Silent Spring: Delayed Derby's Impact on Louisville

The Kentucky Derby Presented by Woodford Reserve (G1) is nicknamed the "Greatest Two Minutes in Sport," but in Louisville, Ky., it's a two-week celebration that kicks off with the largest annual fireworks show in North America, ends with an iconic horse race, and creates a booming economy across town.

The direct economic impact the Kentucky Derby season had on Louisville was nearly $373 million last year and projected to be more than $410 million this year, far exceeding other events as the top tourism driver to the region annually.

But this spring has been disrupted by the COVID-19 pandemic that has caused the cancellation or postponement of events across the globe. As a result, Churchill Downs rescheduled the 146th Kentucky Derby, synonymous with the first Saturday in May, to Sept. 5.

Without the flow of people into town, Louisville's 21,000 hotel rooms—Louisville Tourism tracks rooms from $500-$3,000 a night during Derby season, most requiring three-night packages—and restaurants, retailers, and other businesses are nearly emptied out with social distancing measures in place across the nation.

"I think from the perspective of Kentucky Derby week and weekend, you have to only look at hotel rates to give you an idea of supply and demand and how important it is to their bottom line," said Stacey Yates, vice president of marketing communications for Louisville Tourism. "Historically, a lot of restaurants and retailers especially call it like a second holiday season. Some businesses from maybe caterers to cigar boutiques really depend on that month of business to keep the lights on. With the hotels especially, it is a large part of their business each year."

Before events were canceled or rescheduled, Louisville Tourism used an industry standard model for Destinations International to estimate that the 2020 Kentucky Derby and the accompanying Longines Kentucky Oaks (G1) would have a $394.4 million direct economic impact on the city—an estimated increased over last year's economic impact of $356.5 million. That figure, which does not include the two-week Kentucky Derby Festival, topped the list of estimates for events expected to have an impact on the city. It was more than 14 times higher than the second-highest estimate of $27.2 million from the SkillsUSA National Leadership and Skills Conference, which was canceled.

Though it's too early to estimate a direct economic impact with a rescheduled Kentucky Derby, Yates said "it would be pretty inconceivable that we could expect the impact of almost $400 million with a rescheduled Derby."

"I think that for a lot of people, for the heart and soul and fabric of the community, (the Kentucky Derby is) something that puts us on the world stage every year. It's not only something to look forward to economically for a lot of businesses locally, but you've got the pride factor as well. You got people that, whether they go to the track or any other event, they are maybe landscaping their yard a little nicer and having a party and getting excited," Yates continued. "I think that pairing with the spring has always been a nice pairing because you have that re-awakening after the long winter—everybody's got cabin fever, they're a little pent up—so it's really that first celebration of the community coming back out together. It may look different in September and it may very well parallel that. We all have that cabin fever right now."

Churchill Downs, which was scheduled to kick off its spring meet April 25, continues conversations with Gov. Andy Beshear on when it can begin racing. The opening of the track's stable area has been delayed multiple times and was most recently pushed back to at least May 5.

Racetrack president Kevin Flanery said Churchill Downs is responding to real-time information to responsibly deal with decisions in the midst of an unprecedented pandemic. The disruption from COVID-19 comes on the heels of a record Derby weekend last year, when the all-sources handle on the Kentucky Derby Day program totaled $250.9 million, an 11% increase over the previous record in 2018, and the all-sources handle on the Kentucky Derby itself was $165.5 million, up 10% from another 2018 record.

"The Kentucky Derby is the lifeblood of this community in many ways," Flanery said. "We know the Kentucky Derby is Kentucky's Derby; it's Louisville's Derby. The economic impact has been estimated at $400 million. To those of us in this state, the Kentucky Derby is so much more than a two-minute horse race."

In response to both the COVID-19 pandemic and the Kentucky Derby's new date, the Kentucky Derby Festival has also postponed its coordinated events, which typically number more than 70. KDF spokesperson Aimee Boyd said the Festival generates an estimated economic impact of nearly $128 million for Louisville.

"Several events on the Festival's schedule also help to raise money for local charities each year. It is important to the Derby Festival and for our community that we are able to continue to do that," Boyd said. "While we remain cautiously optimistic, we are still planning a great celebration, when it's safe for all of us to get back together."

The largest of the Festival's events is Thunder Over Louisville, which packs in a crowd on both the Indiana and Kentucky sides of the Ohio River for an air show and North America's largest fireworks display. Thunder Over Louisville has been rescheduled for Aug. 15, and the Humana miniMarathon, which takes runners through Churchill Downs' infield, for Aug. 22. Both events were previously scheduled for April. The Festival has created the "Festival at Home," giving fans an opportunity to participate virtually in the miniMarathon or Tour de Lou cycling event.

"More than just events, the Derby Festival is about our community. The Festival itself was created by a dedicated group of Louisvillians back in 1956 to help celebrate the Kentucky Derby horse race," Boyd said. "As the community has supported the Derby Festival for more than 60 years, we want them to know we will be here when we reach the other side. Though we may be centered around the first weekend of May, we know the spirit of the Festival is strong throughout the entire year, and that we will get through this together."

Thunder Over Louisville, the kickoff to Derby season, was expected to draw another crowd of about 725,000 people this spring and have an additional economic impact of more than $16 million, according to Louisville Tourism.

"(Kentucky Derby season is) the base of so many family traditions," Yates said. "You may have had a parent that ran the miniMarathon so you went and made a sign, or they drug you out in your pajamas to go to the balloon race, or you have concerts at the Chow Wagon, certainly Thunder now. ... I was going back to when I was a little girl and remembering that first time that I got to see a balloon on the loop inflate and then wanting to take my children to do the same thing. It's just pride, a sense of community, bringing families together, making traditions and memories together."

Even with all the uncertainty surrounding the year, Churchill Downs still has the Kentucky Derby in its sights.

"We know the people of Kentucky are resilient. We're all doing what we need to do now in the short term and then we're going to come back stronger than ever," Flanery said. "We're planning to continue the Kentucky Derby tradition for 146 years."