Comments on: WAS CHURCHILL ACQUISITION A SMART MOVE? YOUBET

By: Picksburg Phil

Picksburg Phil — Fri, 20 Nov 2009 22:00:11 +0000

Steve says, “Good for CDI’s quarterly financials, bad, very bad, for the long-term health of racing.”

What? You mean a rising tide doesn’t raise all racers boats? How about the long-term health of your customers, the bettors? Are they ever taken into account? If the short term rapacious takeout-all-you-can from the handle continues, there will be little or nothing left of the pari-mutuel pie to re-distribute.

BTW Steve, I enjoy your website. Anybody that can fit Bob Dylan lyrics into a story about Keeneland yearling sales is absolutely Blowin’ in the Wind. And, even though I’m down here on Desolation Row, selling postcards of the hanging, I clearly understand that if the racing cognoscenti doesn’t soon slash and burn the takeout that A Hard Rain’s A Gonna Fall on the racing game.

By: joe blow

joe blow — Fri, 20 Nov 2009 21:54:27 +0000

How about the new federal regulation that will go into effect later this year which will disallow accts to be funded by your credit card! The only way to fund the betting accts will be by giving your checking information. How many customers will be comfortable with that? Accts will diminish dramacticly> I dont know who the bigger idiot is,Churchill downs for making the deal, or Ray Paulick for thinking its genius !

By: Steve Zorn

Steve Zorn — Fri, 20 Nov 2009 19:21:05 +0000

Another casualty of the merger will be horse owners and trainers. As CDI funnels ever more of its handle through its ADWs, that means a smaller share of the takeout for the purse account. This has been CDI’s obvious strategy for years, unlike NYRA, which treats bets made over its own ADW, NYRA Rewards, the same as on-track bets for purposes of funding the purse account. Good for CDI’s quarterly financials, bad, very bad, for the long-term health of racing.

By: Bob Caito

Bob Caito — Fri, 20 Nov 2009 16:43:36 +0000

Churchill cries “poor” and says it needs slot machines to survive. Then they go and pay $128 million for Youbet.com. I’m sure that will not be lost on voters in the state of Kentucky if the slots issue requires a statewide referendum. Poor timing on the part of Evans and the CDI board of directors.

By: Bob Hope

Bob Hope — Fri, 20 Nov 2009 16:06:59 +0000

Another great debate to offset the Rachael/Zenyatta challenge, a poll for the smartest man in the horse racing world. Ray has made his choice, albeit using narrow criteria for his choice. Some would select the CEO of Betfair who invaded, penetrated and captured North America’s horse racing product without firing a single shot. I would prefer a reference to the smartest man in the gaming business, not the horse racing business and that would pit Evans against Steve Wynn and a host of other mechanical smartys. In my estimation anyone that could lay claim to the title must have quality of content as the premier ingredient to pursue, not gaming gimmicks. It is interesting to read the statements and remarks, including Paulick’s who never mentions the quality of the product as a consideration. With the proliferation of cheap claiming races and the audacity to state that Presque Isle Downs, Indiana and West Virginia are your main competition is demeaning from any point of view. Mr. Carlino and Mr. Evans have made good gaming decisions and acquisitions as all would agree but the pursuit to become “king of the claimers” is not an admirable achievement in the true sense of developing better horse racing and will not generate higher local attendance or handle. We can see the strategy of acquiring instruments by which to do it with borrowed handle and horses but it is certainly not the best use of cash and pedigree ! We think that it is all about “stock” but not bloodstock !

By: David Carrico

David Carrico — Fri, 20 Nov 2009 14:50:29 +0000

The good news Churchill has increased its share of “the growth portion of the NA t’bred wagering total”. Problem is that the same 14b pie was over 16b several years ago and promises to be under 13b by years’ end. True its better having more of that enjoying greater margins but when will Churchill or others begin to create any real growth? Mr. Evans says the future will see fewer dates conducted by fewer tracks. Conventional wisdom was that live racing must be the means to introduce and nurture new customers. If that is accurate (and I’m not so sure it is anymore), how then does he feel new users will leap to their computers to play a game they’ve never been to?

By: Ghostzapper

Ghostzapper — Fri, 20 Nov 2009 14:32:24 +0000

United Tote is a boat anchor. Antiquated hardware and software that is dated. Youbet made the mistake of buying this company to be considered “one of the boys”. They overpaid by millions and it stifled Youbets growth in its core ADW biz. CDI will soon learn that UT is a clunker. Too bad the “cash for…..” is over.

By: Concerned observer

Concerned observer — Fri, 20 Nov 2009 13:18:44 +0000

The real question is whether publicly traded companies present a good fundamental basis for ownership of racetracks. I think there are downsides to public ownership of any business which may be contrary to the common sense good of the business and the community. First, any publicly traded co. will be forced by wallstreet, to grow. In a stable situation like CD, that can only be accomplished through aquisitons (good or bad). Second, publicly traded Co.s must perform well qtr to qtr often meaning cutting staff or services drasticly to salvage a qtr ,even if the decisions are bad in the long term (ie: cutting staff it took years to train, just so the quarterly profit looks good). A private qwner would not gut the business to save a quarter and maintain the stock price, This is often the cause of balance sheet juggling which later comes back to haunt you.

My experience is that Newspapers, banks, auto retailers and yes— horse racetracks —contribute the most to the community and to the overall stability of the enterprise when privately owned or closely held. Wallstreet will always force CD to put bottom line ahead of cooperation, or long term good for the sport. We need more Cella’s.

By: Jeff True

Jeff True — Fri, 20 Nov 2009 00:45:05 +0000

You don”t have to be a genius to see that the “merger” was a good move; at the price, very good. And it has been a a good idea for some time. Both YB and UT are excellent companies at the head of their respective classes. CDI’s stated goals are to grow their share of the parimutuel market, and they (Evans and others) know with the overall market not growing that creating or compeiting for new customers is much harder than buying them. So, genius is as genius does. I commend all the3 parties for getting it done.

Whether we/they can use that consolidated technology base, content, and low cost to market horse racing and related live money games to the modern sports wagering customer is the threshold question over the next decade. If we can’t, it won’t matter how many leading companies CDI buys.

(For the record I am a former exec at YB and UT)

By: Picksburg Phil

Picksburg Phil — Thu, 19 Nov 2009 18:39:44 +0000

8 times EBITDA, which is about where Churchill trades. I think PENN is 5 times EBITDA ex-items.

If you look at the chart on page 4 of the presentation, handle has been stagnant since 2003, while ADW share has doubled. It appears that the existing fan base hasn’t grown any but a larger number of that existing base prefer to bet at home instead of going to the track or OTB. In fact, if you take inflation, population growth, and GDP growth into account, the fan base is probably shrinking. I hate to be a broken record but, if you want to increase the fan base - lower prices and takeout - dramatically.

FWIW. According to Churchill’s Annual Report, if you own 100 shares of it’s stock you get free admission to all of it’s tracks.