The Kentucky Derby, scheduled this year for Saturday, May 6, is the pinnacle event in horse racing. More than 160,000 people from around the world make their way to Kentucky on the first Saturday in May each year to see the race in person. Millions more watch it on television, with many making a party out of it with other horse racing fans.
The race of all races brings a staggering $217 million dollars in revenue to Louisville and the surrounding communities. The presence of the equine industry in Kentucky brings in revenue of $3 billion dollars annually and provides jobs for 55,000 people. However, the financial impact of the Kentucky Derby extends far beyond Louisville and includes many other events leading up to it.
Behind the Scenes Sources of Revenue in the Horse Racing Industry
Winning at the Kentucky Derby requires a horse with a strong pedigree who has undergone intense training. It also requires agile planning on the part of the horse owner. American Pharaoh caused a stir among race fans when he recently became the first Triple Crown winner since 1978 and the first horse to ever win a Grand Slam champion after he took the prize at the Breeder’s Cup in October 2016.
Not surprisingly, people with female horses noticed his success and wanted American Pharaoh to impregnate their mares. With each breeding session priced at $200,000 and at least 100 offspring to his name, breeding future contestants for the Kentucky Derby is just one of many ways the sport of horse racing has a financial impact in the region and worldwide.
American Pharaoh’s legacy has convinced millions of people who never had an interest in horse racing to try their hand at sports betting. Gambling and racing companies are reporting record earnings thanks in part to the number of new players and the increase in computer gaming. The Louisville-based organization Churchill Downs reported revenue of $2.8 million for 2016, without any marketing videos being pushed to the public.
Money-Making Events Leading Up to the Race
The Kentucky Derby Festival, which includes 70 events over a two-week period leading up to the race, brings in approximately $128 million to the region. Adjusted for inflation, this 2016 figure is a 35 percent revenue increase from 2001. Thunder Over Louisville brings in more than 40 percent of the income generated during the last week of April and first week of May. It includes live music, food, and special events each year. In 2017, Thunder Over Louisville features an airshow and tribute to the United States Air Force.
The Kentucky Derby Prep Races give horses and jockeys the points they need to qualify for the Kentucky Derby in early May. These prep races are held in various locations across the country and award between 10 and 300 points each towards qualification. With 37 prep races leading up to the 2017 Kentucky Derby, plenty of revenue-earning opportunities exist for the participants, planners, and hosting cities.
The Kentucky Derby has gone strong for 142 years for many reasons, not the least of which is the amount of money it generates across the world.
Business Impact Analysis
How is the business impact of the Kentucky Derby measured? It is done through something called a business impact analysis, or BIA. BIA predicts the consequences of business function and process disruption. Conducting a BIA also helps gather information that will be helpful in developing recovery strategies. This process can certainly earn higher stock prices for publicly traded companies. If you want to operate a business to its maximum potential, you have to plan for the unexpected. Conducting a business impact analysis is the best way to do this. That is why it was used to conclude the Kentucky Derby business impact.