CDI Hopes to Capitalize on Opportunities as Industry Grows

Churchill Downs Inc. president Tom Meeker said June 17 the company is in an excellent position for future growth and, though CDI intends to do its part, industry factions must work together to support and build the necessary infrastructure.

Meeker made his comments during the company's annual meeting of shareholders held on the fifth floor of the Jockey Club Suites. Five Class II directors were elected to three-year terms: Richard Duchossois, J. David Grissom, Seth Hancock, and Meeker, all of whom were re-elected; and Susan Packard, the first woman elected to the board.

This year's annual meeting was shorter than last year's gathering, with only a handful of questions. Meeker touched on a few things addressed in 2003, but he also discussed what he called four "critical" areas: tote systems, account wagering, patron development, and purses.

"The sky is not falling," Meeker said in regard to the belief of some industry critics. "Racing has opportunities and challenges, but when you compare it with other sports, you've got to be happy. Marquee event days -- big days -- are very attractive to the racing public and casual fans."

Meeker addressed the tote system during the 2003 annual meeting, and again said it is "antiquated." He said CDI, Magna Entertainment Corp., and the New York Racing Association joined forces in the wake of the Breeders' Cup Ultra Pick 6 fraud to offer resources to facilitate technological upgrades.

Meeker said technology in use in Hong Kong, Japan, and the Pacific Rim -- hand-held devices that provide wagering information and the capability to bet, for instance -- aren't that far off for patrons in the United States. He predicted some new technology would be available this year to allow customers "freedom of portability."

CDI has been involved in account wagering for years through its partner, the TV Games Network. Meeker said account wagering remains a growth area but something must be done so customers don't have to employ multiple platforms to wager on racetracks of their choice. Again, he indicated the industry must take the necessary steps.

"Our objective and vision is much like (credit-card companies) -- provide an account-wagering system that has at its heart a common account," Meeker said. "We need portability, and we have to drive toward that objective."

Meeker said NBC Sports has proven a "tremendous" media partner as evidenced by the growth in Triple Crown television ratings the last four years. He said the National Thoroughbred Racing Association is the entity to "exploit and develop resources" for fan creation, and the role of CDI is to develop products that allow the casual fan an opportunity to see racing at its best.

Meeker noted the CDI family of tracks is building on proven brands such as the Kentucky Derby (gr. I) and Kentucky Oaks (gr. I), which produced $174 million in total handle over two days this year. He said the Arlington Million (gr. IT), Hollywood Gold Cup (gr. I), and "Summit of Speed" program at Calder Race Course are in the process of becoming big-event days.

"We have the opportunity to take these great days and promote them as part of the overall racing program in the United States," Meeker said.

To that end, he said major stakes at CDI properties figure in the mix of the proposed Thoroughbred Championship Tour, which would link the Triple Crown and Breeders' Cup World Thoroughbred Championships. Meeker said CDI supports the TCT concept offered by the Thoroughbred Owners and Breeders Association.

"The TCT is alive and well, and is in discussions with Breeders' Cup," Meeker said. "Well, guess what? CDI tracks will be an integral part of the TCT process if it comes to fruition, which I think it will."

(The Breeders' Cup board of directors has approved an agreement in principle with the TCT that would provide the series with $3 million a year for six years. The funds, in the form of purse money and bonuses, would be used only for Breeders' Cup-nominated horses.)

As for purses, Meeker said it's imperative for the industry to focus on increasing field size, the engine for increases in pari-mutuel handle. He cited these figures: In 1950, the average number of starts per horse was 10.9 (one start every 32 days), but in 2003, the average number was 6.8 (one start every 53 days).

"We have a fairly irrational program of racing (in the U.S.)," Meeker said. "Something has to happen."

Meeker said part of the problem is that racing is local: Each state has a regulatory agency that assigns racing dates. Because of that, there can be overlap or conflicts, and CDI is working on ways to "rationally deliver products in a coherent way so the number of runners per race will increase," he said.

Finally, on the topic of alternative gaming, Meeker said he expects various legislatures, including the one in Kentucky, eventually will realize the importance of the horse racing industry and approve measures to allow tracks to implement gaming. He said the dynamics of racing would change should other states, perhaps Ohio and Pennsylvania, win approval for gaming.

Meeker also said racing's support of agribusiness is key, and when legislators realize that, the process might move along. He said gaming would offer yet another means for CDI tracks to increase purses and more effectively compete in the national marketplace.

Materials provided to meeting attendees indicate Duchossois Industries of Illinois owns 3,150,000 shares, or 23.71%, of CDI common stock. Brad Kelley of Bowling Green, Ky., owns 1,165,870 shares, or 8.77%, and 29 directors and officers in total own 5,630,635 shares, or 42.38%.

CDI owns six racetracks: Arlington Park, Calder, Churchill Downs, Ellis Park, Hollywood Park, and Hoosier Park. The second quarter of the year is big for the company as five of those facilities are open for live racing.