UPDATE 9/27: Churchill Downs Inc. Monday announced the completion of its previously-announced purchase of Ellis Park Racing & Gaming in Henderson, Kentucky, for a cash consideration of $79 million, subject to working capital and other purchase price adjustments. CDI also assumes the opportunity to construct a track extension facility with historical racing machines in Owensboro, Kentucky.
“Our team is already hard at work in both Henderson and Owensboro,” said CDI Chief Executive Officer Bill Carstanjen in a statement. “In the coming days, we look forward to sharing more about our plans to invest in the racing infrastructure at Ellis Park and to drive significant purse improvement through the Owensboro historical racing opportunity.”
CDI’s purchase of Ellis Park follows approval of the transaction by the Kentucky Horse Racing Commission. The transaction was funded with cash on hand and through the CDI’s existing credit facility.
ORIGINAL ARTICLE 9/16: Churchill Downs Inc. Friday announced today it has signed a definitive agreement to acquire Ellis Park Racing & Gaming in Henderson, Kentucky, from Enchantment Holdings, an affiliate of Laguna Development Corporation. CDI will pay a total consideration of $79 million in cash, subject to certain working capital and other purchase price adjustments, and will assume Ellis Park’s opportunity to construct a track extension facility in Owensboro, Kentucky.
“We are very enthused to welcome Ellis Park to the Churchill Downs racing family,” said CDI CEO Bill Carstanjen in a statement. “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.”
Ellis Park is located north of the Ohio River and just south of Evansville, Indiana. The facility celebrated 100 years of racing this year and is considered the historic summer home of thoroughbred racing in Kentucky.
Ellis Park also features a gaming facility with approximately 300 historical racing machines (HRMs).
CDI plans to invest in Ellis Park’s racing infrastructure and to construct Owensboro Racing & Gaming, a track extension and entertainment venue at Owensboro’s Towne Square Mall. The new site will feature 600 HRMs, a simulcast wagering center, and multiple food and beverage offerings. CDI expects its total investment in Henderson and Daviess Counties to be approximately $75 million in addition to the purchase price.
“This is an exciting announcement for the horse racing industry, the cities of Henderson and Owensboro, and the entire Commonwealth of Kentucky,” said Kentucky Governor Andy Beshear. “Churchill Downs has proven it has the experience, resources, and desire to reinvigorate Ellis Park into a premier racing destination and provide unmatched gaming entertainment.
“This investment will ensure our Kentucky horsemen and women have the best year-round racing circuit in the country and create jobs throughout the region and state. Churchill Downs is a great corporate citizen and an important part of Team Kentucky.”
CDI will acquire all outstanding equity of Ellis Entertainment, the parent company of Ellis Park. For tax purposes, the transaction will be treated as an asset purchase, allowing CDI incremental tax benefits providing additional cash flow and enhancing the overall economics of the transaction.
The closing of the transaction is contingent upon approval by the Kentucky Horse Racing Commission. The parties expect to close the transaction shortly after change of control is approved.
“The opportunity to bring Churchill Downs to Owensboro is particularly significant to us,” said CDI Senior Vice President of Corporate Development Jason Sauer. “We are eager to start the work to elevate Ellis Park’s reputation as a summer destination for Thoroughbred racing while delivering a premier gaming and entertainment experience to Daviess County. We look forward to sharing more exciting details about our plans in the coming days.”
Rege Behe is lead contributor to CDC Gaming Reports. He can be reached at email@example.com. Please follow @RegeBehe_exPTR on Twitter.