Churchill Downs Is Horse Racing’s Biggest Brand — But Is The Company Trampling The Sport?

Part One of a two-part report on the eve of the 147th running of the Kentucky Derby
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In February, 326 acres of prime real estate went up for sale in the Village of Arlington Heights, an affluent suburb located about 30 miles from downtown Chicago. As described in a press release, the available property’s “ideal location in Chicago’s northwest suburbs, together with direct access to downtown Chicago via an on-site Metra rail station, presents a unique redevelopment opportunity. We expect to see robust interest in the site and look forward to working with potential buyers, in collaboration with the Village of Arlington Heights, to transition this storied location to its next phase.”

This was not some local realtor talking, as you might surmise. This was none other than Bill Carstanjen, the chief executive officer of Churchill Downs Inc. And the “storied location” of which he was speaking was Arlington International Racecourse, a modern marvel of a horse-racing facility that topped Architectural Digest’s list of the most beautiful racetracks in the world in 2014.

Also making that list was Churchill Downs, which will host the 147th running of the Kentucky Derby this Saturday in Louisville. With its twin spires, gaudy hats, mint-julep decadence, blue-blooded backstretch, gargantuan Jumbotron, and enough spectator space to accommodate every single resident of Jackson, Miss., and various other mid-sized cities, Churchill is — by a Secretariat-like margin — the single most recognizable totem in American horse racing.

And yet, a case could be made that no one entity is doing more to strip-mine the sport it’s so synonymous with than the track’s publicly traded parent company, Churchill Downs Inc. (CDI).

To wit, barring some sort of miracle, 2021 will mark the end of racing at Arlington, just as 2020 marked the end of racing at Calder Race Course (currently known as Gulfstream Park West) in Miami Gardens, Fla. Both of these storied properties are owned by CDI.

A racetrack ‘better than the Louvre’

Whereas the 50-year-old Calder subsisted as a workingman’s track, Arlington hosted the world’s first million-dollar race — the Arlington Million — in 1981.

Opened in 1927, Arlington’s original iteration was reduced to rubble in a catastrophic 1985 fire. The track’s beloved chairman, Dick “Mr. D” Duchossois, proceeded to hire the architecture firm Skidmore, Owings & Merill — designers of Chicago’s famed Willis Tower (nee Sears Tower) and John Hancock Center — to reimagine the venue. Mr. D intentionally chose a firm with no experience designing racetracks, and it showed: Thanks in large part to its cantilevered roof, the facility, built for $110 million, is like no other, a heartland space station where horses happen to run.

When the Kentucky Derby-winning trainer Jack Price first visited Arlington upon its grand reopening, he told The Los Angeles Times, “This place is like the Louvre. Check that: It’s better than the Louvre.”

“That roof is a thing of structural and functional beauty,” Blair Kamin, the Chicago Tribune’s former architecture critic, told US Bets. “By cantilevering the roof, you don’t have any poles obstructing your view like Monmouth, where I grew up, or virtually every other track.

“Arlington is a really interesting track because the roof is very modern and bold structurally, but when you go to Arlington, you always felt like it had touches that were intimate and historical. You could get very close to the paddock and the post parade. Despite the bold, Chicago-style gesture of the roof, it didn’t feel like you were overwhelmed. It’s kind of expansive and airy, but it also has grace notes that recall the great history of horse racing.”

When CDI merged with Arlington Park (as it was known at the time) in 2000, “there was no reason not to have shared optimism at that point,” reflected Mike Campbell, president of the Illinois Thoroughbred Horsemen’s Association.

“We were elated in 2000 when Churchill took possession of Arlington,” Campbell added. “The mindset of the time was suggestive of growth, of optimism to proliferate racing in Illinois as well as in Kentucky and Florida. We had reason to believe they were a horse-racing company, having the two marquee races in the world” in the Kentucky Derby and Kentucky Oaks, the Derby’s counterpart for top 3-year-old female thoroughbreds.

But the honeymoon between CDI and Arlington’s horsemen would not last long. While the two sides worked together to push for state legislation granting “racino” licenses for racetracks statewide, Campbell says CDI always found something to complain about.

“In Springfield, the gaming bill — I sensed that there was a problem,” said Campbell. “I was interacting with track officials on the apron. They were saying we took advantage of them, that there were ridiculously high rates going to purses.

“It was clear to us at the time that [onsite slot machines] were the panacea that we’d been waiting for and given the fact that we were involved with a racing company, that they’d be sharing a like feeling. But during that period of time, they morphed from a racing company to a gaming/technology company. Their motivation changed into, ‘We’re an acquisition-based gaming company. We’re going to acquire casinos. And in order to ensure better share value to our stockholders, we’re going to invest in outside casinos and advanced-deposit wagering.’ So we had to add table games. At that time, I didn’t think that legislative body was going to give them slots and table games. And you know what? They did.”

It didn’t matter. In 2019, when it came time to apply for a casino license under Illinois’ new gaming law, CDI stunned horsemen and casual observers alike by declining to seek one for Arlington. “Arlington would enter this market with an effective tax rate that would be approximately 17.5% to 20% higher than the existing Chicagoland casinos,” Carstanjen complained at the time. “It is with a heavy heart that we conclude that we can’t make this work.”

Creative licensing

But there was also another factor: Around the time it decided to pass on a casino license for Arlington, Churchill took a majority stake in Rivers Casino in nearby Des Plaines. Hence, had it decided to pursue casino gaming for Arlington, CDI would have, in the view of Arlington President and CDI executive Tony Petrillo, been competing against itself.

“You’re in a hyper-competitive gaming market already, and to have these casinos located within a stone’s throw of each other just doesn’t make sense,” Petrillo said.

As for why Churchill decided to obtain control of a nearby casino at the precise time it could have taken steps toward opening one at a venue it already owned, Petrillo said, “I’m not sure. It just might have made economic sense and the best use of shareholder revenue at that time to have one of the top casinos in the United States.”

Churchill insists it has no plans to abandon Illinois horse racing, with Petrillo saying it’s “part of the plan” to open another racing facility with an onsite casino elsewhere in the state. But Campbell and others think such a notion lies somewhere between ludicrous and unlawful.

“The racing license is site-specific,” said Campbell. “It cannot be moved by Churchill or anybody else until such time as they would go through an application process where they would have a racetrack. You have to have a facility. You have to have a racetrack, adequate grandstand, a bar area. To think that you could take Arlington Park and move it to some remote position in Illinois and achieve anywhere near that sort of population base is laughable. This is just another way to divert the negative energy.”

At the first meeting of the Illinois Racing Board after it was announced that Arlington was for sale, commissioner Alan Henry absolutely incinerated CDI.

“[Churchill Downs] intends to shut down for good what is generally viewed as the most beautiful racing facility in the country, produce massive collateral damage across the thoroughbred and standardbred industry statewide, and continue to generate a rising tide of the ill will among horse players nationwide,” said Henry, who agreed with Campbell that CDI is not at liberty to simply relocate Arlington’s racing license. “That is a really bad look when the foundation of your brand is horse racing. … We all know that CDI’s intransigence about not selling Arlington Park to a racing concern is in part about protecting Rivers Casino. But does a nasty divorce from Arlington protect CDI from the wrath of legions of horse players both locally and around the country? Not from where I sit.”

Will racing continue at the track?

Henry added that he felt CDI “has no intention of selling the track to another racing concern.” To this end, CDI’s vice president of communications, Tonya Abeln, responded to an email query by effectively confirming Henry’s assessment, writing, “We are marketing the 326-acre Arlington International Racecourse land for future development. We will learn from the market what is most valuable, but we have seen, especially in land-locked metropolitan areas, there is high demand for suburban residential communities and also for job-creating commercial developments.”

Yet while horse racing isn’t exactly a growth industry, Campbell insists that he’s “heard of multiple parties with interest” in purchasing Arlington and continuing to hold races there.

“The choice for Churchill is very clear,” Campbell added. “If the money for racing is the same or better than the money for industrial and mixed-development residential, then I would ask them to step aside and let us race horses.”

While the Arlington property’s current zoning allows for the sort of redevelopment CDI envisions, it’s still subject to review by the Village of Arlington Park. And while Village Manager Randy Recklaus said Arlington Heights “can’t unnecessarily hold up something [a landowner would] legally be able to do” by delaying or denying demolition permits and the like, he added, “Given the prominence of the racetrack in our community, this is a big topic of discussion. It’s a tremendous landmark and a huge part of the village’s identity. We hoped this day wouldn’t come and we’re hopeful that perhaps someone can find a way to reuse it. It’s a special place. The story of how it was built after the fire in the ’80s, it’s got a great story as well as a great facility. We would love to find some way for racing to continue at the site if the market suggests that can happen.”

Fat chance, says former Chicago Tribune turf writer Neil Milbert.

“The only way [CDI] would sell it to someone who would want to keep the racetrack there, they’d put a string in the contract that they couldn’t have a casino and, consequently, no one would want to spend the money for it,” he explained. “I don’t know how interested [CDI] would be in racing if it weren’t for the Kentucky Derby.”

But in South Florida, on the same property where Calder recently hosted its last race, CDI remains committed, at least in the short term, to a sport reminiscent of racquetball — jai-alai — that’s in far more trouble than American horse racing. And as fans of Southern California’s fabled Hollywood Park will tell you, it’s yet another example of CDI’s evolution into a company that’s more concerned with gobbling up casinos and flipping real estate than it is with finding ways to reinvigorate the sport it’s built an empire on.

Coming tomorrow: Part II, exploring Calder, Hollywood Park, and the potential impact of fixed-odds wagering.

Photo by Thomas Kelley / Shutterstock

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