Churchill Downs said Tuesday said it was postponing the Kentucky Derby until September, confirming late Monday reports.
At least one gaming analyst said the company, which operates casinos eight states in addition to the historic Louisville racetrack, made the correct decision. Lake the rest of the gaming sector, Churchill Downs shares have suffered record declines during the spreading COVID-19 coronavirus outbreak.
“The postponement of the Derby should provide some relief for the shares, given concerns that the event could be canceled and its magnitude in the earnings stream,” Jefferies gaming analyst David Katz told investors. “We presume there should be some cost impact related to the change, but modest compared with other outcomes and likely contemplated in current stock price levels.”
The company said it would reschedule the 146th Kentucky Derby from May 2 to Sept. 5. The race, the traditional fist jewel in the triple crown of horse racing traditionally takes place on the first weekend in May.
“Throughout the rapid development of the COVID-19 pandemic, our first priority has been how to best protect the safety and health of our guests, team members, and community,” Churchill Downs CEO Bill Carstanjen said in a statement. “As the situation evolved, we reached the difficult conclusion that we needed to reschedule. At no point did we ever consider canceling the Kentucky Derby.”
Churchill Downs management noted the timing of hosting the Derby over the Labor Day weekend would avoid major sporting events.
“(The date) would allow the company and the community to better accommodate fans,” Katz said.
The analyst said the Kentucky Derby last year generated approximately $172 million of revenue and $113 million of cash flow for Churchill Downs, which was roughly 13% of the company’s total 2019 revenue and 25% of its total cash flow.
“We view this announcement as positive for the company, given that while there should be some cost impact for the postponement, there appeared to be speculation that the Derby would be canceled,” Katz said.
Shares of Churchill Downs closed at $71.74 Tuesday on the Nasdaq, down $3.76 or 4.98%.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
