Churchill Downs reported record revenue of $628.5 million for the third quarter of 2024. The revenue is a 9.3% increase over the same quarter in 2023. The operator also reported record income in 3Q24 of $65.4 million, a year-over-year increase of 6.9% from $61.0 million.
Churchill Downs CEO Bill Carstanjen stated the operator will continue to pursue possibilities for growth.
“We believe that there are many growth opportunities for us to pursue in the coming years,” said Carstanjen during Thursday’s third quarter results conference call. “Whether it’s further investment in our flagship asset, the Kentucky Derby, new investments utilizing our capabilities around HRMs (historical racing machines), or growth in ancillary businesses along with our long-term strategic plans, we have an excellent pipeline of additional opportunities we are evaluating in our company for future growth.”
The Kentucky Derby, for instance, will continue to implement improvements at Churchill Downs. Carstanjen said a starting gate pavilion project will transform the area near the starting gate, replacing 10,000 bleacher seats with 8,500 premium stadium and track-side box seats with “significant” improvements in the amenities offered to patrons and 2,800 people in surrounding sections.
There also will be renovations in the area from 180 feet past the finish line to the First Turn Club, covering total 500 feet of racetrack frontage. Over 10,000 existing uncovered box seats and “dated” dining areas will be replaced by 16,000 seats representing a variety of “premium hospitality experiences.”
“Collectively these projects will by far be the largest expansion we have done to date,” Carstanjen said, “and will increase our premium seated inventory by approximately 20%.”
In a statement, Truist Securities analyst Barry Jonas said Churchill Downs has made “significant” progress on the Starting Gate Pavilion project (on track and on budget for 2025 Derby), renovating 10,000 bleacher seats into a combination of 8,500 Club project that will be available to the surrounding 2,800 seats.
Jonas added that management “unveiled its largest undertaking yet,” with plans in the next 3-4 years:
1) Renovate the First Turn Club which will replace 10,000 existing uncovered box seats with approximately 16,000 premium hospitality seats.
2) Convert the infield experience from temporary structures for 800 guests to permanent premium seating for less than 7,000 guests (management is exploring adding a tunnel for better ingress/egress).
“These projects will be worked on simultaneously, with some areas ready for the 2026 Derby (and remainder for 2027/2028) with overall premium seated inventory increased by +20% once finished,” Jonas wrote.
Carstanjen was also bullish on prospects in Virginia, notably a new HRM gaming operation in Dumfries, Virginia, that debuted with a VIP event October 21 and is currently undergoing a soft opening.
Also, a permit has been filed in Henrico County, just north of Richmond, to open a new HRM gaming parlor, and the operator added approximately 100 HRM machines to its Richmond facility.
“By the end of 2025 after we have completed this expansion, we will have 5,000 HRMS deployed, the maximum permitted under the law in Virginia, up from approximately 4,000 that we have deployed today,” Carstanjen said.
Churchill Downs also intends to hold a “significant” Kentucky Derby qualifying event at Colonial Downs in 2025, with the wining horse “virtually assured” of a spot in the Derby, according to Carstanjen.
“We believe we are meeting or exceeding the expectations of the Commonwealth, and in turn, Virginia has been a great place for us to grow,” he said.
Carstanjen did admit that its property in Louisville, Derby City Hotel & Gaming, has not met expectations. He attributed that to the lingering affects of the COVID-19 pandemic.
“People didn’t go back to work downtown at the same level that they were there prior to COVID,” Carstanjen said. “There are headwinds for that property. But (Chief Operating Officer) Bill Mudd and the operating team have worked hard on right-sizing the cost there, and we’re seen sometimes properties ramp up a little slower. We know what we’re doing, we understand the market, and we’ll just go to work.”
