Churchill Downs Plans Grandstand, Pavilion Renovation at Kentucky Derby Track

Posted on: July 24, 2024, 09:25h. 

Last updated on: July 25, 2024, 10:18h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Churchill Downs (NASDAQ: CHND) said it plans to spend $80 to $90 million to renovate the grandstand at its eponymous Kentucky racetrack.

Churchill Downs
Mystik Dan winning the Kentucky Derby in May. Churchill Downs said it’s expanding the grandstand and pavilion at the famed racetrack. (Image: ESPN)

Construction on the Grandstand Club and Pavilion is slated to start next month with the enhancements expected to be completed in advance of the 2025 Kentucky Derby. The announcement was made in conjunction with the gaming company’s second-quarter earnings release.

The renovation of the Grandstand Club will transform existing outdoor aluminum bleachers into a combination of 8,300 new comfortable seating varieties,” according to a statement. “Updated seating options will include covered and uncovered stadium-style seats as well as rail boxes along the dirt track’s outer rail that will offer a ‘trackside’ seating experience where guests will be able to closely watch horses break from the Kentucky Derby Starting Gate.”

The first floor of the Grandstand Club will feature bars, betting windows, and permanent concessions.

Churchill Continues Sprucing Up Iconic Track

Churchill Downs has already made investments in its namesake venue with new amenities at the iconic Kentucky track, including a new paddock, boosting attendance and revenue for the first leg of the Triple Crown.

In the second quarter, which included Derby Week, Churchill’s live and historical racing revenue came in at $279.2 million, well ahead of the $262 million Wall Street expected. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the event and related activities was $32 million, beating the operator’s previously released estimate of $26 million to $28 million. Adjusted EBITDA for non-Derby races at the famed track was $5.9 million during the June quarter.

It’s possible the grandstand and pavilion renovations will be EBITDA and revenue drivers for Churchill, particularly during the bustling Derby Week next May.

“The Grandstand Pavilion will create a more upscale social environment by converting the existing second-floor amenity area into a covered outdoor garden environment with new concessions, bars, and wagering windows,” added the gaming company in the press release. “Expansion to the second floor will create additional space for overall guest circulation and add an outdoor balcony for added dining seats. A new stately entrance to the Grandstand Pavilion will unify the surrounding exterior architecture.”

Churchill Downs Q2 Earnings Review

For the April through June period, Churchill Downs notched adjusted EBITDA of $444.8 million on revenue of $890.07 million, beating analysts’ estimates by 9% and 4%, respectively. EBITDA margins checked in at 49.9%.

Based on results/commentary, we think key upside drivers included 1) impressive initial results at Terre Haute, 2) lower racing costs & mis-modeled timing, and 3) ramping contribution from TwinSpires strategic ADW partnerships,” wrote Stifel analyst Jeffrey Stantial in a report out this evening.

Churchill repurchased $13 million worth of its stock during the quarter and has $179.9 million remaining on a previously announced buyback plan. The gaming company holds its quarterly conference call at 9 a.m. Eastern time on Thursday.