Leaders grow company by diversifying, employing young professionals
By Misty Cruse
For BG Magazine
It’s known as the world’s most famous Thoroughbred racetrack; but for the people of Churchill Downs, there’s a lot more to the story.
Over the past several years, Churchill Chairman and CEO Bob Evans realized the racing industry was in a state of decline. And as it declined, making money became much more difficult. So in 2008, Evans and his team embarked on what they refer to as the “growth via diversification strategy.”
“Embarking on this strategy did not mean we were abandoning horse racing; it just meant we would not invest solely in horse racing,” he explained.
Over the past few years, Evans and his team have worked to develop and acquire other businesses that could help grow Churchill Downs, Inc. (CDI) into a successful corporation that could withstand – and survive – the racing industry’s decline.
These strategies have resulted in good news and great dividends for the company, which now owns four racetracks, four casinos and a successful online gaming business. The company had record net revenues in 2012 of $734.2 million, up from $696.9 million in 2011, a 5 percent increase. The growth in net revenues was largely because of the continued expansion of Churchill’s online business, a record Kentucky Oaks and Derby week performance and incremental net revenues from the October 2012 acquisition of Riverwalk Casino Hotel.
Track and casino growth
While Churchill Downs is the most profitable, the company owns three additional racetracks: Arlington Park in Arlington Heights, Ill., Calder Casino and Race Course in Miami Gardens, Fla., and Fairgrounds Race Course and Slots in New Orleans.
Recently, another venture was approved; CDI and Delaware North Companies are partnering to build a new harness track and casino that will open in 2014. The new location will open just north of Cincinnati; expanded gaming recently was made lawful in Ohio.
“The area is a gaming friendly community, and there’s a lot of potential for growth,” Evans said. “While the architectural and engineering work is largely complete, we’re waiting on our gaming and racing license before groundbreaking, hopefully soon.”
CDI also has acquired casino-only properties including Harlow’s Casino Resort and Hotel in Greenville, Miss., and Riverwalk Casino Hotel in Vicksburg, Miss.
Riverwalk, one of the newer acquisitions, is located on approximately 22 acres of land on the Mississippi River. The casino features a 25,000-s.f. single-level gaming floor with 723 Class III slot machines and 18 table games; a five-story, 80-room attached hotel; a 5,600-s.f. multi-functional event center overlooking the river; and two separate dining areas.
“There were a lot of positives to this investment,” Evans said. “Riverwalk is a newer property with a reasonable amount of competition, and it has an excellent management team already in place.”
The company also recently announced it plans to acquire Oxford Casino in Oxford, Maine, for $160 million. The property opened in June 2012 and underwent an expansion that was completed in October. It is located on 100 acres about 40 minutes northwest of Portland in the heart of southern Maine. Oxford Casino includes a 25,000-s.f. single-level gaming floor with 790 Class III slot machines and 22 table games. It also hosts a 140-seat casual restaurant, Oxford Grill, a 12-seat casino bar and a grab-and-go.
As CDI has expanded, so has its personnel needs. To give the company more room to grow, CDI moved in June to its new headquarters on Hurstbourne Parkway.
The new location houses 121 employees, but there is space for up to 155. The new space allows CDI to continue to rebrand itself as more than just a racetrack.
“We don’t want to abandon racing, we just want to grow,” Evans said. “With the diversification strategy, we’ve gone from just a track to a racing, gaming and entertainment company.”
Branching out into interactive gaming
Another initiative of CDI is the development of its interactive division. Churchill Downs Interactive consists of the company’s online businesses, including TwinSpires.com, Luckity.com and Bluff Media.
While it is active now, Churchill Downs did not immediately jump on the online gaming bandwagon. The first launch of the interactive segment of CDI came in 2007 with TwinSpires.com, an online wagering platform that allows people to wager on horse racing from around the world and provides detailed handicapping information, such as pedigree and previous performance statistics, which are popular with serious horse racing enthusiasts.
“We are excited about the business we have built over the last five years,” said James E. “Ted” Gay, president of interactive at CDI. Gay, 38, is one of several Gen X employees carrying an upper management title at the historic Churchill Downs.
Gay joined the company nearly 10 years ago and has had time to learn and grow in the company as the interactive business took shape. Most recently, he managed the development of CDI’s newest venture, Luckity.com.
“Luckity.com is built on the same platform as TwinSpires.com, but the interface is different, and it appeals to a different audience,” he said. “It offers fun social games, similar to playing casino games or the lottery.”
The games on Luckity.com are associated with live horse races across the world, and winning numbers are based on the actual real-time results of those races. Players win when their selected numbers match the numbers of the winning horses.
Young professionals in an old business
With a company rich in history and prestige like Churchill Downs, one might think the company leaders would be hesitant to hand over the reigns to a younger generation. However, that’s certainly not the case. It is the perspective of CDI’s young management team that helps move the industry in the direction of growth, according to Evans.
“It would surprise a lot of people that a company that will be 139 (years old) next year would have a young management team,” he said. “We realize that in order to stay profitable, we have to make changes; we have to stay contemporary. We need people in place with the knowledge and ability to foresee these things and the strategies to implement them in our company.”
And while the community sometimes resists change when it comes to Churchill Downs
racetrack, these changes have manifested themselves into great opportunities, such as the Oaks Pink Out, Taste of Derby and Night Racing.
Gay is one of the key players in keeping CDI on the cutting edge.
“One of the things I love about CDI is that we’re always trying new things,” he said. “Growth is fun, we want to create new opportunities for the company and individuals. I didn’t start on this side of the business, but I’ve gotten to learn it from the beginning and that’s exciting.”
Being a young professional in an organization rich in experience and leadership could be daunting, but Gay said CDI’s leaders have been so encouraging that it has been easy to find his niche.
“We don’t think about age, it’s about what you bring to the table as a team member,” he said.
Misty Cruse is a writer for BG Magazine, a publication of The Lane Report.