Churchill Anticipates Another Strong Derby Performance

After evaluating some of the already available numbers for this year's Kentucky Derby Presented by Woodford Reserve (G1), Churchill Downs officials are optimistic the May 4 event will deliver another strong year in terms of financials.

Speaking to investors and advisers during a conference call April 25, Churchill Downs Inc. CEO Bill Carstanjen said initial admissions and sponsorship numbers suggest a promising 2019 edition of the Kentucky Derby.

"We are optimistic for a great Kentucky Derby," Carstanjen said. "We set records last year for virtually all of our significant financial benchmarks despite suffering the wettest Kentucky Derby in history. We are aiming high again this year."

Earlier this year, the company reported that Churchill Downs Racetrack saw its adjusted earnings improve $9.3 million in 2018, largely thanks to a strong Kentucky Derby week. Despite the Derby-Day rain, all-sources wagering for the race and card set records with 8% gains, with the full-card handle reaching $225.7 million. All-sources wagering on the Longines Kentucky Oaks (G1) and Oaks Day card also saw record handle.

Some reasons for optimism this year include a new $5 million rooftop lounge and entertainment area atop the Starting Gate Suites. The 250 available seats and additional 250 access tickets already have sold out. Carstanjen noted that type of performance is impressive, considering there hasn't even been opportunity for word-of-mouth endorsement of the new area.

Churchill Downs also has seen a horse from its Japan Road to the Kentucky Derby accept a bid to the race for the first time in Master Fencer. His addition has opened the Japan wagering market. The Derby will be simulcast for wagering into the country for the first time, with a local starting time of 7:50 a.m. Sunday.

Carstanjen said CDI has had good feedback from new sponsor Quicken Loans, which is awarding 20 contest winners a trip to the Kentucky Derby. Furthermore, each winner will be assigned a Derby horse, and if their horse wins, Quicken Loans will put $250,000 toward their mortgage or a new home.

"That's been a huge success, we understand from our Quicken Loans partners," Carstanjen said. "That's the type of thing we hope we can do more of in the future."

Going forward, Carstanjen said there still is opportunity for growth. 

"I'm really excited about further developing the facility. I think unlocking the Derby potential, in part, depends on building more and more hospitality for the folks that don't have seats—the 110,000 people who attend the Derby every year who do not have a seat," Carstanjen said. "Also, further segmentation for the people who do have seats to create better experiences—richer experiences that they're willing to pay more for—I think that's a great opportunity for us."

Carstanjen also said CDI is working to make the Derby an attractive event for international travelers. 

The CDI CEO did say there's nothing new yet on possible plans outlined in the fall to add a hotel or historical racing games to the property. He did note that its license would allow the addition of the games on the track property. 

Churchill Future Projects Could Include On-Site Hotel



Carstanjen noted that by the second quarter earnings call, he anticipates some announcements on capital investments.

Carstanjen said beyond the numbers, everyone at Churchill Downs takes great pride in the Derby.

"Beyond the metrics, our mission is to improve everything we do surrounding the Kentucky Derby," Carstanjen said. "We have consistently invested to deliver a world-class experience for our customers. Our strategy for the long term is to invest in projects that help more of our guests feel a strong connection to the event and to participate as a participant, not just as a spectator."