CD to buy Ellis Park

[classhandicapper]

Churchill Downs PR
@DerbyMedia
A definitive agreement has been signed by @ChurchillDowns Incorporated to acquire @EllisParkRacing for total consideration of $79 million in cash, subject to certain working capital and other purchase price adjustments.

Full story: https://bit.ly/3xrqVLE


The industry will probably create a new track code and call it CD at Ellis Park (CDE) just to screw up all the database people again. #BAQ :lol:

[The_Turf_Monster]

Hollywood, Calder, Arlington.......Ellis

[Tom]

CD is a serial killer.

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcSQalztDra2TwBOLqQRDVFhdjz0Qg7xn qAuWA&usqp=CAU

[Andy Asaro]

They wouldn't be paying this much to kill it. Seems to me like they are going to expand racing to gain more market share. Colonial Downs has a lot of land to expand on. Look for a huge racing complex there. These guys have a plan. Hotels/Casino's/Racing

[ubercapper]

They wouldn't be paying this much to kill it. Seems to me like they are going to expand racing to gain more market share. Colonial Downs has a lot of land to expand on. Look for a huge racing complex there. These guys have a plan. Hotels/Casino's/Racing

Andy, you are 100% correct about both Colonial and Ellis Park.

In Virginia every 100 HHR machines added requires an additional race day per year. They are inextricably tied together and can't be decoupled per the law. That is why CDI has stated they will be looking to add dates to Colonial (likely as a second meeting) in the future as they will have to as they add more HHR facilities/machines in other parts of the state.

Ellis Park had already planned a big HHR satellite facility with simulcast wagering in Owensboro and CDI is going to make that happen as well as expand at Ellis Park. HHR is tied to racing in Kentucky and again, no decoupling, so with casinos in the state highly unlikely because of moral opposition by a number of rural senators/representatives, HHR is the future for making money in this state. A good chunk of that goes to purses, so that benefits the future of Ellis Park.

I've seen a lot of people opining on social media about Arlington, Hollywood Park and Calder and believing that is the play here. There is ZERO relationship because the real estate value of those in major metro areas was tremendous as compared to the value (for shareholders) of racing, and Arlington was never going to get a casino the ownership wanted in order to be competitive and add to purses.

[dilanesp]

Andy, you are 100% correct about both Colonial and Ellis Park.

In Virginia every 100 HHR machines added requires an additional race day per year. They are inextricably tied together and can't be decoupled per the law. That is why CDI has stated they will be looking to add dates to Colonial (likely as a second meeting) in the future as they will have to as they add more HHR facilities/machines in other parts of the state.

Ellis Park had already planned a big HHR satellite facility with simulcast wagering in Owensboro and CDI is going to make that happen as well as expand at Ellis Park. HHR is tied to racing in Kentucky and again, no decoupling, so with casinos in the state highly unlikely because of moral opposition by a number of rural senators/representatives, HHR is the future for making money in this state. A good chunk of that goes to purses, so that benefits the future of Ellis Park.

I've seen a lot of people opining on social media about Arlington, Hollywood Park and Calder and believing that is the play here. There is ZERO relationship because the real estate value of those in major metro areas was tremendous as compared to the value (for shareholders) of racing, and Arlington was never going to get a casino the ownership wanted in order to be competitive and add to purses.

Right. You can add Bay Meadows to your list- in urban areas where the real estate is super-valuable, if you see a big acquisition, it's totally appropriate to ask questions about whether the track is long for this world. But if it happens in a place with lower real estate values and lower population, and the buyer is a racing operation like CD, it's far more likely that the plans include racing.

[horsefan2019]

CDI is both a race track owner and real estate company. If the horse racing thing doesn't work out they will sell it for redevelopment. Their past history tells us that.

[ScottJ]

They wouldn't be paying this much to kill it. Seems to me like they are going to expand racing to gain more market share. Colonial Downs has a lot of land to expand on. Look for a huge racing complex there. These guys have a plan. Hotels/Casino's/RacingThe plan is real estate development, sports wagering synergies, and unlocking capital assets for the CDI share price. Andy, you are simply foolish if you think for a second that Ellis Park is being purchased as a revenue growth investment in racing.

[ScottJ]

Look at this quote from the Blood Horse article : "We are very enthused to welcome Ellis Park to the Churchill Downs racing family," said Bill Carstanjen, CDI CEO. "Our team is committed to building a summer meet at the 'Pea Patch' that keeps more Kentucky-bred horses and Kentucky-based trainers in their home state while attracting top horse racing talent from across the country to the Bluegrass State each July and August."

Let's consider this strategy. Churchill Downs, which has never developed a strategy against Saratoga, Del Mar, or even Monmouth Park for the summer months is suddenly going to have that ability at Ellis Park based in the middle of nowhere. Attract top racing talent from across the country? How?

This is Carstanjen's CEO speak. As they said on NCIS in Gibb's Rules, when you lie, be specific. The strategy sounds great, has been expressed with confidence, and will rape the industry in the area.

[ScottJ]

A final comment on the $79M purchase price - for cash. If you have that much cash on the books, you become an acquisition target yourself as a publicly traded company. Moving that cash off the books into an asset which can be depreciated protects the company itself.

[cj]

Look at this quote from the Blood Horse article :

Let's consider this strategy. Churchill Downs, which has never developed a strategy against Saratoga, Del Mar, or even Monmouth Park for the summer months is suddenly going to have that ability at Ellis Park based in the middle of nowhere. Attract top racing talent from across the country? How?


How? Giant purses I would guess. Will it work? Maybe, maybe not.

[River11]

CDI is both a race track owner and real estate company. If the horse racing thing doesn't work out they will sell it for redevelopment. Their past history tells us that.

Ellis Park is on a floodplain, the only value is 100 years of racing and the gaming.

[BarchCapper]

Look at this quote from the Blood Horse article : "We are very enthused to welcome Ellis Park to the Churchill Downs racing family," said Bill Carstanjen, CDI CEO. "Our team is committed to building a summer meet at the 'Pea Patch' that keeps more Kentucky-bred horses and Kentucky-based trainers in their home state while attracting top horse racing talent from across the country to the Bluegrass State each July and August."

.

I am probably more worried long term about the Fair Grounds than I am about Ellis Park.

[JustRalph]

How? Giant purses I would guess. Will it work? Maybe, maybe not.

Lots of people would rather travel to KY than New York.

I’m guessing you could do a week at Ellis for the cost of 2 days at Toga.

[Al Gobbi]

Lots of people would rather travel to KY than New York.

I’m guessing you could do a week at Ellis for the cost of 2 days at Toga.

There are already a number of prominent horsepeople who are choosing to stay at Ellis during the summer than held elsewhere.

[ubercapper]

The plan is real estate development, sports wagering synergies, and unlocking capital assets for the CDI share price. Andy, you are simply foolish if you think for a second that Ellis Park is being purchased as a revenue growth investment in racing.

Ellis Park is being purchased (the same as Turfway) for revenue growth and shareholder value based on HHR AND for Racing at the same time, given in Kentucky they are inextricably tied together.

The legislation authorizing HHR is very clear on that (so no decoupling, dare I say ever), and since Kentucky will never have casinos, unless the state turns blue (and that too is unlikely in the next decade at least), HHR is the cash cow which also benefits racing because some of the revenue has to go to KTDF which pays a good chunk of purses.

Just one example is the purse for a MSW at TP went to $60K (from about $32K previously) this past meeting.

Turfway had a superb 2022-2023 winter-spring meeting following CDI completing the purchase. Per Bloodhorse - Fueled by the addition of a nearby historical horse racing gaming venue (an on-track venue will open later this year), Turfway purses increased from $6,104,572 for its Jan. 1-March 27 dates in 2021 to $12,907,734 for its Jan. 1-April 2 dates in 2022.