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Top thoroughbred racehorses will “run for the roses” in the Kentucky Derby on Saturday at Churchill Downs in Kentucky. However, a planned nearly $1 billion revamp of facilities at the racetrack that hosts “The Most Exciting Two Minutes in Sports” is currently on hold.
Churchill Downs Inc. unveiled massive capital projects about 10 weeks ago that were meant to “enhance and expand” certain areas of the Kentucky Derby racetrack over several years. Collectively, the projects amounted to up to $920 million.
Under the plans, the company wanted to install 13,300 seats and new “premium hospitality experiences” in an 11,500-seat area past the finish line through the “First Turn Club” as well as build a new, larger Sky Terrace.
Churchill Downs (Jeff Moreland/Icon Sportswire via Getty Images/File)
It also intended to add “new permanent structures” in the infield for premium ticket holders as part of the capital projects. A trio of permanent buildings had been planned for the general admission section of the infield as well.
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Then, last week, Churchill Downs said it made the decision to temporarily stop those projects.
“The decision to delay these construction projects is due to the increasing uncertainty surrounding construction costs related to tariff and trade disputes as well as current macro-economic conditions,” the company said at the time.
President Donald Trump has imposed import tariffs against numerous countries since taking office, including reciprocal tariffs. He has also imposed some industry-specific levies, such as one for aluminum and steel coming into the U.S. from other countries.
CEO Bill Carstanjen told analysts and investors during the company’s earnings call last week that “a lot had changed” since the unveiling of those now-paused projects, including “the 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.”
The field enters turn 1 during the 150th Kentucky Derby on May 4, 2024, at Churchill Downs in Louisville, Ky. (Joe Robbins/Icon Sportswire via Getty Images)
The tariffs have “created unanticipated and currently unquantifiable expected cost [increases] in most materials,” Carstanjen said.
Churchill Downs will “assess the evolving economic landscape and evaluate any changes to the timing and sequencing of these multi-year projects” in the coming months, according to the company.
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The company remains “completely committed to growing the Kentucky Derby through the prudent timing of capital investments over the long [term],” Carstanjen said.
He also said the pause offered an “opportunity to revisit and to make sure we deliver products that best meet and exceed our customers’ expectations as well as those of our shareholders.”
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CHDN | CHURCHILL DOWNS INC. | 90.95 | +0.54 | +0.60% |
“When the macro environment concerns are better understood, we will move forward with thoughtful decisions on how best to invest material amounts of capital in this iconic asset,” Carstanjen added.
Although the nearly $1 billion revamp is paused, that doesn’t mean Churchill Downs is holding off on capital projects for the racetrack altogether.
At the same time it announced the temporary hold on the nearly $1 billion worth of projects, Churchill Downs unveiled planned renovations of the Finish Line suites, Trophy Room and Mansion, all well-known parts of the racetrack.
Those remodels will cost $25million to $30 million, according to the company.
(Piotr Swat/SOPA Images/LightRocket via Getty Images)
Churchill Downs has hosted the Kentucky Derby since 1875, when the first-ever instance of the race took place.
This year’s race, the first of the Triple Crown series, will mark the 151st running. Journalism, Sovereignty, Sandman, Grande and Burnham Square are among some of the horses running, according to Churchill Downs.
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The Kentucky Derby is a boon for the local economy each year, with the Kentucky Department of Agriculture pegging the economic impact of last year’s race at $400 million.