Steps being taken by the Keeneland Association to cut expenses, such as the current effort to have some employees accept buyouts, will also affect the organization’s support of charities.
Keeneland president and CEO Nick Nicholson, who said curtailing expenses in the face of declining revenues is a prudent business decision, acknowledged that the racing and sales company would continue to make charitable contributions but that it is unknown to what extent they would be impacted.
In addition to various specific fund-raising efforts undertaken throughout the year and support of industry organizations, Keeneland annually distributes a portion of its revenues to support community organizations in Lexington.
Since 1936, the Keeneland Foundation has contributed more than $15 million to local charitable and industry service programs, according to the Keeneland web site.
"We will still be giving to charities," Nicholson said Aug. 19, "But when the sales are down, all of our expenditures are impacted. We are able to give more money to more charities when the sales are good than when they are bad."
Nicholson said Keeneland has historically had to amend it charitable giving to reflect the ups and downs of the auction marketplace. Although it offers two race meets per year, Keeneland is supported primarily through sale revenues.
In 2009, Keeneland sales receipts totaled $396.2 million, less than half the $815.4 million as recently as 2007. Keeneland, which traditionally pays more to purses to than it derives as a percentage of wagering, recently announced it was cutting its fall stakes purses by $1 million.
According to published reports Aug. 18, Keeneland is offering buyouts to some employees as a way of curtailing costs. According to industry reports, the number of buyouts being offered is more than 30 of Keeneland’s 170 full-time employees on the payroll. Maintenance and security departments—the largest within the organization—are said to be the hardest hit. Keeneland has set an Aug. 31 deadline for the offers to be accepted.
Nicholson said the buyouts are a continuation of a cost-cutting process that Keeneland has undertaken as the revenues have declined. Due to the efficiency of the organization and the commitment of employees, he said the changes have gone unnoticed by those attending the sales and races at the Lexington facility.
"This (buyouts) is not the only thing we have done; we have been paying attention to our expenses for a long time," Nicholson said. "Keeneland has been around for 75 years because it has paid attention to its business. This is just responsible business and is typical of action that a company must take to ensure a strong future. I think we are going to be just fine. We just have to run Keeneland with fewer expenses."
Even with its cutbacks, Nicholson said Keeneland would not cut corners in areas where they would have a negative impact on customers.
"We are not going to lower our standards," Nicholson said.
As it has operated with fewer revenues, Keeneland has managed to amend expenses so that it does not have to dip into cash reserves that it has on hand, Nicholson said.
"Right now, this is just a matter of revenue coming in and revenue going out," he said.