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Long Form

The Kentucky Derby Festival®
Economic Impact Study

Kentucky Derby Festival · economic impact study · copy deck

A Celebration of Louisville

The Mission

The Kentucky Derby Festival provides unique and creative entertainment for the people of Greater Louisville, contributing to the aesthetic, cultural, charitable and economic development of the area.

The Kentucky Derby Festival organizes, promotes and conducts events using the collective efforts and resources of volunteers, small and large businesses, non-profit organizations and government entities.

The Tradition

Now entering its 57th year, the Kentucky Derby Festival is widely recognized as one of the top civic celebrations in the United States. With more than 70 events on its official schedule, held during the two weeks leading up to the Kentucky Derby, the Festival is a distinctively Louisville tradition, and it serves as a significant catalyst for economic growth in the community.

The Kentucky Derby Festival is a private, not-for-profit 501 (C) 4 organization. The Festival’s annual budget comes from event sponsorships, Pegasus Pin® sponsorships and event ticket sales. The Festival operates under the direction of a 75-member Board of Directors with 23 full-time employees. More than 4,000 volunteers help organize and produce the Festival each year.

The Impact

The economic impact of the 2011 Kentucky Derby Festival is estimated at more than $127.9 million for the two-week celebration. With an annual operating budget of $5.8 million, that means for every $1 spent by the Festival, more than $22 was generated for the Greater Louisville economy. Moreover, area charities raised nearly $400,000 working alongside the Festival in 2011.

The Kentucky Derby Festival has commissioned four previous economic impact studies in 1984, 1990, 1996 and 2001. As shown below, the Festival’s impact continues to grow impressively regardless of economic climate.

  • 1984 — Budget: $1.1 million · Impact: $17.5 million
  • 1990 — Budget: $2.6 million · Impact: $34.2 million
  • 1996 — Budget: $3.8 million · Impact: $53 million
  • 2001 — Budget: $5.2 million · Impact: $93.6 million
  • 2011 — Budget: $5.7 million · Impact: $127.9 million

Several Festival events generate multi-million dollar impacts in a single day. The Pegasus Parade and Thunder Over Louisville led the one-day wonders in 2011, respectively generating an estimated $22.4 million and $56.6 million for the local economy.

As indicated by this and each previous study, employment, income and tax revenue generated by the Kentucky Derby Festival clearly demonstrates its economic importance to the Louisville community in addition to its social and civic significance.

The Model

The economic impact model for the 2011 study reflects that of the four prior studies, assigning expenditures triggered by Kentucky Derby Festival events as the primary economic factor. The 2011 study considered the following expenditure categories:

  • Expenses incurred by the Kentucky Derby Festival, Inc.
  • Direct revenues from sponsors, not including any donations or fees
  • Participant expenditures in the local economy
  • Spectator expenditures, including mileage, food, souvenirs and incidental expenses
  • Year-round out-of-pocket expenses incurred by Festival volunteers and board members
  • Any other reported expenses directly generated by Festival events.

These expenditures, along with reported revenues stemming from Kentucky Derby Festival events, provide the estimated direct revenue triggered by the Festival. This revenue, multiplied by a gross output multiplier of 1.7709 and a gross employment multiplier of 1.5368, equals the Festival’s total estimated economic impact*.

*Economic multipliers based on 2008 study of Greater Louisville and Metro Louisville by the United States Bureau of Economic Analysis.

The Methodology

The 2011 economic impact model sought to accurately measure the direct and indirect impact of the Kentucky Derby Festival on the local economy. Economic impact is defined as the estimated volume of output generated in the Greater Louisville economy by direct and indirect expenditures resulting from Festival activities.

A sample of 14 events was studied for categorized expenditure impact in order to analyze the direct expenditures in detail. Using an overall attendance estimate of 1,264,127, the following events were selected on the basis of size relative to attendance:

  • $1 Million Dollar Hole-In-One Contest (sm)
  • Basketball Classic
  • Chow Wagon® / Fest-a-Ville (sm)
  • Great Balloon Glow
  • Great Bed Races
  • Great Steamboat Race
  • Marathon/miniMarathon®
  • Pegasus® Parade
  • Ramble for the Roses®
  • Run for the Rose’®
  • Taste of Derby Festival
  • They’re Off!® Luncheon
  • Thunder Over Louisville®
  • WineFest

Top 5 Events

Thunder Over Louisville

Rated as one of the top 100 events in North America, Thunder Over Louisville is not only the official opening ceremonies for the Kentucky Derby Festival, it’s also the nation's largest annual fireworks show with an average yearly attendance exceeding 550,000.

Economic Impact: $56,663,177

The Pegasus Parade

The inaugural event of the Kentucky Derby Festival, the Pegasus Parade is a vibrant display of stately equestrians, colorful floats and giant balloons, not to mention some of the nation’s top marching bands. More than 200,000 spectators turn out for the fun every year.

Economic Impact: $22,462,902

Chow Wagon / Fest-a-Ville on the Waterfront

The Chow Wagon is the premier social scene of the Festival, drawing more than 160,000 visitors with nine full days of live music and riverside entertainment. With dozens of vendors serving up indulgent cuisines of every sort, the Chow Wagon lives up to its name — and then some.

Economic Impact: $16,472,795

Great Balloon Glow

One of the most anticipated events of balloon race weekend, this spectacular event is a favorite of families all over the community, drawing more than 50,000 attendees annually.

Economic Impact: $5,079,449

Marathon/miniMarathon

Drawing a record 15,000 participants in 2011, the Derby Festival Marathon/miniMarathon continue to gain national attention thanks to a challenging course that passes by some of Louisville’s most beautiful landmarks and architecture.

Economic Impact: $4,923,936

The Return on Investment

The 2011 Kentucky Derby Festival generated more than $127.9 million in economic impact. This figure was arrived at based on the total direct expenditures triggered by the 14 sample events plus categories not accounted for by those events. The direct expenditures triggered by the Festival were then multiplied by an estimated gross revenue multiplier of 1.7709. A second multiplier of 1.5368 used to calculate employment impact. Both multipliers were the most conservative used in the five economic impact studies commissioned by the Festival.

Comparing Past Studies

The 2011 study confirms the overall economic significance of the Kentucky Derby Festival. Since the initial study in 1984, the Festival’s impact on the local economy has increased by an astounding 700%. While much of this increase can be attributed to inflation over time, a great deal of credit is owed to the Festival producing events that the public enjoys while finding the best ways to maximize its budget.

Since 2001, the impact of the Festival increased by 36.656%. This equates to a 3.17% year-after-year compounded rate of increase. In addition, the increase in expenditure per person increased by 44.24% since 2001, representing a 3.73% compounded rate of increase over ten years.

From 1996 to 2001, the Festival’s economic impact grew more than 76%, but the budget of the Festival also increased 48% during that time. From 2001 to 2011, however, the Festival’s budget changed only marginally, yet the overall impact grew impressively, going from a 17:1 to a 22:1 return on every Festival dollar spent.

The Bottom Line

Even during times of economic uncertainty, the Kentucky Derby Festival proves a reliable engine for economic growth in Greater Louisville. But the Festival’s significance reaches far beyond its economic impact, as the spirit of pride and tradition it brings to Louisville and surrounding areas grows stronger each year.

The Kentucky Derby Festival’s consistent approach, combined with its ability to engage and entertain citizens of the local community and spectators from across the country, affirms its status as one of the top civic celebrations in America. With more than a million annual attendees, thousands of volunteers and consistent economic growth each year, the Festival promises to remain a national model for community celebrations for years to come.

The Total Impact

  • Estimated Attendance: 1,264,127
  • Average Expenditure Per Person: $32.28
  • Total Direct Expenditure Revenue: $40,806,019
  • Business/Employment-Related Impact: $7,799,232
  • Travel-Related Impact: $3,538,291
  • Gross Output Multiplier: 1.7709
  • Gross Employment Multiplier: 1.5368
  • Increase in Revenue for the Local Economy: $127,909,735