Soft business levels stemming from the nation’s
economic slowdown and the unresolved negotiations with horsemen over
distribution of the Churchill Downs simulcast signal to national advance
deposit wagering ("ADW”)
outlets have prompted Churchill Downs to announce a 10 percent reduction
in overnight purses for the remainder of its Fall Meet and reductions in
purses for two of the meet’s major stakes
races.
Overnight purses will be reduced by 10 percent effective with the racing
program on Wednesday, Nov. 12. In addition, purses will be reduced for
the 134th running of the Grade II Clark
Handicap, which is set for Nov. 28, and the 93rd
running of the Falls City Handicap, a Grade II race which will be run on
the Nov. 28 Thanksgiving Day program. The Clark Handicap purse will be
reduced by $100,000 to $400,000-added, and the Falls City purse by
$50,000 to $150,000-added.
The reduction in stakes purses for the Oct. 26-Nov. 29 Fall Meet is the
second announced by Churchill Downs. A reduction of some stakes purses
and the cancellation of two stakes events was announced on Aug. 29.
The Churchill Downs simulcast signal has been blocked from national
advance deposit wagering outlets since the beginning of Churchill Downs’
April 26-July 6 Spring Meet. Those outlets include TwinSpires.com, the
official ADW site for Churchill Downs Incorporated. The Kentucky Horsemen’s
Benevolent and Protective Association ("HBPA”)
and Kentucky Thoroughbred Association ("KTA”)
have withheld permission to allow distribution of the track’s
simulcast signal to those ADW platforms.
"The soft economy has led to a decline of
wagering dollars industry-wide and resulted in purse reductions at
tracks across the country,” said Churchill
Downs Incorporated Senior Vice President Kevin Flanery. "The
inability to distribute simulcast signals to national ADW platforms has
placed additional pressure on purses at Churchill Downs. We apologize to
our customers for this inconvenience and will continue to work to obtain
the horsemen’s consent to distribute the
Churchill Downs simulcast signal to those sites.”
Churchill Downs, the world’s most legendary
racetrack, has conducted Thoroughbred racing and presented America’s
greatest race, the Kentucky Derby, continuously since 1875. Located in
Louisville, the flagship racetrack of Churchill Downs Incorporated
(NASDAQ Global Select Market: CHDN) also operates Trackside at Churchill
Downs, which offers year-round simulcast wagering at the historic track.
Churchill Downs will conduct the 135th running of the Kentucky Derby on
May 2, 2009. The track’s 2008 Fall Meet is
scheduled for Oct. 26-Nov. 29. Churchill Downs has hosted the Breeders’
Cup World Championships a record six times, and will host the
international racing championship again on Nov. 5-6, 2010. Information
about Churchill Downs can be found on the Internet at www.churchilldowns.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
any counter-suits or 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.
