Fool's Gold

On the heels of yesterday's post in which I discussed the slow death of thoroughbred racing, comes word from The Motley Fool investment site that Churchill Downs (Nasdaq: CHDN) is on its list of "deathbed" stocks. "Revenues dry up. Margins contract. Profits evaporate. All of these signs suggest that their condition is worsening--a financial death rattle, if you will," predicts the Fool.

Churchill Downs, the company owns, more than Churchill Downs, the racetrack. Its operations, according to the Fool, include "tracks across the country [Calder, for one], off-track betting facilities, an interest in a telecommunications provider for the pari-mutuel and simulcasting industries, and a joint venture with ...Magna entertainment to a pay-TV service to broadcast races into Ireland and the U.K."

Enough diversity, one might think, to offset decreasing attendance and daily handle at the actual facility, but according to the Fool, "a look at Churchill Downs' balance sheet makes it seems as though it won't make it to the home stretch."

It is true that Churchill Downs, the racetrack, literally banks on Kentucky Derby week to finance its existence for the rest of the year. And while it is never wise to put all of ones eggs, financial or otherwise, in one basket, it is hard to imagine that the lure of one of the nation's most storied sporting events will ever diminish. Yet, the fact remains that aside from one week, Churchill Downs, the track, and by extension, the company, are feeling the effects of a dying fan base.

Diversification in the form of slot machines has been one answer in other states but I think that answer merely puts a band-aid on the true problem: lack of appeal to a diverse crowd. Horsemen will tell you that Delaware Park and Philadelphia Park are reaping bigger purses, hence a higher caliber of races, since slots came to their tracks. But still that has done little to boost attendance among the crowd headed toward the casino entrances.

Thoroughbred racing needs a major makeover beginning with its own "house." Banning steroids and horse-slaughter would go a long way toward broadening the sport's appeal.