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Churchill Downs Incorporated to acquire Turfway Park, will build $150m state-of-the-art facility onsite


*This story has been updated

Churchill Downs Incorporated (“CDI” or “the Company”) (Nasdaq: CHDN) announced today that, through its wholly-owned subsidiary NKYRG, LLC (“NKYRG”), it has signed a definitive agreement to acquire Turfway Park in Florence, Kentucky from Jack Ohio LLC, an affiliate of JACK Entertainment LLC (“JACK”) and Hard Rock International for total consideration of $46 million in cash, subject to certain working capital and other purchase price adjustments.

The closing of the transaction is contingent upon approval by the Kentucky Horse Racing Commission (“KHRC”).  The KHRC has scheduled a meeting for October 8th and, if the change of control is approved, the parties expect to close the transaction shortly thereafter.

Subject to KHRC approval, the 2019-2020 winter Thoroughbred racing meet at Turfway Park will be conducted on racing dates previously awarded to Turfway Park for December 2019 and in accordance with the schedule of racing dates submitted by JACK to the KHRC for 2020. Upon receiving approval for the change of control, CDI will not pursue its previously announced New Latonia Racing & Gaming project in northern Kentucky and will withdraw its New Latonia race dates application with the KHRC.

Immediately after closing, CDI will commence planning for the demolition of the existing grandstand after the 2019-2020 meet, making way for development of Turfway Park Racing & Gaming (“New Turfway Park”), an up to $150 million (including today’s announced purchase price) state-of-the art live and historical Thoroughbred racing facility.

“We are thrilled to welcome Turfway Park to the Churchill Downs racing family,” said Kevin Flanery, President of Churchill Downs Race Track. “Our team is poised to restore Turfway to its former glory, anchored by northern Kentucky’s first historical racing machine facility. The result will be a first-class racing product fueled by increased purses that keeps high-quality horses in Kentucky year-round and appeals to horseplayers nationwide.”

New Turfway Park is anticipated to support up to 400 direct full and part time equivalent positions and create an estimated 800 direct construction jobs. The project will include a historical racing machine facility featuring up to 1,500 machines, a state-of-the-art clubhouse, food/beverage venues and a new inner dirt track to complement the existing one-mile synthetic main race track.

The transaction is structured as an acquisition of all of the outstanding equity of Turfway Park, LLC and the $46 million acquisition price will be funded with cash from CDI’s balance sheet. Of this amount, $36 million (subject to certain working capital and other adjustments) will be paid to JACK and will be capitalized on CDI’s balance sheet. The remaining $10 million will be paid to Hard Rock and will be expensed.

Churchill Downs Incorporated (“CDI”) (Nasdaq: CHDN), headquartered in Louisville, Ky., is an industry-leading racing, online wagering and gaming entertainment company anchored by its iconic flagship event – The Kentucky Derby. It owns and operates Derby City Gaming, a historical racing machine facility in Louisville. It also owns and operates the largest online horseracing wagering platform in the U.S., TwinSpires.com, and is a leader in brick-and-mortar casino gaming with approximately 11,000 slot machines / video lottery terminals and 200 table games in eight states.

Churchill Downs Incorporated

What they are saying

The Northern Kentucky Tribune reached out to some of those most impacted by the decision to sell Turfway Park, renovate the facility, and keep it at its current location. Their responses are included here:

Whalen

Florence Mayor Diane Whalen – Turfway Park is located in Florence, Kentucky

“We are excited to learn that the fate of Turfway Park has been determined and the outcome offers an incredible opportunity for horse racing and the City of Florence”

Churchill Downs brings the exclamation point to Turfway Park that we’ve all been waiting for and our community deserves.  Their willingness to reinvest in the current location and build a completely new facility will  pay dividends that far exceed their property lines.  I look forward to learning more about their plans and their time line.”

Moore

Boone County Judge/Executive Gary Moore – Florence is in Boone County

“Churchill Downs’ investment in Turfway Park is great news for Boone County and all of Northern Kentucky. Turfway Park needs real attention and I look forward to Churchill Downs delivering on its promises to bring the property back to life.  We recognize that a stronger horse racing industry means a stronger Kentucky and are excited to see the impact that Churchill Downs will have on our region.”

State Rep. Adam Koenig (R-Erlanger) – Co-chair of the Joint Licensing, Occupation and Administrative Regulations Committee, which oversees horse racing in Kentucky

Koenig

“I think it was a good resolution to this struggle between these two entities. Hopefully people are happy that it is staying in this location and everyone should be happy that we are going to have a high-end product with very competitive purses.”

State Sen. John Schickel (R-Union) – Co-chair of the Joint Licensing, Occupation and Administrative Regulations Committee, which oversees horse racing in Kentucky

“I am just so happy that we are going to have a first class thoroughbred racetrack in Northern Kentucky run by experienced people, who know how to run a first-class operation.

Schickel

“Thoroughbred racing is Kentucky’s signature industry and Northern Kentucky is its gateway in the north. I am happy it’s going to be in Florence and that they are going to tear down the Turfway grandstand and rebuild. I want to thank the Kentucky Horse racing Commission and Chairman Frank Kling, a Northern Kentuckian appointed by Gov. Matt Bevin, who I really feel like took a leadership role in this.”

State Sen. Damon Thayer (R-Georgetown) – A lifelong horse-racing fan and industry supporter, who was director of communications at Turfway Park in the 1990s.

Thayer

“This is the best possible outcome. You’ve got an operator on its way out the door that has neglected Turfway Park, selling to an entity which is the best-known horse racing brand in the country.”


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