Browse articles by topic

CDI swings to 2020 loss despite Q4 recovery


Racetrack and gaming operator Churchill Downs Incorporated (CDI) made a loss of $81.9m in 2020 as revenue dropped 207% to $1.05bn, but the business experienced a strong Q4 recovery, with profit increasing by more than 300%.

While land-based and racing revenue fell, online revenue from CDI’s Twin Spires online product brought in $403.4m, up 40.7%. Almost all of this came from its online horse race wagering platform, while $4.3m came from its sports betting and casino brand, which was rebranded under the Twin Spires umbrella earlier this year.

The Churchill Downs site brought in $142.8m, down 48.0%, with $63.3m coming from the racetrack and $79.5m from the Derby City racino at the track.

Venues besides Churchill Downs remained CDI’s largest source of revenue, however, bringing in $441.4m, though this was down 36.3%. The Fair Grounds in Louisiana brought in $97.6m of this total, while Presque Isle in Maine brought in $75.2m and Ocean Downs in Maryland $60.2m. All venues saw revenue decline year-on-year.

CDI brought in a further $61.5m from other sources.

The business’ operating expenses, meanwhile, totalled $993.8m, down 10.8%. Of these costs, $360.4m were related to non-Churchill Downs sites, $273.3m were from online products and $141.9m were related to Churchill Downs itself. A further $114.8m were selling, general or administrative expenses.

This left the operator with a $60.2m operating profit, down 72.1% year-on-year.

After interest costs of $80.0m and $27.7m in income from businesses in which CDI holds a non-controlling stake, the operator was left with an $8.0m pre-tax profit, down 95.9%.

After a $5.3m tax benefit, CDI had a post-tax profit of $13.3m, down 90.5%.

However, the operator also incurred costs of $95.4m from discontinued operations, including social gaming business Big Fish Gaming. This led it to an $82.1m net loss, of which $81.9m could be attributed to CDI shareholders.

In 2019, the business had made a $137.2m profit, with $137.5m attributed to shareholders.

“Against the backdrop of the COVID-19 global pandemic, we managed our business efficiently and responsibly, and with that discipline, we have maintained a strong company,” CDI chief executive Bill Carstanjen said. “We are moving forward in 2021 with a relentless focus on strategic and organic growth opportunities that will enable us to continue to deliver a strong return on investment to our investors.”

Looking only at the fourth quarter, CDI’s revenue declined 0.8% to $278.2m. While online wagering revenue was up by more than 50% to $93.9m, Churchill Downs revenue dipped to $35.2m and other gaming revenue declined by 26.4% to $121.7m. Other revenue more than doubled to $27.4m.

CDI’s operating expenses, meanwhile, were down 7.8% to $255.5m. This meant operating income increased more than sixfold to $22.7m.

After a net $6.0m financial loss, CDI’s pre-tax profit was $16.7m, up 104.6%. Its post-tax income was $16.4m, up just under 300% year-on-year.

After a $700,000 profit from discontinued operations, Churchill Downs Incorporated made $17.1m for the quarter, up 327.5% from Q4 of 2019.

Yesterday, the operator announced that it would sell the Arlington Racecourse in Illinois, with the new buyer expected to redevelop the site. However, it said it was working with authorities to find a new venue from which to operate racing under its licence.