Kentucky Derby 2025: Rome before the fall?

Yahoo

01-05-2025

A $200 million paddock redesign completed last year caps more than $500 million in capital projects at Churchill Downs over the last two decades. CEO Bill Carstanjen says the changes at the Louisville track 'drove the Derby experience and our financial results to a level we could not have imagined just a few years ago.' (Churchill Downs photo)
After ballyhooed changes for its sesquicentennial last year and the 50th anniversary of Secretariat's win the year before, the Kentucky Derby is set to revert to norm Saturday at Churchill Downs in Louisville.
It won't be its mid-20th century norm of Whirlaway and Citation, British royals and Hollywood stars, movie newsreels and Time magazine covers, of course, or the half-life reburst of that era epitomized by Secretariat. Or the subsequent coasting on old glories and nostalgic Americana.
Those times were based largely around a curated commonality — the sport of horse racing, real and imagined — and are ancient history. The current norm is a lot more corporate and complicated and revolves around an unsought intersectionality of the business and politics of horse racing, broadly defined.
Start with Churchill Downs Inc., the track's corporate parent. Formed in 1950, CDI was low-profile for decades but has morphed into a publicly-traded, nationally leading racing, online wagering and gaming company, with some 29 casinos and racing properties across 14 states. It had record net revenue of $2.7 billion last year, up 11% from 2023.
Numbers for the Derby last year showed a record $320.5 million wagered from all sources on Derby day and on the Derby race alone a record $210.7 million. Attendance of 156,710 was the highest since 2018 (the record of 170,513 was set in 2015). And the race attracted an average 16.7 million viewers on NBC and Peacock, the most since 1989.
Over the past two-plus decades, CDI has spent more than $500 million on capital projects at Churchill, capped by a $200 million paddock redesign completed last year that CEO Bill Carstanjen said 'drove the Derby experience and our financial results to a level we could not have imagined just a few years ago.'
In February, CDI announced plans for $920 million in projects to expand and renovate its infield and grandstand and improve its infrastructure. The projects, slated to begin this year and be completed in 2028, were paused last week, CDI said, due to increasing uncertainty surrounding construction costs related to tariffs, trade disputes and current economic conditions.
Its completed projects have turned Churchill, a National Historic Landmark site, into a modernized physical plant that dominates what remains of the working-class South Louisville neighborhood around it. (Over recent decades, CDI has acquired numerous properties in the neighborhood to construct grand entrances and add landscaped and parking areas.)
Inside its gates, there are a plethora of new and renovated hospitality spaces, suites and rooms at almost every turn, shaping an overall milieu Churchill terms an 'experience.' The track has become an entertainment facility, with racing, including to an increasing extent the Derby, more plotline than raison d'etre.
Except for the iconic 1895 twin spires, vestiges of its pre-renovation past — sprawling betting and concession spaces packed with motley crowds, hidden corridors, brick walkways, a crowded paddock, a wide-open and raucous infield, trough urinals in men's rooms, beer on tap — disappear year by year and the environment becomes less soulful and more gentrified and risk-averse.
For the Derby, the certainty of Churchill's corporate march is being intersected more and more by the uncertain state of American racing. For decades, the sport has faced predictions of demise, given its aging fan base, marginal TV coverage and competition from lotteries, casinos and online sports betting. Its current troubles include shrinking field sizes, reduced purses and the closing of major tracks, including Hollywood Park in greater Los Angeles (where the first Breeders Cup was held and now the site of SoFi Stadium) and Arlington Park near Chicago.
The Derby's attendance, financial and television numbers, which seem to break records each year, belie the demise. But then there are the numerous racing-related drug scandals and on-track horse deaths that have become recurring national news in the past decade. The drug scandals have involved prominent trainers and led to suspensions and federal indictments and convictions. The deaths have forced major tracks to close for investigations of surfaces and training practices. (Nationally, racehorse fatalities have been decreasing, with the rate last year falling to its lowest level in 16 years.)
Both drugs and deaths have directly impacted Churchill. In 2021, Medina Spirit, who finished first in the Derby, was disqualified for failing a post-race drug test. That led to a protracted and very public legal battle involving the horse's high-profile trainer, Bob Baffert, owner Amr Zedan and Churchill. The track prevailed and Baffert, whose horses have won a record-tying six Kentucky Derbies, was banned from Churchill for three years. He returns this year and has two horses running in the Derby.
Churchill also became a focus of media and public attention when 12 horses died at the track during its 2023 spring meet. Two of the deaths occurred on Derby day. The track suspended racing to investigate the situation and moved the remainder of its meet to Ellis Park (also owned by CDI) in Western Kentucky. Last year, 13 horses died racing or training at Churchill. And just last week, a three-year-old horse was euthanized on the track after fracturing his front legs during a morning workout.
The politics of racing have catalyzed around drug and death issues and gained widespread traction. In 2020, after years of lobbying by groups from The Jockey Club to PETA, Congress authorized the Horseracing Integrity and Safety Authority (HISA) to develop and implement a national, uniform set of safety and anti-doping and medication rules. It's now in effect at 47 tracks in 19 states. (PETA continues to push for stricter horse safety standards and investigate and highlight racing's underside.)
Racing's most recent political issue is decoupling, which surfaced in Florida early this year when the owners of Gulfstream Park, a leading national track, proposed separating the facility's racetrack from its casino, ending casino revenues supporting racing and closing the track in a few years. Though strongly opposed by Florida horsemen, legislation allowing the decoupling passed the state House and a Senate committee. Gov. Ron DeSantis has indicated his opposition and its outcome is unclear.
Many in the industry believe that, if approved in Florida, decoupling would set a precedent and jeopardize racing across the country. Churchill wouldn't be affected by such a scenario since casinos aren't legal in Kentucky. But the track is closely coupled to historical horse racing (HHR), an electronic gambling product where players bet on replays of races on slot machine-like terminals. HHR, along with live racing, accounted for $1.3 billion of CDI's $2.7 billion net revenue last year and it provides significant support for Churchill's racing purses, including the Derby's $5 million one.
Despite its success in Kentucky, HHR hasn't become a panacea for American racing. Its legality as pari-mutuel wagering (as opposed to slot machine gambling) has frequently been challenged, and it's allowed in only a handful of states. In March, it was struck down by the Louisiana Supreme Court for operating in the state without voter approval. That decision led CDI to announce a 25% cut in purses at Fair Grounds, the New Orleans racetrack it owns.
For CDI and the Derby, HHR and ongoing record profits, popularity and expansion is the bull-market side of its current norm. What to make of the bear-market side — drugs, deaths, track closings and the like — is the question. Is it all much ado about nothing or a portent of the Colosseum and Rome before the fall? So far, the main response seems to be deferral or, every now and then, a muted 'But not yet. … Not yet.'
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