Via TD Thornton
The pending sale of Ellis Park to game company Churchill Downs, Inc. (CDI), cleared a necessary regulatory hurdle on Tuesday when the Kentucky Horse Racing Commission (KHRC) quickly approved the transaction by a unanimous vote.
KHRC members who attended the “special” meeting revealed the $79 million transaction in just 6 ½ minutes after reading through the basic terms of the agreement and stated that the committee was hopeful. CDI will follow development projects. approved by the departing owner, who was the business entity of the Pueblo of Laguna tribe of New Mexico.
There was no debate prior to approval and no member of the KHRC posed any questions to the CDI operators.
The transaction is based on KHRC’s approval, which is expected to close in the near future.
The Intent to sell is publicly announced for the first time Last Thursday, September 15.
In Kentucky, CDI already owns Churchill Downs Racecourse and Turfway Park.
Using the current Kentucky race schedule as a model, when the deal is finally signed, it will give CDI control over the majority of the dates on the state’s annual calendar. Keeneland Racecourse meeting in April and October and the Kentucky Downs store meeting in early September will be the only exceptions.
The only pre-voting comment at the September 20 meeting was made by KHRC commissioner C. Frank Shoop, who said: “This isn’t just a great move for Churchill Downs, it’s a great one. tremendous economic improvement for the state of Kentucky, and it was also great for the Kentucky Riders. It is a win-win for everyone. “
Following the vote without objection, president Jonathan Rabinowitz said, “Thank you Churchill Downs for their commitment to our year-round operation, and for all that they do for the common good. It was really exciting for Ellis. “
The transaction would be CDI’s second attempt at owning Ellis, which acquired Ellis in 1998 but sold off eight years later, describing it as an “underperforming asset” in its filings. of the Securities and Exchange Commission.
Ellis Park opened as Dade Park in 1922, and it is currently the only Thoroughbred state site in the western part of the state. From a demographic perspective, its unique geographical location in a small part of Kentucky on the north bank of the Ohio River adjacent to Indiana makes it like an extension of the Evansville, Indiana metro market , about 450,000 people.
For much of the 20th century, Ellis – with the folk nickname “bean patch” – was a summer staple of the Kentucky racetrack catering mainly to lower-end races.
But the introduction of the historic horse racing (HHR) game over the past decade has boosted its stature as a business opportunity, and in recent years other racetracks in the state have come together to share game revenue from the Kentucky Purebred Development Fund with Ellis. to power year-round races across the state.
When CDI bought Ellis in 1998, it became only the fifth owner in the track’s history. When this latest CDI acquisition closes, it will mark the fourth other owner for Ellis in the past 16 years.
CDI paid $22 million in cash, plus stock, to buy Ellis from Racing Corporation of America in 1998. That deal also included what was then known as the Kentucky Horse Center, a training facility. in Lexington which in 2000 was acquired by Keeneland for $5. million.
In September 2006, CDI sold Ellis to Louisville businessman Ron Geary for undisclosed terms.
Two years later, Louisville Business First reported that “Ellis Park had been in the red for eight consecutive years, including the seven years it was owned by Churchill Downs.” The publication also quoted Geary as saying that CDI lost $17 million during the race, and Geary himself lost $2.7 million in his first year at the helm.
Geary persisted, eventually partnering with Saratoga Casino and Hospitality Group (SCHG) by selling that entity 30% stake in Ellis for $4 million. Geary then invested that money in bankrolling the launch of HHR in Ellis.
In 2018, Geary sold its remaining 70% stake in Ellis to SCHG on undisclosed terms.
A year later, Ellis was transferred again, this time for $11 million to Ellis Entertainment, LLC, a subsidiary of Laguna Development Corporation in New Mexico. Laguna Tribe’s Pueblo then took hold of Ellis under another gaming subsidiary, Enchantment Holdings, Inc.
Waqas Ahmed, KHRC’s director of staking and pari-mutuel compliance, detailed the pending transaction’s filing at Tuesday’s meeting, noting that in addition to the $79 million purchase price, CDI has a plan plans to “invest another $75 million” to develop Ellis and the off-campus HHR facility in Owensboro, though specifics on how that money will be spent are few.
“Due to the preliminary nature of the project, CDI is unable to provide further details, but I would like to note that after reviewing the purchase agreement, Ellis Park will retain responsibility for promised improvements to the project. KHRC earlier this year,” Ahmed said.
The installation of twilight or nighttime track lighting and turf expansion are major value items that outgoing Ellis management previously told KHRC is in the process of improvement.
Ahmed said CDI is expected to make “significant changes” in operations, but the game company intends to honor the 2023 race date requirement for 24 shows (up one day from 2022). which Ellis submitted to the KHRC for next year.
Earlier this month, CDI announced the completely rebuilt Turfway Park, which in recent years has hosted the December-March portion of Kentucky’s run. That major project has been positively viewed in Kentucky as a way to promote winter racing in the state.
But while CDI currently enjoys a benevolent reputation among regulators in Kentucky, its history of acquisitions followed by the closure of other tracks has been a major cause of concern for the sport as a whole for two decades. past century.
Under CDI stewardship for this century, the gaming group has closed Hollywood Park and Calder Racecourse and is in the process of finalizing the sale of Arlington International Speedway so the property can be used for a new football stadium. All three closures have strained or devastated their respective circuits in California, Florida and Illinois.
In particular, the closure of Arlington last year capped a decade-long series of acrimonious relationships with the riders, who are still reeling from CDI’s decision to sell off one of the sites. America’s most historic and aesthetically beautiful racing spot, even as the corporation continues to pursue gaming interests in the same Chicago market.
Earlier this spring, CDI signed a $2.4 billion deal to buy Colonial Downs and its network of HHR gaming facilities in Virginia.
In July, before that deal was even officially finalized, CDI chief executive Bill Carstanjen said during an earnings conference call that the company planned to nearly double its lead time. Colonial race time over the next few years, from 27 to 50, to comply with Virginia Law binding HHR expansion to live race dates.
In response to Carstanjen’s comments, Frank Petramalo Jr., executive director of the Virginia Horsemen’s Protection and Benevolence Association, told TDN in July that the expansion was such a strong one. may be detrimental to the overall circuit and a spirit of partnership that exists in the mid-Atlantic, due to the “declining number of horses” and the riders’ desire to keep the Virginia track from “running above other races.”
In addition to the aforementioned three Kentucky tracks and Colonial Downs, CDI has two other Purebred tracks in its portfolio – Fair Grounds in New Orleans and Presque Isle Downs in Pennsylvania.
