Horses run for the roses, as track runs to the bank Churchill Downs stops to smell profit HORSE RACING


Forget the horses. The real winner at today's Kentucky Derby is Churchill Downs, the 119-year-old host track that is riding the world-famous race to riches despite a stumbling industry.

Since a top management change in 1984, the Louisville, Ky., track has undergone $30 million in renovations and launched an aggressive marketing campaign aimed at first-time bettors and professional gamblers alike.

The result has been nothing short of remarkable. Its $5.2 million profit for the fiscal year ended Jan. 31 is up nearly three-fold from levels posted a decade ago. It is below fiscal 1991's record $5.4 million, but that was a year the track played host to the lucrative Breeders' Cup races, which it will do again next year.

Except for last year, profits have risen in each of the past nine years and are showing no sign of slackening. Contrast that with Maryland's jointly owned Pimlico and Laurel, which, struggling with debt and dwindling fan interest, have posted a net loss of more than $1 million since 1988 -- a period during which Churchill Downs' profits exceeded $20 million.

"It's the granddaddy -- the most famous racetrack in the U.S. and it's one of the best run," said Willard W. Brown, senior vice president and gaming analyst with Dean Witter Reynolds, a Wall Street brokerage.

The company is virtually debt-free and management has invested heavily in off-track betting and inter-track wagering and is eyeing expansion into neighboring Indiana and even Virginia -- where it is challenging a bid by the owners of Pimlico and Laurel.

Its stock, which this year began trading on the NASDAQ market, is selling at about $55 a share, almost three times the level of a year ago.

The track beams live coverage of its races to dozens of tracks and off-track betting facilities across the country, earning fees and a portion of the betting pool in return.

President Thomas H. Meeker, an ex-Marine who took over track management in 1984, has stressed "customer-driven" innovations to reverse losses in attendance and purses.

The track has a slew of lounges and restaurants within its one million square feet of enclosed space, each aimed at different kinds of fans. For novices there's a deli-style lounge with hardwood floors. There are formal dining areas and private clubs for corporate clientele, and areas stocked with extra betting windows for hard-core gamblers.

For first-timers, there are beginner's betting windows, handicapping seminars and even play-money handicapping contests.

"Racetracks tend to be viewed as an ominous venture for many people, and the easiest way to get them out is to bring them out with friends," said Matt Iuliano, a Churchill Downs business analyst and planner.

Jeffrey Thomison, an analyst with Hilliard Lyons, a Louisville-based brokerage, said, "Our view on the company is very positive. Not only are they at the top in prestige, but also in terms of management."

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