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Original Issue

Against Steep Odds Churchill Downs is a come-from-behind winner

Churchill Downs and Out, they called it. Fifteen years ago the
state of horse racing's signature track mirrored that of the
sport. Attendance at races nationwide had plummeted by 65% over
the previous quarter century, and purses were staggeringly low.
Churchill Downs, for its part, was decrepit. A move to extended
summer racing at the Louisville track had proved financially
disastrous, and morale among the employees was at an alltime
ebb. To make matters seem worse, Churchill Downs Inc. had just
hired as its CEO Tom Meeker, who unabashedly admitted that he
had little knowledge of racing. "His background wasn't in
horses, and he didn't seem like a real aggressive businessman,"
says veteran trainer Bill Mott. "But I'd say he's worked out
pretty well."

As Churchill Downs readies itself for the 125th Kentucky Derby
next month, the track's parent company is making its own run for
the roses. Churchill Downs Inc. turned in a record gross profit
of $28.2 million in 1998 and has more than doubled its net
revenues since 1994. The price of its stock ($30 at last Friday's
closing) has nearly tripled in the last four years. Horse racing
might remain a fiscally beleaguered sport, but you wouldn't guess
it from scrutinizing the Downs track. Attendance has risen by 61%
since 1984, the facilities are first-rate, and, perhaps most
important, the handles--and thus the purses--have never been

Meeker, who relishes publicity as much as thoroughbreds enjoy a
visit to the vet, deserves much of the credit for the dramatic
turnaround. An attorney and retired Marine Corps lieutenant
colonel who served three tours of duty in Vietnam, Meeker, 55,
is a no-nonsense consensus builder among his 25-person
management team. When he assumed the job in 1985, he invested
$35 million in marketing and in capital improvements to the
track. But his company's success rests on its ability to change
along with the sport's landscape.

As the racing industry becomes increasingly consolidated,
Churchill Downs has embarked on an aggressive plan of expansion.
It recently acquired Ellis Park in western Kentucky and
announced the purchase in January of Calder Race Course in
Miami. Last week a Churchill Downs source confirmed that the
company would buy Hollywood Park, one of California's busiest
tracks. "The Chicken Littles say the sky is falling on horse
racing," says Meeker. "Well, we see lots of opportunity."

What's more, at a time when the proliferation of casinos
threatens the sport, one of Meeker's strategies has been to push
the Kentucky legislature to permit "alternative gaming" (i.e.,
video slots) at the track. "It's a great way to grow our sport,"
he says.

As the company thrives it has not ignored the tradition of its
flagship track. One of Meeker's catchphrases, "Keep the horses
in horse racing," reflects a desire to leverage the Churchill
Downs brand without changing the fundamental product. "We're in
the live racing business," he says. "Everything starts with the
quality of your racing."

It's all proof that all one needs is a little horse sense to know
that success breeds success.

"The Chicken Littles say the sky is falling," says Meeker.
"Well, we see lots of opportunity."