Churchill Downs

Churchill Downs

Anne M. Eberhardt

Derby Week Boosts Churchill's Earnings

The success of Kentucky Derby week will enhance CDI's pre-tax earnings.

The night-time opening card of the spring meet and the success of Kentucky Derby week at Churchill Downs will likely result in a contribution of between $5-6 million in pre-tax earnings to the company’s bottom line for 2011.

In releasing Churchill Downs Inc.’s results for the first quarter (which do not include Derby week), CDI chairman-elect and CEO Robert Evans said the company's overall 2011 results will benefit from a strong opening night that led into a week in which the Kentucky Oaks (gr. I) posted record handle and the Kentucky Derby Presented Yum! Brands attracted a record crowd.

Last year's Derby and Oaks had a $3 million contribution to CDI's pre-tax earnings.

“We are extremely pleased with the results of this year’s Kentucky Derby weekend, during which we set a new record for on-track Derby Day attendance – 164,858 – breaking the long-standing record of 163,628 that was set in 1974 for the centennial Derby celebration,” Evans said in a statement. “We also saw increases over 2010 levels in on-track and all-sources wagering on both Derby and Oaks days and grew revenues from sponsorships and admissions year over year. Based on our preliminary estimates, these increases will help contribute to an additional $5 million to $6 million of Derby-related EBITDA in 2011. We believe these results demonstrate there is still demand for competitive, high-quality racing entertainment, and that is the very essence of Kentucky Derby weekend.

“We opened Kentucky Derby week in style with Churchill Downs Racetrack’s first-ever Opening Night event, which drew a more diverse crowd of 38,142 – more than double the typical turnout for an opening day race card at Churchill Downs,” Evans continued. “We continued to see a strong turnout at the Kentucky Oaks, with 110,122 fans coming to Churchill Downs for our third annual Pink Out to support breast cancer awareness and at Taste of Derby, our Derby weekend kick-off party and fundraiser for hunger-related charities. Taste of Derby attracted 1,245 guests and offered gourmet cuisine from 16 award-winning chefs representing racing destinations around the county.

The numbers from the current spring meet, including Derby week, will be included in financial results for the second quarter that ends June 30.

CDI reported net revenues from continuing operations during the quarter increased 54% to $131.6 million from $85.2 million during the same period of the prior year. The company said growth in net revenues from continuing operations was fueled primarily by acquisitions in its gaming and online business segments, which now include results from two 2010 acquisitions, and Harlow’s Casino Resort & Hotel. Additionally, the first quarter of 2011 included a full three months of results from the Calder Casino, which opened for business in late January of 2010. 

Quarter-over-quarter EBITDA (earnings before interest, taxes, depreciation and amortization) grew to $11.2 million, compared to an EBITDA loss of $5 million during the first quarter of 2010.  EBITDA was positively impacted by the acquisitions of and Harlow’s and a full quarter of Calder Casino operations as compared to only two months of operations at the Calder Casino during the prior year. 

CDI’s net loss from continuing operations during the quarter decreased 63% to a net loss of $3.2 million, or $0.19 per diluted common share, as opposed to a net loss of $8.1 million, or $0.60 per diluted common share during the same period in 2010. The company historically posts a net loss during the first quarter of the year when only one of its four racetracks conducts live racing throughout the quarter.
Evans also said it is unknown when Harlow’s Casino will reopen after being closed due to the threat of flooding along the Mississippi River basin.

“On May 3, the Board of Mississippi Levee Commissioners declared a state of emergency for Washington County, Miss., where our Harlow’s casino property is located. The Commissioners directed our management team at Harlow’s to temporarily close the property until further notice, and Harlow’s temporarily ceased operations the evening of May 6. At this time, we do not know when state officials will allow Harlow’s to reopen or what the ultimate impact this temporary closure – or potential flooding – could have on the Harlow’s operation or our business results. We are closely monitoring the situation.”