Churchill Downs Agrees to Sell Arlington Park to the Chicago Bears for $197M
Posted on: September 29, 2021, 06:28h.
Last updated on: September 29, 2021, 09:17h.
The Chicago Bears, the NFL team that raised some eyebrows in June after placing a bid on Arlington International Racecourse, have agreed to buy the historic racetrack in the Windy City suburbs for $197.2 million. That’s according to an announcement made Wednesday morning by seller Churchill Downs Incorporated.
The deal is expected to close either late next year or early in 2023, according to the filing. But it will be several years before the Bears could potentially open a new stadium on the site.
The Athletic first reported the deal late Tuesday night.
In a statement Wednesday, Bears President and CEO Ted Phillips said reaching an agreement with Churchill Downs was “a critical next step” in its due diligence for the project.
“Much work remains to be completed, including working closely with the Village of Arlington Heights and surrounding communities, before we can close on this transaction,” Phillips said. “Our goal is to chart a path forward that allows our team to thrive on the field, Chicagoland to prosper from this endeavor, and the Bears organization to be ensured a strong future. We will never stop working toward delivering Bears fans the very best experience. We will continue to provide updates on our progress at the appropriate time.”
Churchill Downs announced in February its intention to sell the 326-acre property in Arlington Heights. The Louisville-based gaming company contracted with commercial real estate firm CBRE to market the site and solicit bids.
The deadline to bid was in June. In late July, Churchill Downs CEO Bill Carstanjen told investment analysts the company received “numerous” proposals.
Rumors about the Bears’ interest in the track began spreading shortly after Churchill’s announcement seven months ago. For the past 50 years, the team played its home games at Soldier Field – with the exception of the 2002 season, when it played at the University of Illinois in Champaign while the stadium underwent a massive overhaul.
While the team’s lease at the stadium is not scheduled to end until the 2033 season, The Chicago Tribune reported in July that the cost to break the lease would be $84 million in 2026. Figuratively speaking, that’s couch cushion money in the NFL, where each of the 32 teams are guaranteed to make $220 million this year from national television contracts alone. By 2032, the teams will get $377 million a season.
Soldier Field, which holds just 61,000 fans, is the smallest stadium in the NFL, so having 326 acres would allow the Bears to build a much bigger stadium and still have room for other developments, too. It also would improve their chances of having an on-site or adjacent sportsbook, something that has been denied by the Bears’ current landlord.
Excitement in Arlington Heights
In a statement to Casino.org Wednesday morning, Arlington Heights Mayor Tom Hayes said he was very excited about the news.
My goal for any redevelopment has always been to put this prime piece of real estate to its highest and best use, and I can’t think of a higher and better use than this one,” Hayes said. “There is a long way to go as we begin this journey, and many issues for the community to discuss, but the Village is committed to working with the Bears organization and all stakeholders to explore this opportunity for Arlington Heights and the northwest suburban region.”
In a separate statement posted on the village’s website, Arlington Heights said its officials have been in talks with the Bears and Churchill Downs since the summer.
“The Village recognizes that many residents and stakeholders have questions about the potential redevelopment of this land and its impact,” the statement read. “This will be a long discussion, and there will be many opportunities for community stakeholders to engage in the process.? As with all development efforts, the Village will thoroughly analyze all proposals and make decisions based on what is in the best interests of the Arlington Heights community as a whole.
“While this process is in its initial stages, all parties fully respect and understand the challenging and complex nature of this effort, and are committed to work through and fully explore the tremendous opportunities that this site presents.? Further information will be made available as the process unfolds.”
Part of the challenge with the deal will likely come from Chicago officials.
Even though the affluent suburb is just a half-hour from downtown Chicago, Chicago Mayor Lori Lightfoot previously indicated she would fight to keep the team in the city.
She repeated that desire in a Tweet late Tuesday, sharing a link to the Scott Powers article in The Athletic.
“My statement still stands on the Bears: my admin remains committed to continuing the work to keep the team in Chicago,” the mayor posted. “As I have said numerous times, our door in City Hall remains open.”
Bitter Dispute Between Illinois Horsemen, Churchill
The Bears news comes just days after Churchill Downs ended the last meet at the historic track. The company did not submit a proposal for 2022 race dates, which the Illinois Racing Board awarded to tracks last week.
Not only did Saturday’s card end nearly a century of racing at the track, it also served as the conclusion of a drawn-out battle between horsemen and track officials.
It was also a bittersweet day for local racing fans, especially those in Arlington Heights. The track had long been a jewel for the community, and the village openly embraced it and tied its identity to racing. On its seal, the A is made into a horse’s head.
Hayes told Casino.org that he went to the track one last time with his family on Saturday.
“It was a sad day. But it could not have been a better way to go out, with great races and perfect weather,” he said
The acrimony festered between the sides after Churchill Downs opted against applying for a casino license at the track. It was an opportunity that horsemen and track officials previously pursued and finally got when Illinois lawmakers passed an expanded gaming bill in 2019.
Churchill Downs officials declined to apply, citing a tax structure that would make a racetrack casino unprofitable. However, in November 2018, the company bought a majority stake in Rivers Casino Des Plaines. The state’s largest casino is about a 20-minute drive from the track.
Revenue from an on-track casino would have been used to supplement purses to attract more horses and horsemen for the meets. It would likely have led to increased wagering on the races as larger fields typically produce more attractive odds for bettors.
The track’s 2020 meet ended up being delayed not by the COVID-19 pandemic, but by a months-long impasse between the horsemen and track officials over the size of purses.
A former Arlington executive put together a bid with the intention to continue racing. But Churchill Downs officials had previously shot down any consideration for that.
In July 2020, Carstanjen told stock analysts that the “economics” of horse racing aren’t feasible at Arlington, and that the company would consider “a better long-term solution” for racing.
“But the long-term solution is not Arlington Park,” he said. “That land will have a higher and better purpose for something else at some point.”
Churchill Downs Looks to Sell Calder Land
As the likely sale of Arlington Park draws near, Churchill Downs has put a “For sale” sign up at another of its properties.
At an investor presentation on Monday, company officials noted that it has started the process of selling excess land it owns at Calder Casino in Miami Gardens, Fla.
Among the 170 acres Churchill Downs owns there is a racetrack. In recent years, Churchill Downs tore down the grandstand at the once renowned track. It then leased the track to nearby Gulfstream Park, which used it for a fall meet. However, Churchill Downs chose not to renew the lease after Florida law allowed the company to keep its casino license by offering jai alai, another pari-mutuel game.
The sell-off isn’t a sign that Churchill Downs is looking to downsize. On the contrary, the company has plans to grow.
Last week, it submitted a proposal to build a casino in Terre Haute, Ind. Earlier this year, it announced new plans to invest millions in its namesake track in Louisville. It also has plans to build a new historical horse racing gaming facility in downtown Louisville and expand its existing Derby City Gaming complex by adding a hotel to the site.
Churchill Downs is also a partner in a proposal for a casino in Waukegan, Ill., located between Chicago and the Wisconsin stateline.
“The strong free cash flow of our businesses with the potential to monetize underutilized assets enables us to maintain low leverage, invest in organic and inorganic growth opportunities, pay increasing levels of dividends, and strategically repurchase shares over the long term for our shareholders,” Carstanjen told analysts on a July 29 quarterly earnings call. “As we discussed, we have a lot of opportunities that are in the execution phase, and we have the capacity to land more projects as they develop. We think the horizon has never looked brighter for us.”
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