Churchill Downs Seeking to Purchase Hollywood Park

Churchill Downs, the track that has been running the Kentucky Derby since 1875, has turned its attention to Hollywood Park after a recent unsuccessful bid to buy Santa Anita.

Churchill Downs announced Thursday that it is negotiating to buy Hollywood Park, the Inglewood track whose parent company, Hollywood Park Inc., has shifted its focus in recent years. Hollywood Park Inc. now takes many more bets on card games and other forms of casino gambling than it does on horses.

Hollywood Park’s game has become casino-related businesses, but Churchill Downs’ focus is on simulcasting--the televising of races around the country for betting purposes--and more specifically, at-home betting through a planned television network.

Churchill Downs’ plan seems to be putting enough tracks in place so that it will have an entire calendar of live racing that can be piped into homes and other tracks.

The bid for Hollywood Park is part of an ongoing track acquisition program at Churchill Downs. The Louisville, Ky., track, which lost out on Santa Anita when Frank Stronach and his Magna International company bought the Arcadia facility in December for $126 million, in January bought Calder Race Course, a track near Miami, Fla., in an $86-million deal.

Churchill Downs also owns Ellis Park Race Course in Henderson, Ky.; Hoosier Park in Anderson, Ind., and the Louisville Sports Spectrum, a simulcast betting facility in Louisville.

Churchill Downs has borrowed heavily to expand, and its stock-market price, which closed at 29.63 Thursday, up 1.16, has dropped about 26% since mid-January. In mid-March, Churchill Downs obtained a line of credit for $250 million and increased the number of shares in the company from 20 million to 50 million.

The Churchill Downs bid for Hollywood Park is believed to be only for the racetrack and surrounding property. It is unclear whether Churchill Downs would buy the casino and card club adjacent to the track. Officials from both tracks were either unwilling to comment or couldn’t be reached.

Hollywood Park also owns the Turf Paradise track in Phoenix, but that, too, may be for sale. Last year, when Hollywood Park Inc. showed a profit of $13 million, almost 70% of its $427 million in revenue came from gaming. In 1994, only 10% of Hollywood Park’s revenues were gaming-related. Hollywood’s revenues from racing have dropped from $80 million in 1995 to $67 million last year.

Hollywood owns eight casinos and two card clubs in California, Nevada, Mississippi, Louisiana, Arizona and Argentina, and has been approved for a gambling riverboat license on the Ohio River in Indiana.

Last year, Hollywood Park spent $340 million to buy the Casino Magic Corp., which has gaming operations in Mississippi and Louisiana. Hollywood Park’s annual shareholders’ meeting is scheduled for May 25 at the Casino Magic Hotel in Biloxi, Miss.

Hollywood Park lost money in 1995 and 1996, but has shown a year-end profit the last two years, including $9 million in 1997. Trading of Hollywood stock was suspended Thursday after Churchill Downs made its announcement. At the time, the Hollywood Park stock was at 11.56, up 1.125.