🐎 Triple Crown Money-Maker

Nothing screams wealth more than gaudy hats, silky-smooth bourbon, and horse racing.

Summertime couldn’t be any closer. Sure, we’re only a few weeks away from Memorial Day Weekend (a.k.a. the official bell-ringing of summer), but some of us don’t have calendars at our desk cubicles crossing out the days like we’re Kindergarten teachers showing our students what days of the week mean. No, some of us use the ever-so-popular sports calendar to tell us when seasons are upon us. And one way to recognize when summer is right around the corner, is the start of Triple Crown season. In other words, the cream of the crop horse races begin, starting with the Kentucky Derby (at Churchill Downs in Louisville, KY), followed by the Preakness Stakes (at Pimlico Race Course in Baltimore, MD), and finished off with the Belmont Stakes (at Belmont Park in Elmont, NY).

Just this past weekend, the 150th Kentucky Derby got the Triple Crown season started with a bang! Fans piled in by the thousands waiting to show off their insane hats and pastel suits, bartenders constantly pouring Woodford Reserve into cups to make mint juleps, and cash flying around the track waiting to place bets at any moment. While we wait for next year’s VIP ticket, let’s review the business of horse racing. What’s the history of horse racing? What does the business model look like for these Triple Crown events, specifically The Kentucky Derby?

Let’s get after it…

What’s the history of the Triple Crown?

• 1875 marked the first time that all three Triple Crown races were run in the same year.

• It’s known as the highest achievement in all of horse racing, while also being one of the rarest feats to conquer in all of sports.

  • To win, a horse must win all three races in over a span of 5 weeks.

    • To give you an idea, over a 150 year span, only 13 horses have won a Triple Crown 🤯. The last horse being Justify, in 2018.

  • Horses must be three-year-old Thoroughbreds to compete. (i.e. it’s impossible for horses to win more than once)

• One of the reasons why Triple Crown winners are so uncommon is because it’s hard for a horse to race in all three races.

  • A horse that goes for the Triple Crown tends to race against fresher horses who haven’t been on the road racing for weeks straight.

• Not only that, but the length of the races are all different, which means training horses for upcoming tracks is extremely important:

  • The Kentucky Derby: 1.25 miles (built for strength & tactical speed)

  • The Preakness Stakes: 1.19 miles (built for speed & strength)

  • The Belmont Stakes: 1.50 miles (built for stamina & distance)

Why is the Kentucky Derby so successful?

• Simply put, it’s one of America’s most prestigious sporting events. But let’s review why the “Run of the Roses” is in the upper echelon compared to the rest…

• Viewership. Each race might only last around 2 minutes, but NBC wants to make sure they’re the most exhilarating 2 minutes of your weekend!

  • This year, the Derby saw an average audience of 16.7M (+13% from last year), making it the race’s best total since 1989.

    • It was NBC’s most-watched program since the NFL divisional playoffs in January.

  • Peak viewership hit 20.1M, the most for an NBC Sports presentation of the Kentucky Derby.

  • Right after the race, NBC Sports and Churchill Downs, Inc. (CDI) announced a rights renewal where it will continue to air the Kentucky Derby through 2032.

    • The extension includes multiplatform (NBC & Peacock) rights to the Kentucky Derby, Kentucky Oaks, and Derby and Oaks Day programming.

    • NBC started viewing the Derby in 2001 and have had the rights ever since.

  • And to give you an idea in terms of ad dollars, two years ago according to iSpot.tv data, NBC generated ~$34M in ad revenue over the course of the afternoon.

• Gambling. The Derby also raked in some betting records this year.

  • 2024 total wagers on all 14 Kentucky Derby races: reached a record of $321M (+11% from last year), which was the previous record.

  • 2024 total wagers on the Kentucky Derby race: set a new record of $211M, beating the previous record of $189M in 2023.

  • 2024 total wagers during Derby week: also a new record of $447M (+8% from last year).

  • Not only does CDI own the Derby’s brand and IP, it also owns an online horse racing gambling app called, TwinSpires — which has been in use since 2007.

    • CDI’s total gambling revenue has more than tripled since 2013, to nearly $1B in 2023, excluding historical racing machines (electronic gambling product where players bet on replays of horse races, using terminals that resemble slot machines).

    • TwinSpires contributed ~$458M in total revenue for CDI in 2023 since the app can be used in 16 countries, with ~165,000 races, and at 360 racetracks (one could say it’s the optimal online horse racing app, and no this is not an ad…but we’re not against a future partnership 😉)

• In-Person Experience. This year, ~155,000 attended the actual race and ~260,000 people attended the 2-week festival leading up to the main event. As attendance continues to increase, Churchill Downs unveiled their new Paddock which costed upwards of $200M worth of renovations. But in doing so, it dramatically increased the in-person viewing experience. How so? Well…

  • They introduced two new luxury seating areas: The Woodford Reserve Paddock Club and Sports Illustrated’s Club SI.

  • 3,025 new premium reserved seats and 3,250 new standing room “seats”.

  • Over 3,700 existing premium reserved seats were upgraded.

  • The redesign was structured to improve the flow of guests throughout the Paddock. This included:

    • A larger paddock walking ring for viewing the horses prior to the races.

    • New hospitality and other amenities for guests in certain areas of the 3rd floor clubhouse seats.

    • New terraces including a new Turf Club balcony overlooking the Paddock.

• Ticketing. More than half of Churchill Downs' revenue during Derby Week comes from ticketing, especially premium ticketing (includes VIP ticket purchases) as the demand continuously exceeds supply.

  • There are ~65,000 reserved seats on the frontside of the track — everything apart from the infield — including the 7,000 seats added with the First Turn Experience project, and the venue boasts 45 seating products (4x the average at most horse tracks)

  • Ticket prices range from ~$700 for boxes near the paddock to ~$15,000 per person in some suites 🤯.

• Economic Impact. For the monumental 150th year, the city of Louisville is expected ~$405M of economic impact, which would outpace last year’s numbers by around $3M — this is due to increased attendance, higher costs of transportation, lodging, food, retail, and entertainment activities for visitors.

  • For example, hotel occupancy on Derby weekend is estimated to be ~83% citywide and 93% just in Downtown Louisville (I wonder if Churchill Downs can Airbnb their pristine grass for a couple nights 🤔).

    • The average rate from last year came in at ~$764/night.

• What’s also interesting is that Churchill Downs reaps tax incentives for doing business in Kentucky.

  • Derby Day alone contributed ~$4.3M in tax revenue to the state and ~$1.1M in tax revenue from Oaks Day.

  • The tax breaks the company receives is outweighed by the tax revenue from pool wagering and out-of-town guests that visit Louisville + employment taxes and other tax revenue the company creates.

Enjoying this really awesome newsletter? Share with your friends!

Quick Hitters

• 🎤 Death Row Records is back y’all! Well, kind of. The duo who brought us the jam and new alcoholic brand, “Gin & Juice”, Snoop Dogg and Dr. Dre are back and stamping their names on…a college football bowl game? You got it. The Arizona Bowl has a new sponsor and will now be called the, “Snoop Dogg Arizona Bowl Presented by Gin & Juice By Dre and Snoop”. Even though its known as the first alcohol partner presenting sponsor in an NCAA bowl game, perhaps the funnier story is that these two rap icons will have their names as part of the branding. We’ll see how long the sponsorship lasts as the Arizona Bowl is known to be a little flirt…they’re now on their 4th presenting sponsor after mortgage lender NOVA Home Loans, real estate company Offerpad, and sports media darling Barstool Sports.

• 🤢 The Oakland Athletics couldn’t be anymore of a dumpster fire. It’s honestly too sad to even type this up. We went through some of the in’s and out’s of this awful situation last month, but it looks like things are not getting any better. Coming up on their final season in Oakland, the A’s are averaging 6,410 fans per game. It would be the lowest home attendance figure for an MLB team in 45 years 🫣. According to Sportico, around 553 pro and college teams in U.S.-based leagues are averaging more fans per home game than the Oakland A’s. And yes, one of the teams on that list averaging more fans are the Athletics’ minor league Triple-A affiliate, the Las Vegas Aviators.

• 💷 Way back we had ourselves a soccer-filled day! In one of those stories, we talked about the scrutiny and financial woes some Premier League clubs were involved in — one of them being Everton. They were charged twice over the span of one year and subsequently docked, a league record, 10 points in the standings. In the midst of these issues, Everton announced in September that its majority shareholder, Farhad Moshiri, agreed to sell a 94% stake in the team to a Miami-based investment firm, 777 Partners. But the firm couldn’t provide the required financial information for approval, and, in April, Everton began looking for another buyer. Well…now we might know why. A federal lawsuit was filed last week as Leadenhall Capital Partners, a British asset management company, alleges in the suit that it had provided more than $600M in funding to 777, before learning that about $350M in assets either didn’t exist, weren’t owned by the firm, or had already been promised to other lenders. We’ll see what ends up happening but it’s a pretty strange situation since 777 currently owns stakes in teams based in Europe and Australia.