Three months after the Fair Grounds’ parent company promised to make significant upgrades to the venerable Gentilly race track, it has put the track up for sale.
Multiple sources familiar with the situation said Friday that Churchill Downs Inc., which has owned the Fair Grounds plus its 11 off-track betting facilities since 2004, has enlisted JPMorgan Chase to solicit requests for proposals from other gaming interests around the country, with a deadline of Wednesday.
Also, the Chicago-based Duchossis Group, CDI’s largest stockholder, has been approached about a deal for the Fair Grounds plus Arlington Park, near Chicago, which the Duchossis Group owned before it merged with CDI in 2000. However, a source with knowledge of Duchossis’ plans said Friday that such a deal is unlikely to happen at this point.
The requests for proposals came after at least two local interests, including Saints owner Tom Benson, made inquiries in recent weeks about purchasing the track, but they reportedly found the asking price, estimated at $125 million, too high. Greg Bensel, a spokesman for Benson, said Friday that Benson is not interested.
CDI purchased the Fair Grounds out of bankruptcy for an estimated $70 million.
CDI spokesperson Courtney Norris said CDI, which is based in Louisville, Kentucky, and owns famed Churchill Downs there among other racing and gaming properties, does not comment on business-development issues.
Fair Grounds President Tim Bryant and Senior Director of Marketing Mark Connor both declined comment.
Bob Wright, recently named chairman of the Louisiana Racing Commission, said the commission had not been informed of CDI’s plans but that he was not surprised.
“We’ve understood for some time that CDI is seeking to move out of racing, except for Churchill Downs, while expanding its gaming interests,” he said. “At the same time, the asking price we’re hearing shows that they value the Fair Grounds.
“We’ll just have to see where it goes from here.”
CDI came under considerable criticism from the state’s horse-racing interests earlier this year because of substandard conditions at the track, especially the turf course, and a dearth of amenities, such as the lack of a large-screen TV at the finish line.
The commission at one point deferred renewing CDI’s rolling 10-year license for the Fair Grounds before the company submitted a written plan promising improvements worth more than $1 million. The majority of that money was to be spent on improving the turf course, which had seen 45 percent of its races over the past two years either moved to the dirt course or canceled outright. The canceled races contributed to the track reducing purses for non-stakes races by 10 percent and lowering the purse or canceling some stakes events during the latter part of this year’s meet.
However, at a recent meeting of the commission, the track’s operators received favorable notices for the improvements made thus far.
“Our working relationship is good,” said Bernard Chatters, of Lake Charles, president of the Louisiana Horsemen’s Benevolent & Protective Association, which had lodged many of the complaints about the Fair Grounds. “Every request we’ve made has been met. I appreciate the working relationship we now have. We are absolutely interested in working with anyone who wants to work with the horse industry, whoever that might be.”
The license renewal is still on a conditional basis.
A threat of legislative action remains. A bill by Rep. Patrick Connick, R-Metairie, mandating that CDI dedicate 10 percent of its slots revenue for track upkeep gained unanimous approval in the House of Representatives, but it was withdrawn after assurances from CDI about the upgrades.
“As long as the new owners are more interested in racing than slot revenue, I think this could be a great thing for the city and the state,” Connick said Friday of a possible sale. “Let’s see what happens.”
Some industry observers see the move as part of a continuing effort on the part of CDI to transform itself from an entity primarily involved in racing to one concentrating on casinos and other gaming revenues.
In addition to Churchill Downs, the Fair Grounds and Arlington Park, CDI owns Calder Park in Miami, which is having severe financial difficulties.
In Louisiana, CDI derives most of its revenue from the slot machines at the track and video poker, which is located in the OTBs. The company reported profits of more than $20 million last year.
CDI officials have said they are interested in reducing the number of racing days at the Fair Grounds to reduce their expenses. But that would take legislative approval, which would be difficult given the strong influence of the state’s equine interests.
The 2014-15 thoroughbred racing season begins Nov. 21.