Churchill Downs delays major expansion projects amid economic uncertainty

Churchill Downs Inc. said on Wednesday it would pause several major capital improvement projects, citing rising construction costs linked to U.S. tariffs and broader economic uncertainty, even as it reported record first-quarter revenue.

The Louisville-based company, which operates the Kentucky Derby racetrack, announced in February a nearly $1 billion expansion plan through 2028. Projects included the revamp of Skye Terrace, the addition of permanent premium seating in the infield, and the construction of new infield structures for General Admission areas. Those projects will now be delayed.

"The decision to delay these construction projects is due to the increasing uncertainty surrounding construction costs related to tariff and trade disputes as well as current macro-economic conditions," Churchill Downs said in a news release.

Chief Executive Bill Carstanjen called the decision “difficult” but emphasized the need for financial discipline. "We have a responsibility to be disciplined given the recent changes in the economic environment. We remain committed to growing our iconic flagship asset over the long term," Carstanjen said.

Churchill Downs will proceed with two smaller renovation projects targeting high-end customers: upgrades to the Finish Line Suites and The Mansion, with an investment of $25 million to $30 million.

In a conference call with investors, Carstanjen said macroeconomic uncertainties, including tariffs on Chinese imports, have added volatility to construction costs. "We don’t like having the additional variable of what this thing is going to cost to build. ... We can’t do that on a major product because of the macro environment," he said.

The company will put its larger projects on hold before reassessing. "I expect we’ll pause it for a year, wait for the macro stuff to settle down, and then it’s full speed ahead with whatever relevant, smart changes make sense based on events we can’t now predict," Carstanjen said.

Churchill Downs reported first-quarter revenue of $642.6 million, up 9% from a year earlier, marking a record for the company. Adjusted EBITDA rose 1% to $245.1 million, while net income fell 5% to $76.7 million.

Despite broader consumer hesitancy, particularly among lower-tier players, Carstanjen said demand for the Kentucky Derby remains strong, with no material change in international visitation. "The Derby is a very strong event that continues to grow and is getting stronger year to year," he said.

Wall Street analysts supported the company's decision to delay the projects. "We view CDRT as the highest return opportunity within the company," said David Katz of Jeffries, adding that the pause was "prudent and positive for the shares." Truist Securities' Barry Jonas also called the move the "right thing to do at this stage in this environment."