CDI Expects Derby Week Performance Comparable to 2024

A day after the company announced a pause on some planned improvements to the Churchill Downs facility, Churchill Downs Inc. CEO Bill Carstanjen expressed confidence in this year's Kentucky Derby week performance. In an April 24 conference call with investors and analysts, Carstanjen said he expects returns for this year's Derby week to be similar to last year's record returns for the 150th edition of the Kentucky Derby (G1). While he acknowledged some softness in the market for lower-priced tickets, specifically in a new section, he said higher-priced tickets have performed well and the company expects strong performance in wagering and sponsorships. "Strategic investments have driven the Kentucky Derby experience and financial results to a level few would have imagined just a handful of years ago," Carstanjen said. "We set records last year in all of our key financial metrics and grew the adjusted (earnings) EBITDA for the event by $30 million compared to the prior year. "We expect this year's Kentucky Derby to be comparable to last year's; delivering one of the best results in the history of our company across our key financial metrics." Responding to a question later in the call, Carstanjen acknowledged lowered demand for some tickets. "Over the last eight or nine weeks, I think in the in the lowest tier, which are not inexpensive tickets—call them $1,000-plus tickets—we've seen less demand for those than we've seen historically, but still it's strong demand. I think when you see this Derby this year, it'll look like every other Derby. It'll be a packed house." Carstanjen said typically Churchill has quickly found the correct price point for new seating areas but this year the company has seen some hesitancy from fans. He thinks that after fans see the new seating areas this year—specifically the Starting Gate Pavilion—they'll be more willing to pay for those experiences in the years ahead. "I think what we've seen over the last number of years is when we introduce a new area we've been able to go right to the price that we target as our long-term price, and then grow off that," Carstanjen said. "I think when we look at this year, we weren't able to take that same kind of approach that we've taken in previous years where we go right to our three-year or at maturity-type price for a new area. "I think as people experience the new section, I think you'll see more pricing power there, and as we develop more experiences, you'll see us be able to take more price. Part of our plan for the Derby, as it's always been, is to develop new areas, introduce people to those areas, and be able to yield price as they appreciate the value of the experience. That chain this year in 2025 took a little bit of a jolt, because we didn't have the endless pool of demand that we've seen in prior years. "I think this year we'll prove it. We'll prove it with the new area, and so when you get to 2026, I think you'll be able to see us take more price there, and we'll continue that model." Carstanjen provided that outlook a day after the company announced plans to pause three multiyear projects to develop the Skye, Conservatory, and infield areas of Churchill Downs for an estimated $900 million while announcing a smaller $25 million-$30 million plan to renovate its Finish Line Suites and the Mansion. He added some detail on that decision the company tied to uncertainty over construction costs in part due to new tariffs. "A lot has changed in the world in the past nine weeks since that earnings call, including increased general economic uncertainty and risk of significant inflation driven in part by the new tariffs that the U.S. intends to charge on products from almost every country in the world," Carstanjen said. "This has created unanticipated and currently unquantifiable expected cost increases in most materials. Due to these factors, we have made the difficult decision to temporarily pause this multiyear effort in order to let things settle down so that we can better determine any permanent changes in the cost of this project and better evaluate any changes in the overall economic environment." After trading Wednesday, the Louisville, Ky.-based company reported record net revenue and record adjusted earnings (EBITDA) for the first quarter. Despite that, in trading Thursday shares of Churchill Downs Inc. fell $17.05 to $87.99 (down 16.23%).