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Kentucky Derby 2013: Running for the Roses or Going for the Gold?

By Rick Horrow and Karla Swatek

May 3, 2013

Between mounts Golden Soul and Goldencents, it’s going to be a golden day on Saturday at Churchill Downs.

While Golden Soul is a longshot at 50-1 odds, Goldencents—partially owned by Louisville basketball coach Rick Pitino, fresh off a NCAA championship—is one of the top picks at this year’s Run for the Roses.

Whether the winner of the 139th running of the Kentucky Derby will be a Revolutionary, an Orb, a Palace Malice, or one of the golden guys, one thing is certain: with profits up $15.3 million since 2008 and strong viewership across the NBC family of networks that attracts a wide swath of sponsors, the Derby is certainly worth its weight in gold.

Over the past five years, even as it has undergone a $120 million overhaul to upgrade its aging facilities, Churchill Downs has boosted its profits by following stick-and-ball sports stadiums down the now well-trod turf of seat licenses. According to an in-depth examination by the Louisville Courier-Journal, about 55% of Churchill Downs’ Derby Week profit “comes from admission to the track—which includes premium tickets that this year can easily cost hundreds of dollars, seat licenses costing as much as $75,000 and fees of as much as $50 to get into the Derby infield.” It also helps that Derby Day has set attendance records each of the past two years.

The multimillion dollar facelift added revenue-intensive luxury suites, an upgraded Turf Club and Millionaire’s Row. Additionally, the sold out new Mansion luxury seating area, comparable to Augusta National’s recently unveiled Berckman’s Place (where badges during the Masters cost $6,000 for the week), also attempts to recreate that Deep South antebellum aura—for an average price of $8,700 per ticket, according to the Courier-Journal.

To further enhance the fan experience, the racetrack also added a “temporary, stadium-style 3,000-seat area in the Clubhouse turn near the former Marquee Village, where tickets were priced up to $698 per person for a two-day package that included food and beverage.”

Combined with its casino investments, Churchill Downs’ ability to extract more money out of the Kentucky Derby has helped lift its stock by 50% over the past five years. While other racetracks throughout the country have gone bankrupt, Churchill’s annual profit in 2012 was more than double its 2008 results.

While the track’s handle has provided the next-largest revenue share behind premium ticket sales, sponsorships surrounding the event accounts for a healthy income stream. Besides Yum! Brands Derby sponsorship, which began in 2006, this year Churchill Downs partnered with Swiss watchmaker Longines, under a five-year agreement, for a presenting sponsorship for the Longines Kentucky Oaks, the signature race traditionally run the day before the Kentucky Derby. Longines also will receive “race apparel” rights, which include branding on starting gate workers’ apparel and on the horses’ saddlecloths, according to a Churchill release.

Churchill Downs has also partnered with AT&T and wireless infrastructure provider Mobilitie to improve cellular service throughout the property. And on Wednesday, candy giant Mars announced it will give away one million Snickers Bites if jockey Rosie Napravnik wins the Derby on Saturday. The win would be the first by a woman in the race’s history.

NBC, finally, looks forward to its thoroughbred annual Kentucky Derby return on investment. Last year, 14.8 million viewers watched the Derby on NBC, the third most watched Derby in a quarter century and the fourth straight year NBC’s viewership surpassed 14.5 million.
In 2013, NBC Sports’ coverage of the Kentucky Derby began Wednesday evening with coverage of the Kentucky Derby Draw on the cable NBC Sports Network. The Longines Kentucky Oaks will air on the NBC Sports Network on Friday, and on Saturday, Derby coverage gallops from the NBC Sports Net to the parent broadcast network and back.

The Derby is as much of a social event as it is a sporting one, and as such, NBC’s popular “Access Hollywood” will also provide interviews and features. To lure an even bigger female demographic, Coc Rocha, a supermodel coach on the Oxygen’s networks "The Face," will be at Churchill Downs to talk Derby hats and fashions, and handle celebrity interviews.

Whether it’s glitz and glamour, guest relations, or solid Gold, from an economic standpoint, where the Kentucky Derby is concerned, all bets are on.

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Beyond the Scoreboard
Rick Horrow, America’s leading expert in sport business, and coauthor Karla Swatek give fans an inside look at the multibillion-dollar world of professional sport.
Beyond the Scoreboard eBook
Rick Horrow, America’s leading expert in sport business, and coauthor Karla Swatek give fans an inside look at the multibillion-dollar world of professional sport.
Beyond the Scoreboard: Chapter 1. The Mega-Master Super Series XLXL eBook chapter

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