Churchill Downs Tumbles as Tariff Angst Delays Derby Projects

Churchill Downs Incorporated (CHDN) faces mounting headwinds as tariff-driven inflation and macroeconomic uncertainty force delays to its $920 million expansion projects at the iconic Louisville racetrack. The pause, announced earlier this year, threatens to disrupt plans for the 2026 and 2028 Kentucky Derbies, casting a shadow over the company’s long-term growth strategy. Meanwhile, its stock price has oscillated amid conflicting signals of short-term optimism and bearish technical indicators.

The Projects on Pause—and Why They Matter

The halted projects include four major initiatives:
1. The Skye Project: A $455–465 million effort to enclose the south side of the track with 13,300 new premium seats.
2. Conservatory Project: A $320–330 million overhaul of infield seating, adding 7,000 permanent seats and 36 luxury suites.
3. Infield General Admissions Project: $60–70 million in upgrades to improve fan access.
4. Infrastructure Upgrades: $45–55 million for tunnels and guest experiences.

These projects were critical to expanding revenue streams via premium seating and hospitality—a key driver of CHDN’s growth. Their delay risks missing the 2026 Kentucky Derby, a marquee event that typically draws 150,000 attendees and generates millions in revenue.

Tariff Fallout: A Costly Headwind

The pause stems directly from escalating tariff disputes. President Trump’s 2025 policies imposed 25% tariffs on steel and aluminum imports, with retaliatory measures from Canada, Mexico, and China. These metals are foundational to construction projects, driving up costs by 12% in Q2 alone (Moody’s Analytics). For Churchill Downs, which relies on foreign suppliers for materials, this has created a “double whammy”:
- Input Inflation: Steel prices surged by 18% in early 2025, squeezing margins.
- Supply Chain Disruptions: Retaliatory tariffs on U.S. exports (e.g., $42 billion from Canada) have strained North American trade partnerships, further slowing approvals.

The CEO, Bill Carstanjen, emphasized fiscal discipline but acknowledged the projects’ importance: “We’re maintaining flexibility while waiting for clarity on trade policies.”

Stock Performance: Volatility Amid Mixed Signals

CHDN’s stock has reflected this uncertainty. Despite Q1 2025 record revenue, its shares fell sharply in late March to $89.79, down from a March high of $115.16. Technical indicators paint a bleak picture:

• Bearish Sentiment: All moving averages (SMA/EMA) remain above current prices, signaling a SELL recommendation. The 50-day SMA is at $110.90, nearly 20% above April’s lows.
• Near-Term Glimmer: A $106.71 peak is projected for April 27, offering a +18.95% ROI from April lows. However, May-June forecasts dip to an average of $93.68, with volatility persisting.

Investor Considerations: Risks and Opportunities

1. Near-Term Risks:
2. Project Delays: The paused construction could reduce revenue growth for years. The 2026 Derby’s diminished capacity may disappoint investors.

3. Cost Overruns: Even if projects resume, tariffs could inflate budgets, squeezing margins further.

4. Long-Term Catalysts:

5. Bond Funding: A Metro Council bond ordinance will proceed, ensuring funds remain available once conditions stabilize.
6. Smaller Renovations: CHDN is proceeding with $25–30 million in high-margin upgrades, such as modernizing the Finish Line Suites and The Mansion. These could boost hospitality revenue without massive capital outlays.

The Bottom Line: A Wait-and-See Strategy

Churchill Downs’ pause is a prudent move in turbulent times, but its stock remains vulnerable to tariff-related headwinds. Short-term traders might capitalize on April’s projected rally, but long-term investors should wait for clarity on trade policies and construction timelines.

While the 2025 year-end price is expected to rebound to $115, the 2030 forecast predicts a decline to $40–$55, underscoring structural risks. For now, hold CHDN until tariffs abate or projects restart—preferably both.

In sum, Churchill Downs’ halt is a cautionary tale of how geopolitical risks can derail even the most ambitious growth plans. Investors would do well to monitor tariff developments and construction restart timelines closely.