Churchill Downs Incorporated ("Company” or "CDI”)(NASDAQ: CHDN), the
Kentucky Horsemen’s Benevolent and Protective Association ("HBPA”), and
the Kentucky Thoroughbred Association ("KTA”) have reached agreement on
a three-year contract that establishes levels of race purses at the home
of the Kentucky Derby. In addition, the Kentucky HBPA and CDI have
agreed to dismiss their claims against one another in a lawsuit filed in
United States District Court for the Western District of Kentucky in
2008. The agreement follows the expiration of the previous contract
following the historic track’s 2009 Spring Meet.
Churchill Downs has also agreed to provide a $1.5 million supplement to
race purses divided evenly over the three years of the horsemen’s
agreement. That commitment includes a provision that would allow the
track to distribute a greater share of that supplement early in the
three-year period should race purses at Churchill Downs drop below
anticipated levels.
"Churchill Downs is very pleased to be part of this long-term agreement
that is good for horsemen, Churchill Downs, Kentucky’s embattled horse
industry and racing fans in Kentucky and throughout North America,” said
Kevin Flanery, president of Churchill Downs racetrack. "This three-year
pact between our track and horsemen comes at a crucial time for
Kentucky’s horse industry as horses and horsemen are leaving our state
to pursue the growing purses and breeding incentives that exist in
states with slots and other expanded wagering options at their
racetracks. Decisions are being made daily on where to breed and race in
2010 and beyond, and once horsemen, stallions and mares leave Kentucky,
it will be very difficult to get them to return. Churchill Downs’
commitment to provide an additional $1.5 million to purses is an effort
to protect Kentucky racing from states that supplement their races with
expanded gaming revenues. Our hope is that the purse supplement will
help keep a few more horses and horsemen in Kentucky through 2010 while
our united horse industry works for the passage of legislation that
would allow additional gaming at racetracks and level our competitive
playing field with tracks and breeding operations in those rival states.”
"It’s a good contract – I think it’s good for both parties,” said KHBPA
President Rick Hiles. "I think it’s going to work out well for the
horsemen and for Churchill Downs. We’re glad to get this behind us and
we look forward to working together over the next three years in the
effort to get all of Kentucky racing back on track.”
"The KTA appreciates the professional and unified manner we experienced
in working with Churchill Downs in our recent negotiations for a
contract renewal,” KTA President Don Robinson said. "We believe all
parties, owners, trainers and the track will benefit as racing continues
in these troubled economic times.”
Churchill Downs Incorporated ("CDI” or "Company”), headquartered in
Louisville, Ky., owns and operates world-renowned horse racing venues
throughout the United States. CDI’s four racetracks in Florida,
Illinois, Kentucky and Louisiana host many of North America’s most
prestigious races, including the Kentucky Derby and Kentucky Oaks,
Arlington Million, Princess Rooney Handicap and Louisiana Derby. CDI’s
racetracks have hosted seven Breeders’ Cup World Championships. CDI also
owns off-track betting facilities and has interests in various
advance-deposit wagering, television production, telecommunications and
racing services companies including a 50-percent interest in the
national cable and satellite network HorseRacing TV, that support the
Company’s network of simulcasting and racing operations. CDI trades on
the NASDAQ Global Select Market under the symbol CHDN and can be found
on the Internet: www.churchilldownsincorporated.com.
Information set forth in this discussion and analysis contains
various "forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. The Private Securities Litigation Reform Act of 1995 (the
"Act”) provides certain "safe harbor” provisions for forward-looking
statements. All forward-looking statements made in this Quarterly Report
on Form 10-Q are made pursuant to the Act. The reader is cautioned that
such forward-looking statements are based on information available at
the time and/or management’s good faith belief with respect to future
events, and are subject to risks and uncertainties that could cause
actual performance or results to differ materially from those expressed
in the statements. Forward-looking statements speak only as of the date
the statement was made. We assume no obligation to update
forward-looking information to reflect actual results, changes in
assumptions or changes in other factors affecting forward-looking
information. Forward-looking statements are typically identified by the
use of terms such as "anticipate,” "believe,” "could,” "estimate,”
"expect,” "intend,” "may,” "might,” "plan,” "predict,” "project,”
"should,” "will,” and similar words, although some forward-looking
statements are expressed differently. Although we believe that the
expectations reflected in such forward-looking statements are
reasonable, we can give no assurance that such expectations will prove
to be correct. Important factors that could cause actual results to
differ materially from expectations include: the effect of global
economic conditions, including any disruptions in the credit markets;
the effect (including possible increases in the cost of doing business)
resulting from future war and terrorist activities or political
uncertainties; the overall economic environment; the impact of
increasing insurance costs; the impact of interest rate fluctuations;
the effect of any change in our accounting policies or practices; the
financial performance of our racing operations; the impact of gaming
competition (including lotteries and riverboat, cruise ship and
land-based casinos) and other sports and entertainment options in those
markets in which we operate; the impact of live racing day competition
with other Florida and Louisiana racetracks within those respective
markets; costs associated with our efforts in support of alternative
gaming initiatives; costs associated with customer relationship
management initiatives; a substantial change in law or regulations
affecting pari-mutuel and gaming activities; a substantial change in
allocation of live racing days; changes in Illinois law that impact
revenues of racing operations in Illinois; the presence of wagering
facilities of Indiana racetracks near our operations; our continued
ability to effectively compete for the country’s top horses and trainers
necessary to field high-quality horse racing; our continued ability to
grow our share of the interstate simulcast market and obtain the
consents of horsemen’s groups to interstate simulcasting; our ability to
execute our acquisition strategy and to complete or successfully operate
planned expansion projects; our ability to successfully complete any
divestiture transaction; our ability to execute on our permanent slot
facility in Louisiana and permanent slot facility in Florida; market
reaction to our expansion projects; the loss of our totalisator
companies or their inability to provide us assurance of the reliability
of their internal control processes through Statement on Auditing
Standards No. 70 audits or to keep their technology current; the need
for various alternative gaming approvals in Louisiana; our
accountability for environmental contamination; the loss of key
personnel; the impact of natural disasters on our operations and our
ability to adjust the casualty losses through our property and business
interruption insurance coverage; any business disruption associated with
a natural disaster and/or its aftermath; our ability to integrate
businesses we acquire, including our ability to maintain revenues at
historic levels and achieve anticipated cost savings; the impact of
wagering laws, including changes in laws or enforcement of those laws by
regulatory agencies; the outcome of pending or threatened litigation,
including the outcome of claims arising in connection with a pending
lawsuit in federal court in the Western District of Kentucky styled
Churchill Downs Incorporated, et al v. Thoroughbred Horsemen's Group,
LLC, Case #08-CV-225-S; changes in our relationships with horsemen's
groups and their memberships; our ability to reach agreement with
horsemen's groups on future purse and other agreements (including,
without limiting, agreements on the sharing of revenues from gaming and
advance deposit wagering); the effect of claims of third parties to
intellectual property rights; and the volatility of our stock price.
