Churchill buying into Saratoga Harness for $30.6m

Churchill Downs said on Tuesday that it has signed an agreement to purchase a 25 percent stake in Saratoga Casino Holdings for $30.6 million.

The purchase price remains subject to adjustments for Saratoga Casino Holding's working capital and debt at the time of closing, according to the news release.

The purchase must be approved by New York regulatory authorities; Churchill said its anticipates that will happen in the second quarter of 2015.

The deal could give Churchill a stake in up to five more casinos.

In July, the Louisville track announced the planned deal, which gives Churchill an interest in Saratoga Harness's casino and harness track, and the Gideon Putnam Hotel and Resort in Saratoga Springs, N.Y., as well as an existing casino in Colorado.

Churchill and Saratoga Harness jointly bid on a casino near Albany, N.Y., which Churchill will manage if the bid is successful.

This deal gives Churchill an interest in a separate bid for another Hudson Valley casino.

Saratoga Harness also is a minority partner in Ellis Park in Henderson. It's unclear if the deal still includes an interest that track, as originally stated in July.

For the third quarter that ended Sept. 30, Churchill Downs on Wednesday reported earnings of $3.5 million, or $0.20 per share, down 62 percent from the $9.2 million, or $0.52 per share, reported in the same quarter of last year.

Year-to-date, Churchill reported earnings of $60 million, or $3.40 per share, almost identical to the first nine months of last year.

Churchill blamed the profits plunge on the loss of Calder racing revenue now that the Florida track has been leased to a competitor.

Bill Carstanjen, Churchill Downs Inc. CEO, said, "We were pleased with our third-quarter results which were in line with our internal expectations. We produced record (adjusted earnings) of $32.2 million, despite generally soft regional gaming trends and changes to the legal and tax environment affecting our online operations. We continued to make strategic investments in the development of our real-money internet gaming platform and incurred costs associated with our Capital View Casino joint venture bid for a New York gaming license."

Churchill executives will discuss the results in a conference call with stock analysts at 9 a.m. Thursday.