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Arlington Park Experiencing Financial Squeeze

Posted on August 18th, 2010

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This coming Saturday, Arlington Park will have to put a brave, robust front as it will host the Arlington Million which is predicted to attract more or less 30,000 spectators. As the racing track in the outskirts of Chicago will conduct its annual highlight event, it may even end up registering a neat profit. But amidst the excitement, an internal struggle within the racetrack’s organization is in full force as it tries to battle financial woes. The financially alarming state of Arlington Park, and the entire horse racing in general, was confirmed by Arlington Park officials and Churchill Downs, Inc., the racetrack’s parent company based in Louisville, Ky. The future of racing and the track is in jeopardy unless other means of generating income is tapped into, such as different kinds of gambling. The park’s president, Roy Arnold said that it will be tragic if the world-class complex will not be able to to provide entertainment and racing to the public.

Arnold claims that as of the moment, the racing tack, in terms of finances, can be described as “marginally profitable,” which means that if revenue generation shifts to a downturn, then shareholders will have no return anymore, and thus would not be expected to support the facility anymore. As of the moment, closing down the racetrack is not an option – yet. In order for the whole racing industry in the state of Illinois to survive, gambling would have to be expanded to other forms. Plans to add gambling activities such as slot machines in the facility have been stalled so far by anti-gambling lobbyists. If these proposals die down, no one knows how long the race track can keep up. A spokesperson for Churchill Downs Liz Harris has expressly denied any plans or even just talks to close the tracks, claiming that closing the track, which is one of their properties, is tantamount to closing the entire company.

With that in mind, firm resolve to keep operations may not be enough to stabilize the situation. In June, the CEO of Churchill downs himself, Bob Evans proclaimed that the future of Arlington Park is still unsure. If not totally closed down, the future was in doubt and that the Churchill Downs racetrack itself in Kentucky may have to decrease the number of races and dates. The possibility of that happening is increasing unless other forms of gaming such as slot machines will be permitted. Two of Churchill Downs’ other facilities, Florida’s Calder casino and Race Course, as well as New Orleans’ Fair Grounds Race Course both have other gambling activities offered. While Evans divulged that all tracks of the company will undergo review internally to see if it is really viable to put gambling operations in the two racetracks, Harris opined that the review is something that the company does in all of the properties the company owns.

What Arnold would be seeking will be coming from the state, as the state holds the power of legalizing slots in the racetrack, which will then put The Arlington racetrack on the same level as the other racetracks in other states that have other forms of gambling. Arnold claims that competition stems from racetracks around the country where customers would prefer to go because of the added gambling opportunities. He adds that customers also consider the quality of races when going to racing tracks, which may be affected by the purses available. Arnold laments that Churchill Downs may not suffer from lack of funds because the single event of the Kentucky Derby has the ability to support the track financially throughout the year. This, compared to the Arlington track which doesn’t have a Triple Crown event, nor slots, and thus no alternative source of revenue.

That is not to say that Arlington is a second-rate track, as it also holds an illustrious past, having been established in 1927, surviving the Great Depression and the Second World war, and hosting the first race with a million dollar purse in 1981, the Arlington Million. Difficulties along the way include a fire in 1985 which destroyed the track’s grandstand and the state allowing for riverboat casinos in 1999, two years after the track went under Churchill Downs ownership. A decrease in purse prizes and the number of races can be a direct result of the track’s financial woes. Though Grade 1 and the Arlington have been spared, a total of $800,000 in stakes purses have already been slashed, with operational days in summer lessened from five to four days. More cuts are in store in the future, which Arnold says could deal a huge blow to its regular employees.