Personal Seat Licenses Considered at Churchill Downs

Churchill Downs, as part of its massive $121-million renovation project, is pondering the concept of personal seat licenses for at least part of its clubhouse box area.

PSLs, popular at sports stadiums, give someone the right to purchase seats at a facility for a fee. They have become revenue-producers for the owners of stadiums, arenas, or franchises, and in some cases have funded construction or brought teams to cities.

In Cleveland, Ohio, 57,000 PSLs were sold in a pro-football stadium with seating for 72,000. The prices, for the rights to purchase one seat, ranged from $250 to $1,500. (If the average is $1,000, that's $57 million.) Other pro-football franchises have used PSLs.

John Asher, vice president of corporate communications for Churchill Downs, said the racetrack has looked into PSLs because they have been successful at other facilities. The second phase of the master plan won't be completed until spring 2005, so it's far too early to say what Churchill will do in regard to the boxes or seating plans, Asher said.

Current box-holders, who have not received official word of any changes, privately said they've heard the charge could be $50,000 to $75,000 for the 20-year rights to a box in sections near the finish line. The cost would vary by section and might not include the customary box fees for the spring and fall meets or for the Kentucky Derby.

Churchill Downs doesn't comment on rumors.

"Those plans have not been finalized, and it would be premature to speculate whether PSLs or any similar concept would be a part of those plans," Asher said. "We have looked at the PSL concept and have said so publicly on more than one occasion over the past few months, but that's all we have done."

At this year's Derby, Churchill unveiled the new Jockey Club Suites atop the grandstand. One level of suites was in use for three days, while two other levels will be available later this year. The second phase of the track's master plan calls for construction of more suites on the clubhouse side.

One box-holder said PSLs would be a logical way to pay down debt given the construction project. The cost, however, mustn't be prohibitive, the individual indicated.

Said another long-time box-holder not enthralled with the concept: "It's becoming the Corporate Derby."

Indeed, there has been a gradual shift as the Derby grows into a big-ticket event for a public company that must answer to shareholders. Churchill struggles with accommodating box-holders, many of them from Kentucky, as it attempts to capitalize on the lure of America's most popular horse race and the revenue it can produce.

During a conference call after Churchill Downs Inc. released 2003 first-quarter financial results, company president Tom Meeker indicated hospitality is a major part of Kentucky Derby business. Even though 23 of 64 suites were available for use May 1-3, sales in other areas weren't impacted, he said.

In fact, business in the Marquee Village, located behind the clubhouse, was up 7% this year, and Churchill added five new marketing partners, Meeker said.

"The amount of hospitality is impressive in the context of the downturn in the economy," Meeker said.

On-track attendance and handle for the May 3 Derby were up 2.4% and 6.1%, respectively, even in the face of some on-site construction. On May 2, the Kentucky Oaks program lured more than 1,000 fewer patrons than last year, but on-track handle rose 2.9%.

The biggest gains were record May 1, when Churchill lured more than 24,300 people, up 28.3% from the corresponding Thursday in 2002. Handle jumped 10% from last year.

"It's likely the 2004 Derby will suffer in attendance and on-track handle (because of construction)," Meeker said. "We also have to incur the additional costs for temporary seating. In the end, however, we'll have a facility with better opportunities to grow the Kentucky Derby."

In a recent interview, Churchill Downs president Steve Sexton said track officials would meet soon after this year's Derby to map out a strategy to accommodate people who will be displaced in 2004. The outside box-seating area, however, is scheduled to be completed by next year's Derby.