Higher insurance costs and a lack of live racing caused Churchill Downs' first quarter losses to deepen.
The Louisville-based racing conglomerate reported a net loss of $12 million, or 92 cents per share, which was a 9.5% increase from the 84 cents per share loss reported for the first quarter of 2001. Net revenues for the three months ending March 31 were down 2% to $31 million from $31.7 million for the same period a year ago.
With essentially no live racing in the first quarter, the losses were not surprising. The earnings per share was actually 2 cents better than the 94- to 97-cent loss projected earlier in the year.
Growth for the second quarter is expected to be equal to or slightly higher than last year depending largely on how the nation's economy fares overall, according to Churchill Downs' president and chief executive officer Tom Meeker.
"As expected, we are incurring substantial increases in insurance costs," Meeker said. "At present, we anticipate earnings for the second quarter will range from $1.66 to $1.71 per diluted share. However, because of the higher expenses and the limited live racetrack experience to date, we are more comfortable at this time with the lower end of that guidance."
Meeker said he was encouraged by the strong performance of the Kentucky Derby (gr. I) weekend. Total handle for the 11-race Derby card increased 14.5% to $123.2 million compared with last year, and the total handle for the 10-race Kentucky Oaks (gr. I) card increased 15.4% to $28 million.
"Initial results from other tracks are also positive, but is it early in our racing season to support a definitive forecast, especially considering the uncertainty that still surrounds the general economy," Meeker said.