Churchill Downs Inc. has put nearly $1 billion in renovations to its flagship Louisville track on hold, the company announced on Wednesday night, citing “increasing uncertainty surrounding construction costs related to tariffs and trade disputes, as well as current macro-economic conditions.”
The decision by Churchill to, at the very least, delay three major projects comes in the midst of widespread economic uncertainty due to extreme volatility in the capital markets and political environment created by the administration of President Donald Trump, which has levied new tariffs on nearly all U.S. trading partners, including the placement of massive import duties on any products coming from China.
The three projects were announced in mid-February on a conference call to discuss Churchill’s first-quarter earnings, when most market observers believed that Trump was bluffing on threats to levy the tariffs, which have increased the costs of imported goods from around the globe, including steel and other common building materials. The uncertainty has also proved to be a drag on interest rates, which were expected to come down later this year absent the trade war. This has led economic observers to raise their projections for the risk of a recession.
“A lot has changed in the world in the past nine weeks since that last earnings call,” said Churchill CEO Bill Carstanjen on a conference call Thursday morning. “This has created unanticipated and currently unquantifiable expected cost increases in all materials.”
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Churchill said in February that it planned to fund the projects with cash and proceeds from its existing line of credit. The interest rate for that line of credit is based on market conditions.
Churchill’s stock began the year trading at $132, but, like most stocks, it has declined consistently since then. In early April, the stock price dropped below $100 a share for the first time since late 2023, despite the announcement of a $500 million share buyback program. It has since rebounded slightly to $105 per share. Executive compensation at Churchill is strongly tied to the performance of its stock.
During the conference call, Carstanjen said that Churchill had committed to $25-$30 million in short-term improvements at Churchill Downs, focusing on the Mansion, a highly exclusive area of the track, and the Trophy Room, where winners of major races at the track are feted.
During the first quarter of this year, Churchill had record net revenues of $624.6 million, but net income fell 5 percent compared to the first quarter of last year, dropping to $76.7 million, according to financial statements released on Wednesday night.
Marcia Dall, Churchill’s chief financial officer, said on the Thursday conference call that Churchill’s casinos were being affected by “regional gaming softness” that had manifested mostly in “weakness at the lower end” of their customer demographics. Other casino companies have also reported softening business at their properties over the past several months.
“I think what we are seeing is some hesitancy because of the volatility in the macro-economic environment,” Carstanjen said, in response to a question from an analyst about the deteriorating economic conditions for casinos. “It’s most evident in our un-tiered or lower segment of play, and that’s the segment where we have the least amount of control.”
Churchill has invested nearly $1 billion over the past 20 years in renovations to its Louisville track to leverage the popularity of the Kentucky Derby, creating dozens of new price points for attendees. Earnings for the Derby have grown consistently over the past decade, in large part due to increased ticketing revenue.
Carstanjen said on the conference call that the company has seen no drop-off in interest in this year’s Derby, which is scheduled for May 3, or for ticket sales for 2026.
“We see strong growth in ticketing,” Carstanjen said. “Nothing’s really changed in the formula.”
Carstanjen expressed confidence that Churchill would restart the three projects that have been put on pause once the costs of the renovations become clearer.
“We like to treat [project costs] as a certainty, rather than a variable,” Carstanjen said. “Right now, we can’t do that.”
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