How The Kentucky Derby Became A $500 Million Business
Huddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 100,000+ others who receive it directly in their inbox each week. Today At A Glance:The Kentucky Derby is one of America’s most lucrative and prestigious sporting events. So today’s newsletter breaks down the money, business, and history behind the 149th running of the race, including how it started, its unique wagering system, the local economic impact, TV viewership, stud fees, and more. This newsletter is also available via podcast on Apple or Spotify. Enjoy! Today’s Newsletter Is Brought To You By Hyperice!
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The idea behind the Kentucky Derby initially came from Meriwether Lewis Clark — the grandson of William Clark (yes, of the famous Lewis and Clark). In 1872, Meriwether Clark was inspired to start a horse racing spectacle in the United States after attending the legendary Epsom Derby in England. So his uncles John and Henry Churchill gave him land to develop into a horse racing track as a gift, and he gathered a group of horse racing fans in Kentucky to start the “Louisville Jockey Club.” The first-ever Kentucky Derby was then held in 1875. A total of 10,000 spectators showed up to the inaugural event, and a horse named Aristides beat out 14 other 3-year-old Thoroughbred horses in a 1.5-mile race to claim the $2,850 1st place prize. And the Kentucky Derby has only gotten more extravagant over the last 100+ years.
And the business behind the Kentucky Derby is fascinating, too. There is a 2-week festival leading up to the event. And when you add that with the Derby itself, the entire process reportedly brings Louisville about $400 million in economic activity. That’s because more than 250,000 people attend the festival throughout the two weeks, and another 150,000 are at the track for the actual race. Louisville hotels see a 93% occupancy rate throughout the week, and $274 million was wagered in 2022 alone.
And this impacts the prize money. For example, the 2023 purse for the Kentucky Derby is $3 million in total. But the purse is only split up between the top-5 finishers, and with a full field of 20 horses, that means 75% of the horses won’t win any money. Kentucky Derby Purse Payout (Twin Spires)
The purse is then divided amongst the team, with the owner typically taking 80% ($1.488 million) and the jockey and trainer each receiving 10% ($186,000). Fun Fact: NFL Network insider Ian Rapoport and Joy Taylor and Lindsay Czarniak of Fox Sports are part-owners of Jace’s Road, who is racing in the Kentucky Derby on Saturday.
And with so much money being funneled into the event, TV viewership is strong. NBC has been the official broadcasting partner of the Kentucky Derby since 2001, singing a new 10-extension in 2014 that gives them broadcast rights to the Kentucky Derby (and the Kentucky Oaks, and Derby and Oaks day programming) through 2025. The annual broadcast fee is unknown, but it’s believed to be worth more than NBC’s previous deal of $9 million annually. And NBC is able to make a lot of money, too — because even though the race is only 2 minutes long, they stretch the event into 7+ hours of content by broadcasting pre and post-race coverage throughout the day. This year’s race will include a drone camera, two live jockey cameras, a steward’s room camera, and 50 total cameras at the track, including a red carpet “360 Glam Cam” for celebrity coverage.
So keep an eye on the Kentucky Derby today. You’ll see a barrage of social media posts from celebrities dressed in $1,000+ outfits. There will be 150,000 people in attendance and another 15 million watching at home. The horses will be competing for $3 million in prize money, and the most significant financial win will come after the race — when the winning horse starts collecting $10,000 to $100,000 stud fees for breeding. I hope everyone has a great weekend. We’ll talk on Monday. Interested in advertising with Huddle Up? Email me. Your feedback helps me improve Huddle Up. How did you like today’s post? Loved | Great | Good | Meh | Bad Want More Detailed Sports Business Breakdowns? Subscribe To JPS.The Joe Pomp Show is a 3x weekly podcast where I break down the business and money behind sports. Think of it as the same high-quality work you read here, just deeper. There are exclusive interviews with people like Dana White, Lance Armstrong, and Troy Aikman, and you’re guaranteed to learn something new. Extra Credit: Why Stephen Curry is Worth BILLIONS to The WarriorsHuddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 100,000+ others who receive it directly in their inbox each week.
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