Iroquois Area Business Association

Churchill Downs' Lates Expansion

Jun 12, 2002

--------------------------------------------------------------------------------
By Sheldon S. Shafer and Brandy Warren
Contact Sheldon S. Shafer at sshafer@courier-journal.com
The Courier-Journal

?• Aldermen override police-contract veto
The Louisville Board of Aldermen voted last night to declare Churchill Downs a special taxing district, a move that will help the track defray the $100 million cost of a second expansion project.

The district encompasses the track's primary grounds off Central Avenue, including parking lots and barns. The district includes the Kentucky Derby Museum, but no tax revenue from it would go to the track.

The ordinance clears the way for the city, Jefferson County, state and race track to sign contracts that will give the Downs up to 80 percent of the tax revenue -- including sales and occupational taxes -- generated by the planned expansion. That could mean as much as $250,000 a year, said Mike Miller, Churchill Downs' corporate senior vice president of finance.

Meanwhile, work is well under way on the $27 million first phase of the track's makeover. The expansion is intended to increase revenue by drawing visitors nearly year-round, not just during racing meets.

''There's a lot more competition for the entertainment dollar. There's a lot of venues that make us look old and dusty,'' said John Asher, vice president of racing communications at Churchill Downs. He mentioned Papa John's Cardinal Stadium, Louisville Slugger Field and the Caesars riverboat casino.

The initial expansion work began just after the Kentucky Derby and is expected to be completed in fall 2003. It will include 66 corporate suites, a club room that can be leased for catered affairs, renovation of the Jockey Club under the twin spires and part of the grandstand, and new elevators.

Each of the 66 suites, atop the grandstand east of the twin spires, will seat 25 people.

Phase one also will include restoration of the wooden spires, the Downs' signature. Asher said the spires will be repaired with the same materials used to construct them.

The spires are ''the heart and soul of this corporation. They're like the McDonald's arches of thoroughbred racing,'' Asher said.

Gene Payne, 63, who has been coming to the track five days a week since 1981, said the Downs needed renovation. ''It was beginning to look like an old wooden barn,'' he said.

Miller said Churchill Downs is paying for the first phase itself.

The track, however, has not put together all the financing for the $100 million additional expansion, known as phase two. Some preliminary design work is under way, with the total project expected to be completed in 2004. Much of the major work will have to be planned around the spring and fall meets.

Phase two will include 12 more corporate suites, a satellite wagering facility seating 1,700, new lighting, a new Eclipse Room and improvements to other dining facilities, a new Turf Club, a new section of premium box seats, a new food-preparation facility, a new Gate 10 entrance off Longfield Avenue, and a sports bar and lounge.

The Downs' directors are expected to consider final approval of phase two at the corporation's annual meeting June 20, officials said.

The taxing district approved last night is part of the phase two financing plan.

The $100 million expansion will generate a variety of new taxes. The state, for instance, will get sales-tax revenue from the corporate suites and from the sale of concessions and souvenirs.

Although track officials aren't sure how many new jobs the expansion will create, any new employees would pay income taxes to the state and occupational taxes to the city and county.

State law allows the city, county and state each to agree to turn over to Churchill between 50 percent and 80 percent of the new taxes -- including sales and corporate income taxes from the state and occupational taxes from the city and county -- generated by the $100 million expansion.

''We hope our projections are conservative, but we estimate the bulk of the $250,000 (a year) will come from the state,'' Miller said.

Gov. Paul Patton must approve the state's participation in the taxing district.

Patton spokesman Rusty Cheuvront said, ''We are pleased to be able to do all we can to assist Churchill Downs in its expansion.''

David Morris, a development authority lawyer, said the number of years that the Downs will get the tax money is yet to be negotiated, as is the percentage each government will give back to the track.

Miller said the Downs is exploring other financial opportunities with the city to help pay for the $100 million project.