Churchill Downs Inc. on Wednesday announced plans to sell Hollywood Park in Inglewood to Bay Meadows Land Co. for $260 million in cash.
As part of the deal, Bay Meadows Land Co. has agreed to run the racetrack for three years and make $5 million in capital improvements to the track.
After that, Bay Meadows officials can begin redeveloping the property. The clock begins ticking once the transaction is finalized on or about Sept. 20.
The Business Journal last month reported that Bay Meadows Land Co. owned by San Mateo fund manager Stockbridge Capital Partners LLC was the front-runner to purchase the site.
Bay Meadows Land Co. is finalizing plans to raze its 83.5-acre eponymous San Mateo horse track to build a residential and commercial development. Stockbridge has numerous investments in real estate developments throughout California and nationwide.
“Like our track in San Mateo, the land here is attractive land and we are ready to go down another path with it if the racing environment doesn’t improve,” said Terrence E. Fancher, the president of Bay Meadows Land Co.
The joint announcement by each company’s top executive took place Wednesday afternoon in Hollywood Park’s Sunset Room, with audience members listening in person and through a conference call.
Thomas H. Meeker, president and chief executive of Churchill Downs, said the company had been having a rough time with its California horseracing operations.
Churchill Downs bought the track six years ago for $140 million, and since then has had to cope with spikes in energy costs, the high cost of workers compensation insurance and increased competition from casinos operated by Native American tribes.
“We’ve been committed to racing in Southern California but we have had difficulties here,” said Meeker. “As a Kentucky-based company, it’s been difficult to do business out here.”
Meeker said Churchill Downs chose Bay Meadows as the buyer because it represented the best deal for its shareholders. Later, under questioning, Meeker also said there hadn’t been a higher bid for the property.
Under the deal’s terms, Churchill Downs has the right to buy back the track for an undisclosed sum within three years if the California legislature allows race tracks to operate slot machines or video gambling terminals.
The Louisville, Ky.-based race track owner can also invest in Hollywood Park as a minority partner for up to eight years.
Bay Meadows Land Co. also agreed to distribute races at its San Mateo racetrack and at Hollywood Park through Churchill Downs Simulcast Network.
Fancher isn’t entirely banking on the state to allow racetrack owners to expand their gambling operations. He said the company would begin discussions with Inglewood city officials on plans to possibly redevelop the 240-acre site.
“We enter into this with optimism, but we will also initiate a process with the City of Inglewood to explore alternatives that they would consider,” Fancher said. “There are no predetermined ideas and we would be entering into cooperative process with Inglewood.”