Keeneland's Local Impact? $590 Million

As a company that sold $535 million worth of horses in 2014, and handled another $263 million in wagers, Keeneland, it could be assumed, has a big economic impact on the local economy in Lexington, Kentucky. But just how big? That's what officials at Keeneland wanted to know when they commissioned a study by the University of Kentucky's Center for Business and Economic Research, Gatton College of Business and Economics. The study aimed to quantify Keeneland's economic impact on Fayette County, where Keeneland is based. 

Yesterday, the results were announced, and they indeed were eye-opening. UK researchers declared Keeneland's annual impact on Fayette Co. at $590 million, a figure that doesn't include the impact it has on neighboring counties. The study took into account not only the sale of horses and wagering dollars, but also things like money spent at local hotels and restaurants. Kentucky Gov. Steve Beshear was just one of several prominent officials to weigh in after yesterday's announcement. 

“I don't think anyone is surprised by the tremendous economic impact Keeneland has on Lexington and Fayette County, Kentucky,” said Gov. Beshear. “The study reinforces for us all the attraction to and the significance of this world-class venue. With Keeneland hosting the Breeders' Cup World Championships Oct. 30 and 31, its mark on the local and state economy is only going to increase in 2015. I congratulate Bill Thomason and his team for commissioning the report and look forward to Keeneland's ongoing successes.” 

The study didn't take into account any expected increase in economic activity due to the Breeders' Cup this fall. 
Yesterday, the TDN's Lucas Marquardt sat down with Keeneland President Bill Thomason, and the man who directed the project, Dr. Chris Bollinger, the director of UK's Gatton College, and talked about some of the findings. 

First, what was the impetus behind the study? 

THOMASON: We always talked about it, but Keeneland has never done an economic-impact study. We've had the question asked of us, and we asked the question ourselves, and we wanted to put a number to it. As people are making decisions about things in the community, we want them to know the kind of investments that Keeneland is generating for the community. We want the community to see that, as we grow our fan-initiative projects, that we bring people here from all over the world, and everyone benefits from that. From hotels and restaurants and other local businesses, we all work together and fit together to make this whole region special. 

What was looked at? 

BOLLINGER: We focused on three events Keeneland hosts: the September Yearling Sale—the October racemeet, and the November Breeding Stock Sale. Based on what we found there, we projected out on what would be the impact of the Spring racemeet, and the impact of the January and April horse sales [note: the April 2yo Sale was put on hiatus in 2015]. Our primary focus was to identify money coming into Fayette Co. from outside regions that was specifically generated by Keeneland. It's a narrow question: how much money does Keeneland bring in to Fayette Co.? 

What methodology was used? 

BOLLINGER: We talked to people as they came to the meet. We asked them where they were from and why they were here, and asked them how much they spent. We also had online surveys for people that participated in the September and November sales, asking them the same questions. Plus we also used Keeneland racing and sales data directly. 

How did the numbers break down? 

BOLLINGER: One of the most important things we found was that…73% of the people at the Fall Meet who lived outside Fayette Co. were here for the sole purpose of going to Keeneland. And it was the spending of those people—the people who were there for the sole purpose of going to Keeneland—that we looked at. They spent $12 million on retail…$19 million on food and beverage…$15 million on lodging…and $9 million on gasoline. That generates $900,000 in local hotel taxes—that's the only local tax we looked at—and $3.9 million in state taxes, which are sales and hotel taxes. Overall, the fall meet brings in $59 million directly to Fayette Co. and $99 million in economic impact. 

And you were able to estimate the impact of the Spring Meet? 

BOLLINGER: The spring meet tends to be 3 to 4% bigger, and we came up with a $64 million estimate of direct expenditures, and a $102 million economic million. So put together, the impact of racing on Fayette Co. is roughly $200 million. 

And that's not including the sales? 

BOLLINGER: Right. The two Keeneland sales in the fall draw people from all over the United States and the world. Those people spent $6 million in lodging, and $9 million in food and beverage. That means they generate $400,000 in local taxes, and $1 million in state taxes. Overall, the September and November sales result in $206 million directly brought into Fayette Co.; looking at the January and April sales, they're smaller, and we found they generated $22 million in direct spending and $38 million in economic impact. The full economic impact of the sales was $354 million. 
So when we look at the big picture, there's a $200 million impact from Keeneland racing, and $390 million impact from the four sales. So that's $590 million of economic impact on Fayette Co. from Keeneland's racing and sales activity. And that doesn't take into account the myriad other things Keeneland participates in. 

The study stresses the impact of non-Kentuckians as a major driver of revenue. 

BOLLINGER: Approximately 45% of groups participating in the September Yearling and November Breeding Stock sales were from states other than Kentucky, while another 20% were from outside the U.S. That's something that struck me as I looked at the data: Keeneland is bringing a local product—horses—to the international market. That's a really difficult thing to do. It's something I get asked about a lot—how do I get my product to the international market? And Keeneland generates a lot of money for the region doing that well. 

Mr. Thomason, were there any surprises in the study for you? 

THOMASON: When I looked at the number of individuals who were here only to be at Keeneland, we're proud of that. Last year, we heard from some of our hotels that from the start of October through the November sale that they had 97% occupancy in their hotels. We've talked to a number of restaurants who say that Keeneland helps make their year, helps make their business. We're very proud of all that, too. Was I surprised? Well, $590 million in Fayatte Co. alone, and not being a regional number, that's a big number.