Track companies team up

Churchill Downs, Magna join forces on TV, betting deals

March 06, 2007|By Sandra McKee | Sandra McKee,SUN REPORTER

The country's two biggest racetrack owners, Magna Entertainment Corp. and Churchill Downs Inc., yesterday announced a partnership that will offer expanded viewing and betting options to horse racing fans on television and the Internet.

Coming on the same day that Magna, owner of Maryland's Laurel Park and Pimlico Race Course, said it recorded a fourth straight year of losses - $87.5 million in 2006 - the two companies announced that:

Churchill Downs has bought 50 percent interest in Magna's HorseRacing TV network (HRTV), which will add races from Churchill's tracks as soon as their deals with the Television Games Network (TVG) expire this year and next. The agreement between TVG - a competitor of HRTV - and Churchill Downs already has expired, and HRTV will begin televising the track's spring meet on April 28. HRTV is available on some cable systems and via the Dish Network satellite service.

The companies have created the account-wagering company, which will carry the programs from Churchill Downs Inc.'s four tracks - Fair Grounds Race Course in New Orleans; Arlington Park near Chicago, Calder Race Course in Miami and Churchill Downs in Louisville, Ky., as well as from six major Magna tracks - Maryland's Laurel and Pimlico, Santa Anita Park outside Los Angeles, Golden Gate Fields outside San Francisco, Gulfstream Park in Hallandale Beach, Fla., and Lone Star Park in Grand Prairie, Texas. It will also carry races from 11 other tracks already under contract to HRTV.

Magna and Churchill have formed a media management company called TrackNet Media Group LLC to buy content from and sell content to third parties.

"We can capture the importance of this announcement in a single word," said Churchill's president and chief operating officer, Bob Evans. "Growth. In the last 10 years, the industry has generated a 29 percent growth in its revenues, while inflation has risen 28 percent. In real value, that's 1 percent, and it's even worse in the last five years.

"In the no-growth environment, it's a struggle to stay afloat. Our choices are to shrink our industry to the point where it can support itself on what it makes or grow revenue. Certainly, maintaining the status quo won't work."

At Laurel yesterday, Magna vice president Joe De Francis said: "Locally, fans can now bet, through the same account, our Magna racetracks and Churchill Downs tracks. If they have XpressBet, they can use the same account to bet Laurel, Pimlico and Churchill Downs."

Or they can use the new to bet on cards at Churchill and Magna properties.

It will be the same with viewing habits. Previously, fans had to have the TVG network to watch races from Churchill Downs-owned racetracks and HRTV to see local races at Laurel and Pimlico. Now, they will all be on one channel.

De Francis said the partnership also will seek to crack down on unauthorized use of telecasts from tracks - the pirating of signals - by entities that then take bets on the races but don't share revenue with the tracks or the horsemen.

"TrackNet Media will have a substantial and significant department responsible for wagering security and integrity," De Francis said. "It will be monitoring compliance to plug leaks where unauthorized signals are being used for betting on racing content.

"Right now, a guy might enjoy the convenience of going to one site to bet on basketball, poker, racing and all the other stuff. But ultimately, the more money that leaks through, the more the industry is shriveling up and not able to put on a quality product. Ultimately, plugging those leaks will result in a healthier and more robust industry."

Meanwhile, Magna's financial report said it has lost $407 million over the past five years. Last year's loss came despite a $126 million gain on the sale of The Meadows, a Pennsylvania harness track. Magna also took on debt to finance construction of a Gulfstream casino, but said its long-term debt was reduced by $27 million to $601 million.

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