Churchill Downs Acquires Preakness Stakes Intellectual Property in $85 Million Deal

Churchill Downs Inc. (CDI), the owner of the Kentucky Derby, has acquired the intellectual property rights to the Preakness Stakes, the second leg of horse racing’s Triple Crown, for $85 million. The transaction is anticipated to finalize following the running of this year’s Preakness Stakes on May 16, with further details expected during CDI’s quarterly earnings call scheduled for Thursday. The Kentucky Derby will be held earlier on May 2.

Under the terms of the deal, CDI plans to lease the Preakness Stakes rights back to the Maryland Jockey Club (MJC) for an undisclosed sum. This arrangement is likely to mirror the existing lease agreement between MJC and 1/ST Racing, also known as The Stronach Group (TSG), which owns Santa Anita Park. Previously, 1/ST Racing, which formerly owned Pimlico Race Course, leased the rights to MJC for approximately $5 million annually after effectively transferring ownership of the property to MJC.

The acquisition has prompted numerous questions regarding the future configuration of the Triple Crown series and broader implications for horse racing. One key issue is whether the traditional two-week interval between the Kentucky Derby and the Preakness Stakes will be adjusted. The short turnaround has contributed to the absence of the Kentucky Derby winner in two of the last four Preakness races, potentially diminishing fan interest, as spectators often attend the Preakness to see the Derby champion compete.

Financially, the move raises questions about the rationale behind the $85 million purchase price, given the current annual rights lease is valued at $5 million. Observers speculate whether CDI intends to invest further in the redevelopment of Pimlico Race Course or other racing infrastructure. This year’s Preakness will be conducted at Laurel Park with significantly reduced capacity due to ongoing renovations at Pimlico, a project supported by a $400 million state commitment. Whether this funding will suffice for the redevelopment remains uncertain.

The transaction may also signal a strategic divestment by The Stronach Group from its racing operations. TSG has advocated for decoupling gaming and racing licenses at Florida’s Gulfstream Park and faces challenges in California racing, where field sizes and purses have declined. Notably, the Santa Anita Handicap purse has dropped from $1 million a decade ago to $300,000, the minimum for Grade 1 status. Despite these trends, TSG maintains its commitment to racing in Florida and California.

Broadcasting rights for the Preakness Stakes add another layer of complexity. The current television contract with NBC expires after this year, and the recent closure of FanDuel TV’s daily horse racing channel leaves the sport searching for new media partners. Churchill Downs has a longstanding relationship with NBC, while FOX partners with the New York Racing Association, which manages the Belmont Stakes, the Triple Crown’s final leg. How CDI’s acquisition will influence future broadcast negotiations remains to be seen.

Bill Carstanjen, CEO of Churchill Downs Inc., emphasized the strategic value of the acquisition, stating, “The acquisition adds one of the most iconic brands in American sports to our portfolio and is consistent with our strategy of investing in premier thoroughbred racing assets with long-term growth potential. In keeping ownership of the Preakness intellectual property in the racing industry, CDI will support efforts to fully realize the potential of a redeveloped Pimlico and Preakness Stakes within the Triple Crown and the broader sports and entertainment landscape.”

Belinda Stronach, chairman and CEO of 1/ST Racing, echoed this sentiment, noting, “Bringing together two prestigious racing brands, the Kentucky Derby and Preakness Stakes, is a significant step toward the successful longevity and growth of the American Triple Crown of thoroughbred racing. The agreement with Churchill Downs closes our company’s thoroughbred racing chapter in Maryland. 1/ST is proud to have served as a steward of the Preakness Stakes, and we are grateful to the fans, industry stakeholders, the state of Maryland, the city of Baltimore and the community for their support. We remain focused on our core assets in California and Florida and supporting a strong and sustainable future for our sport.”

While the full impact of this acquisition will unfold over time, it clearly enhances Churchill Downs’ influence over the Triple Crown and the future direction of American horse racing.