Thursday, April 24, 2014
Less than a year after its opening, Oxford Casino agreed Friday to be acquired by Churchill Downs Inc., the Kentucky-based racetrack and casino operator, for $160 million in cash.
The casino's Maine-based ownership, which won voters' approval for the casino in a hotly contested referendum in 2010, drew immediate criticism for its decision to sell to an out-of-state company.
Oxford Casino became Maine's second casino when it opened in June, and it completed an expansion of its gaming floor in early October. It had more than $30 million in net revenues in its first six months of operation and has about 400 employees.
"Although we developed the property, operating casinos is not our core business, and we thought that the time was right to look for a major gaming company that could take this property to the next level," said Bob Bahre, a founder of Black Bear Realty Co., which owns Oxford Casino.
When they proposed the project, the developers envisioned a $165 million destination resort with a casino, a hotel, restaurants, conference space and a spa.
Today, Oxford Casino has a 25,000-square-foot gaming floor with 790 slot machines and 22 table games. It also has a casual restaurant and a casino bar.
The developers emphasized their Maine roots and made efforts to hire local building contractors. Stillwater-based Sargent Corp. was the site contractor and Pittsfield-based Cianbro was the construction manager.
"They sold a bill of goods to the people of Maine," said Stavros Mendros, general manager of Great Falls Recreation and Redevelopment LLC, which tried to develop a casino in Lewiston but was rejected at the polls in 2011.
"I'm surprised that it happened so soon after opening, but Oxford's whole pitch about it being owned by Maine people was just an effort to get it to pass muster. They said whatever they needed to say," Mendros said.
Dennis Bailey, whose public relations firm in Portland led the campaign against the casino in Oxford in 2010, called the sale to an out-of-state operator "another broken promise."
"They were saying it would be locally owned and operated," Bailey said, "but people who own and operate casinos are casino operators -- not local businesspeople. They said there was going to be a hotel and a golf course and beautiful grounds. None of that happened."
Oxford Casino, about 45 minutes northwest of Portland, is one of two casinos in Maine, along with Hollywood Casino Hotel & Raceway in Bangor, which is owned by Pennsylvania-based Penn National Gaming Inc.
The sale of Oxford, which depends on Churchill Downs getting a gaming license from the Maine Gambling Control Board, is expected to close by the end of this year.
Churchill Downs Chairman and CEO Robert Evans said, "The acquisition of Oxford continues our focus on investing capital in gaming-friendly states, in newer properties, in what we believe are competitively defensible markets, and at valuations that we believe will result in significant future free cash flow generation at rates of return attractive to our shareholders."
The deal is expected to immediately boost Churchill Downs' earnings per share and provide free cash flow of about $12.5 million a year.
Churchill Downs owns the Churchill Downs racetrack, home of the Kentucky Derby.
It is a publicly traded company that must answer to shareholders, Bailey said, so it may not make investments to build Oxford Casino beyond its existing operations.
Bailey said the casino's owners may have been wise to get out of the business quickly, with competition in New England expected to intensify in coming years.
Three large resort casinos are expected to open in Massachusetts, and efforts continue to open a casino in the Biddeford market.
While the largest share of Oxford Casino is owned by Bob and Gary Bahre, former owners of the New Hampshire International Speedway and the Oxford Plains Speedway, Och-Ziff Real Estate Advisors, a financial investment advisory firm in New York, owns a minority interest.
"They got out while the getting was good," Bailey said. "Competition will only increase from here."
Jessica Hall can be contacted at 791-6316 or at: