Evans: Continued Demand for Quality Racing
The success of this year’s Kentucky Derby Presented by Yum! Brands (gr. I) and Kentucky Oaks (gr. I) shows there is continued demand for quality racing that combines entertainment, according to CDI chairman and CEO Bob Evans.
During CDI’s annual shareholders’ meeting June 14, Evans said this year’s Derby week produced EBITDA (earnings before interest, taxes, debt, and amortization) of $5 million, showing that quality “racing combined with entertainment elements” can be successful at a time when North American racing overall continues to decline.
This year’s Derby, won by I'll Have Another , drew a record 165,307 fans and all-source wagering totaled a record $187 million. Attendance of 112,552 on Oaks Day was second-highest in race history and produced record wagering of $39.9 million.
“Racing and entertainment works in creating a profitable growth business,” Evans said, also citing the success of Churchill Downs with night racing programs.
Evans reported that in 2011, CDI recorded record net revenues of $696.8 million, with EBITDA earnings of $158.7 million and net earnings of $64.4 million. In 2010, CDI had $16.4 million net earnings on EBITDA earnings of $35.1 million.
“We had a great record-setting year in 2011 and we are off to a great year in 2012,” Evans said.
Evans said the key to CDI’s success was the broad diversification of the one-time track operating company into one with extensive casino holdings and online gaming offerings.
In 2011, racing accounted for slightly more than 40% of CDI’s total net revenues, compared with just over 50% in 2010. Gaming contributed 30% to net revenues last year and online business was responsible for about 23% toward net revenues.
“Our strategy of diversification is the reason for this growth,” Evans said.
Not only has diversification of its business line proven successful, but Evans said CDI’s operations are now spread across different geographic locations, meaning it is less susceptible to the ups and downs of economies in certain areas.
Moving forward, Evans said, “We will continue to work with our political allies in Kentucky” to try to secure legalized alternative gaming when the state’s General Assembly reconvenes in January 2013.
He said CDI will continue to “look for casinos that come up for sale,” and will expand the successful TwinSpires.com brand.
While growth is important, Evans said he was gratified by the way CDI is conducting its business.
“Bigger is not necessarily better, but over the past several years your company has gotten better,” Evans said to the approximately 250 shareholders attending the meeting.
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