With Preakness Purchase, CDI Hopes to Grow Event

In buying into the Preakness Stakes (G1) through an intellectual property purchase, Churchill Downs Inc. says it would like to help build the second jewel of the Triple Crown. In a conference call with analysts and investors April 23, CDI CEO Bill Carstanjen provided some details on the company entering into a definitive agreement to acquire the intellectual property of the Preakness for $85 million. The deal also includes the Black-Eyed Susan Stakes (G2), which is traditionally conducted one day before the Preakness. The deal, still subject to customary closing conditions, would see CDI take over the Preakness intellectual property ownership that 1/ST Racing (The Stronach Group) had retained under a wide-sweeping plan that is reshaping Maryland racing. That plan has seen a not-for-profit entity take over the Maryland Jockey Club, which formerly was owned by 1/ST Racing (1/ST Maryland), to operate day-to-day racing in the state. Carstanjen said that while MJC and the state primarily will shape Maryland racing, CDI will offer any expertise requested on building the Preakness. CDI has built Kentucky Derby week into an event expected to this year generate $15 million to $20 million in adjusted earnings for the company. "For us, it's a thrill to be a part of what's, in our view, an iconic asset," Carstanjen said. "Having been in the game for a long time, I'm familiar with the history of the Preakness. I know what it's been in the past and what it can be in the future." He said CDI will work with the MJC and the state—as requested—to build the Preakness. Once the deal is fully completed, leasing the Preakness to MJC will generate millions of dollars in payments each year for CDI. Those payments previously would have gone to 1/ST Maryland, which had retained the Preakness intellectual property but has now entered a definitive agreement to sell to CDI. As outlined by Carstanjen in Thursday's conference call, beginning in 2027, MJC will pay a $3 million base fee for the Preakness as well as an amount equal to 2% of the handle on Preakness weekend (Friday and Saturday). The base fee also increases a small amount each year (0.25% of 3%). Maryland Jockey Club noted that this is a 10-year agreement that will be renegotiated at the end of that time period. Based on 2025 handle that saw $110,043,794 on Preakness Saturday and a Friday-Saturday total that Carstanjen estimated at $140 million, that 2% handle payment would generate another $2.8 million. As CDI stands to gain from increased handle through that deal, as well as its large advance-deposit wagering platform TwinSpires.com that also would benefit from an increase in Preakness weekend handle, CDI will be motivated to see the Preakness succeed. Carstanjen noted the MJC will make the big decisions, but he said if asked for help in shaping Preakness weekend, CDI will be at the ready. "Maryland is in control of the destiny of the Preakness. They have the land. They've authorized, legislatively, $400 million of bond proceeds to invest in the property," Carstanjen said. "We certainly, upon closure, will be the owners of the intellectual property, and have started already a very strong dialogue with the state on how we may be able to help them achieve those goals. "We have 300 people that work here in Louisville, at the track or in our corporate offices, supporting our racetrack, doing construction and design, ticketing, sponsorships, and wagering. We have a real team of experts here that do this on an absolute world-class level, and certainly those resources and efforts are available to the state if they seek our help, and would like our help in any way," Carstanjen said. "Those discussions are just beginning, and it's important to let those discussions play out at the state's timing and direction. "I would say that we really love the market when we compare it to say our own market here in Louisville and in the Midwest. We love that corridor, that DC-Baltimore, up through Philadelphia corridor. There are a lot of great customers there. There are a lot of great potential sponsors and business partners there. So we love that market. We think it's one with a lot of opportunity, and we have a lot of ideas, but this is something that the state will have to ask for our help on." CDI's April 21 release announcing the agreement to purchase the Preakness intellectual property from 1/ST Maryland was not a joint release with MJC, which some 10 hours later put out a separate release. On Thursday, Maryland Jockey Club president and general manager Bill Knauf said they're focused on this year's Preakness but have begun communications with CDI. He said those talks likely will pick up after this year's race and he expressed optimism that CDI could bring some big-event expertise to the table. As part of a massive overhaul of Maryland racing, the Maryland Stadium Authority, in partnership with the Maryland Economic Development Corporation and The Maryland Jockey Club, currently is overseeing the transformation of Pimlico Race Course, the usual home of the Preakness, into a year-round racing facility and acquiring Laurel Park to serve as the training center. MJC noted Tuesday in its release that it retains full operational control and responsibility for the Black-Eyed Susan and Preakness stakes, both of which are scheduled to be held at Pimlico beginning in 2027 after a stop at Laurel this year while Pimlico is rebuilt. The MJC controls media rights and licensing for the Preakness Stakes, as identified in the master agreement reached in June 2024 between the state of Maryland and 1/ST Maryland. That agreement, which included 1/ST Maryland, now sees CDI move into that role. 1/ST Maryland noted Tuesday that the sale marks its exit from Maryland racing. On paper, CDI would appear to be more motivated to make the Preakness a success than 1/ST Maryland. Last year's Kentucky Oaks (G1) card and Derby card saw about $423 million in handle. Carstanjen said CDI is meeting with state officials and is interested in working to make the Preakness a success. "We've begun that dialogue, and we're excited," Carstanjen said. "We're excited for that to develop."