Decoding Churchill's Magna, Empire Alliances

Churchill Downs’s second-quarter earnings conference call on August 9th (full transcript is available via the SEC website) sheds some light on why it linked with Magna to get behind Empire Racing’s bid. (Churchill and Magna announced plans to “cooperate” in the NYRA bidding process on August 4th, but did not announce that they had “joined” the Empire Racing effort until yesterday).
“It’s in the general interest of the industry to ensure that there is continuity and longevity in New York racing. And to the extent that we can play a role in assisting (emphasis mine) whoever might be the successful bidder in ensuring that there is longevity in New York, it will inure to the benefit not only the industry but to Churchill Downs and to Magna,” outgoing Churchill CEO Tom Meeker said in response to an analyst question on the alliance with Magna for the New York bid. “And so, the relationship that we’ve structured now is that we will join together and try to assist some bidding group with a successful bid. And beyond that I really can’t comment obviously.”
Meeker dodged a question on whether Churchill would be willing to take a minority interest in a bid. “The various permutations of relationships that may occur are extremely wide,” Meeker said on the call. “And I really am not in a position right now to tell you what we might or might not do.”
It doesn’t sound like Churchill and Magna will be major players behind Empire Racing, or significant financial contributors, in the process. They’re simply getting on board and lining up behind the group they view as the inevitable winner of the franchise.
Meeker also tipped Churchill’s motive for its growing links with Magna on the conference call (and what it may push for will push for in exchange for “assist[ing]” Empire Racing): favorable access to Churchill’s signals, and support for the development of its own account-wagering platform. “There is an imperative out there that has to be addressed,” Meeker said in response to a question on its growing links with Magna. “We need to get a more customer-centric approach to the delivery of our account-wagering products in the United States and then ultimately in the international community. And when I say customer-centric, we need to make sure that our fans have the opportunity in a very easy way to access the content that they want and, more important, to be able to - on a transactional basis to be able to access a single account to transact their business, albeit there may be various front ends out there that will be accepting bets through XpressBet, TVG, whatever. But the customer ought to be - like a Visa credit card or a MasterCard - ought to be in a position where he or she doesn’t have to maintain four or five accounts to make wagers on our products.”