Bill Carstanjen, a former corporate associate at Cravath, is now the Chief Operating Officer of Churchill Downs Incorporated. He speaks about his role at CDI, as well as his transition from the legal arena to the business arena.
A week after the 2010 Kentucky Derby, Churchill Downs Chief Operating Officer Bill Carstanjen took one of his regular walks through the backstretch of the tracks—chatting with staffers about the event that saw 275,000 attendees in two days. One discussion revolved around the unusually large crowds near the paddock. Bill learned that a leakage point a mile away from the complex had enabled trespassers to slip through and proceed down the path as if they were derby entrants.
“That was today’s lesson,” confided Bill, who says that insights like these are the reason he walks the grounds several times a week. “So many times, people are pulling out their hair in corporate offices, trying to fix problems, and most of the time the answers can be found just by talking to your front-line team.”
The regular walks are a relatively new habit for Bill—two years ago he rarely went to the backstretch. But Bill’s awakening to the value of leaving the corner office—inspired, in part, by his appearance on a reality-television program—is just one example of his ability to listen deeply and adapt to new environments—skills he says he first developed at Cravath.
A Cravath corporate associate from 1994 to 2000, Bill came to Churchill Downs in 2005, after serving as the managing director and general counsel of General Electric’s Energy Financial Services division.
At Churchill Downs, Bill quickly became part of a leadership team that transformed a company that was almost exclusively focused on brick-and-mortar issues into an enterprise that has a $1 billion a year internet-wagering business and an office in Silicon Valley. “That represents a high cultural shift in terms of the skill set, attitude and approach of our team,” he says.
That cultural shift wasn’t always easy to navigate. Churchill Downs is a company steeped in tradition—the Kentucky Derby is the oldest continuous sporting event in the United States. Bill’s mission was to increase profits and build a business model that would enable the company to thrive in the 21st century, and when he first arrived he tackled that challenge in the aggressive, fast-paced manner that is necessary for conducting high-stakes deals in the Northeast. That did not always fly in Kentucky horse country, where relationships tend to be more personal and informal—and often take years to cultivate. “I was one of the first outsiders of that culture to come into the company, and I broke a lot of glass when I first arrived,” he said.
Fortunately, says Bill, the experience he gained at Cravath has carried him through the many times he has been charged with a challenging task in a new environment. “The message at Cravath always was, ‘You can do this.’ You can handle what’s been asked of you. If you work hard, if you do your homework, if you watch and listen, you can handle the assignment that has been given to you.”
Cravath is also where Bill developed the M&A skills that have served him for his entire career. “I still am involved in a fair amount of M&A activity, as it’s always been critical to building the businesses I’ve worked in. I’ll always be grateful for the time Richard Hall spent training and working with me. He was a great teacher and I’ve relied on what I learned from him throughout my career,” he says.
The confidence and technical expertise Bill gained at Cravath served him well when he went to General Electric in 2000 and gradually took on a business-development role in addition to his position as internal M&A counsel. It also enabled him to rise to the occasion when, late one Friday evening, Jack Welch called. Welch was trying to negotiate a deal with Honeywell in a 24-hour period. Bill, then 30, was the only one in the office, so he served as the lead GE lawyer working on the deal. “That experience resulted in the very most senior people in the company realizing that I actually existed on the planet. It quickly gave me credibility that I otherwise probably would have needed many years to build,” he says.
Bill’s M&A experience also made him valuable to GE’s business-development side, and he became involved in every aspect of the process from deal generation to integration. “At Cravath, I had pretty extensive negotiation experience, and a very complete understanding of the process and the issues of getting a deal done,” says Bill. “I watched and listened carefully at GE and pretty soon they asked me to play a business role as well.”
Bill’s unique combination of legal, M&A and business-development skills caught the attention of then Churchill Downs CEO Tom Meeker, who asked Bill if he would consider assuming the joint role of general counsel and head of business development at the company.
Initially, Bill wasn’t interested in leaving GE—he was having too good a run. But several months later, Bill went with his family to Chicago’s Arlington Park, which is owned by Churchill Downs Incorporated, and realized that gaming had great potential for expansion in the digital age. In his subsequent research, he discovered that horse-racing was the sole exception to the general prohibition against internet wagering. “I looked at those things and thought, ‘Wow, this is a company with a very interesting growth trajectory,’” he said.
After several more discussions with Churchill Downs, Bill assumed the position of general counsel and chief development officer in 2005, and he quickly went to work on the internet business. When it launched in 2006, the company had zero wagers conducted on the internet; the company is now expecting a run rate of close to $1 billion by the end of 2010.
The COO since 2008, Bill also oversees two recently built casinos, four horse tracks and the ownership of half a television station and a media-rights company. “I have to switch hats fairly regularly because these businesses have very different metrics and are run by different sorts of people,” he says.
That ability to switch hats became exceedingly clear to viewers of the CBS reality show Undercover Boss last March. For 10 days, a television crew filmed Bill while he was being trained for several rank-and-file jobs at Churchill Downs—including horse trainer, room cleaner and jockey’s valet. Bill’s “bosses” at Churchill Downs thought they were training a new hire, and gave him widely varying marks on his vacuuming and horse-dressing skills.
It was an extremely risky move—one few executives would subject themselves to, but Bill says it was an extraordinarily valuable experience. “Because I was anonymous, it was the first time I got an unfiltered view of all the things that go on in a racetrack. That’s an experience I wouldn’t trade for anything. When you sit in a corner office like I do, in order to absorb everything you have to process over the course of a day, you end up relying on spreadsheets and on people in suits and ties. It’s easy to lose your feeling for the heartbeat of the company.”
In some respects, the Undercover Boss experience changed Bill—it was after filming the show that he decided to start his regular walks through the grounds. But in other ways, Bill’s willingness to be schooled on camera on how to clean a horse’s stall is merely an extension of his general belief that success is contingent upon listening deeply, working hard and knowing that you can accomplish the task, no matter how new or challenging. This is the mindset Bill is convinced he developed at Cravath.
“Whether I’m using my training to figure how to analyze some tax wrinkle that may seriously affect our quarterly earnings or to figure how to serve successfully as a jockey’s valet, it comes back down to the same attitude and same respect for the people around you.”
Bill Carstanjen, COO of Churchill Downs, goes undercover.