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Against Steep Odds
L. Jon Wertheim
April 19, 1999
Churchill Downs is a come-from-behind winner
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April 19, 1999

Against Steep Odds

Churchill Downs is a come-from-behind winner

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Churchill Downs and Out, they called it. Fifteen years ago the state of horse racing's signature track mirrored that of the sport. Attendance at races nationwide had plummeted by 65% over the previous quarter century, and purses were staggeringly low. Churchill Downs, for its part, was decrepit. A move to extended summer racing at the Louisville track had proved financially disastrous, and morale among the employees was at an alltime ebb. To make matters seem worse, Churchill Downs Inc. had just hired as its CEO Tom Meeker, who unabashedly admitted that he had little knowledge of racing. "His background wasn't in horses, and he didn't seem like a real aggressive businessman," says veteran trainer Bill Mott. "But I'd say he's worked out pretty well."

As Churchill Downs readies itself for the 125th Kentucky Derby next month, the track's parent company is making its own run for the roses. Churchill Downs Inc. turned in a record gross profit of $28.2 million in 1998 and has more than doubled its net revenues since 1994. The price of its stock ($30 at last Friday's closing) has nearly tripled in the last four years. Horse racing might remain a fiscally beleaguered sport, but you wouldn't guess it from scrutinizing the Downs track. Attendance has risen by 61% since 1984, the facilities are first-rate, and, perhaps most important, the handles—and thus the purses—have never been higher.

Meeker, who relishes publicity as much as thoroughbreds enjoy a visit to the vet, deserves much of the credit for the dramatic turnaround. An attorney and retired Marine Corps lieutenant colonel who served three tours of duty in Vietnam, Meeker, 55, is a no-nonsense consensus builder among his 25-person management team. When he assumed the job in 1985, he invested $35 million in marketing and in capital improvements to the track. But his company's success rests on its ability to change along with the sport's landscape.

As the racing industry becomes increasingly consolidated, Churchill Downs has embarked on an aggressive plan of expansion. It recently acquired Ellis Park in western Kentucky and announced the purchase in January of Calder Race Course in Miami. Last week a Churchill Downs source confirmed that the company would buy Hollywood Park, one of California's busiest tracks. "The Chicken Littles say the sky is falling on horse racing," says Meeker. "Well, we see lots of opportunity."

What's more, at a time when the proliferation of casinos threatens the sport, one of Meeker's strategies has been to push the Kentucky legislature to permit "alternative gaming" (i.e., video slots) at the track. "It's a great way to grow our sport," he says.

As the company thrives it has not ignored the tradition of its flagship track. One of Meeker's catchphrases, "Keep the horses in horse racing," reflects a desire to leverage the Churchill Downs brand without changing the fundamental product. "We're in the live racing business," he says. "Everything starts with the quality of your racing."

It's all proof that all one needs is a little horse sense to know that success breeds success.

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