Delaware North Companies Gaming & Entertainment and Churchill Downs Inc. announced March 1 their joint venture to purchase Lebanon Raceway in Lebanon, Ohio, and develop a new video lottery terminal facility with up to 2,500 machines and a harness racetrack.
Through a joint venture agreement, Delaware North Companies Gaming & Entertainment and CDI have formed a new company, Miami Valley Gaming & Racing, LLC, or Miami Valley Gaming, to manage the development and operation of the VLT facility and racetrack. Miami Valley Gaming has entered into an asset purchase agreement through which it intends to acquire the harness racing licenses and certain assets held by Lebanon Trotting Club Inc. and Miami Valley Trotting Inc. These two entities currently conduct harness racing at Lebanon Raceway at the Warren County Fairgrounds.
Miami Valley Gaming intends to acquire these assets for an aggregate purchase price of $60 million, to include $10 million paid in cash with a $50 million promissory note delivered at closing. An additional $10 million could be paid to the sellers if certain conditions are met with respect to the performance of the VLT facility over time.
The sale is contingent upon the approval of the partnership's application to the Ohio Lottery Commission and the Ohio State Racing Commission as well as other customary closing conditions.
Subject to the satisfaction of the closing conditions, including the resolution of any gaming-based litigation, Delaware North Companies Gaming & Entertainment and CDI hope to begin construction of the new facility this year, with completion scheduled for the fall of 2013.
"We are proud to add Lebanon Raceway to our growing portfolio of U.S. racing and gaming operations," said William Bissett, president of Delaware North Companies Gaming & Entertainment. "We are confident that this facility will create hundreds of jobs and result in millions of dollars in economic impact."
Bill Carstanjen, president and chief operating officer of CDI added, "We are excited to partner with Delaware North Companies Gaming & Entertainment to build a modern gaming and racing venue in an attractive location. This opportunity fits well with our strategy to grow the company through both acquisition and development of new gaming facilities."
Lebanon Raceway has been awarded 52 race dates in 2012 and will offer live racing during two meets: Jan. 6 through June 9, and Sept. 21 through Dec. 8. Prior to the closing of the asset purchase agreement, the existing licensees will continue to conduct harness racing at the current Lebanon Raceway location. Once the acquisition has closed, Miami Valley Gaming will continue to host races at this location until construction of the new facility is completed.
C. Keith Nixon Jr., vice president of Miami Valley Trotting, said, "After all these years of having the track in our families, we wanted to be certain the new owners would have the resources and the experience to operate a successful facility. We're confident that we are placing our families' legacy in good hands with both a global hospitality company, Delaware North Companies, and the legendary Churchill Downs Racetrack."
The Nixon and Carlo families, owners of Lebanon Raceway since 1951, will continue to be involved with the new racing and gaming facility. Both families have agreed to remain consultants to Delaware North Companies Gaming & Entertainment and CDI.
"This track is a huge part of our life, so we wanted the new owners to be someone with the vision and the resources to ensure the raceway remains an economic and entertainment asset for Warren County and the entire region," said John Carlo, president of Lebanon Trotting Club. "Delaware North Companies Gaming & Entertainment and Churchill Downs Inc. are committed to keeping the track in Southwest Ohio and provide the best opportunity to design and operate a successful track and gaming facility."
Bissett said a new location is necessary to provide more room for the construction of a video lottery gaming facility and will provide easier access to Interstate 75. "As with any complex economic development project, there are many factors that could impact the final location of the new track and video lottery facility, and we are currently looking at a number of great possible sites. We will continue to work with local leadership, the state of Ohio and Ohio General Assembly leaders on this development that will create 700 jobs and bring in $24 million a year to the area," Bissett said.
Delaware North Companies Gaming & Entertainment and CDI will each own a 50% interest in the new venture and will have equal representation on its board of managers. Collectively, Delaware North Companies Gaming & Entertainment and CDI plan to contribute up to $90 million in equity with the rest of the development funded with debt.
Miami Valley Gaming will apply for a 10-year VLT license. In addition to the $50 million license fee, the joint venture will invest $175 million in the new facility, including the cost of VLTs. Total project cost is estimated to be $225 million. Miami Valley Gaming has teamed with other horse tracks in Ohio for discussions with horse racing associations to establish purse levels to ensure continued racing in Ohio.