislature and horsemen’s groups.
CDI’s desire to sell Fair Grounds has less to do with the sometimes tempestuous relationship with Louisiana racing authorities and more to do with a revised corporate strategy. Financial observers suggest that CDI is streamlining their operations looking to focus on the Kentucky Derby, racing at the flagship Louisville track and casino gambling. As a result, they’re looking to get out of the race track operations business. Earlier this year CDI leased Florida’s Calder Race Course to longtime industry rival The Stronach Group.
Reports suggest that CDI has enlisted JP Morgan Chase to facilitate the Fair Grounds sale with an initial asking price of $125 million. Despite the successful slots parlor on site that might be too high–at least that has been the reaction of the first parties interested in the track.