The second leg of the Triple Crown races is about to undergo seismic change.
Churchill Downs on Tuesday entered into a definitive agreement to acquire the intellectual property, including all trademarks and associated rights, of the Preakness Stakes and Black-Eyed Susan Stakes from 1/ST Maryland LLC, an affiliate of 1/ST Racing, for $85 million, subject to customary closing conditions.
“This 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,” Churchill Downs CEO Bill Carstanjen said in a statement. “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.”
The Preakness intellectual property rights are subject to an exclusive license agreement. Churchill Downs will license to the State of Maryland the intellectual property rights necessary to conduct the running of the Preakness Stakes and Black-Eyed Susan Stakes in exchange for an annual fee.
The Preakness Stakes, first run in 1873, is the second leg of the Triple Crown of Thoroughbred racing. The Black-Eyed Susan is a leading race for 3-year-old fillies traditionally conducted at Pimlico Race Course on the day before Preakness.
This is the third major change affecting the Preakness and Black-Eyed Susan. Both are being held at Laurel Park in Laurel, Maryland, because of renovations at the races’ traditional home, Pimlico Race Course in Baltimore. And the Sports Business Journal reported that the Preakness Stakes could be moved back a week to ensure there are three weeks in between the Kentucky Derby, the Preakness, and the Belmont Stakes in New York.
The parties expect the transaction to close after the running of the 2026 Preakness Stakes. The transaction will be funded with cash on hand and Churchill Downs’ existing credit facility.
Analyst David Katz of Jefferies wrote in a note that here have been “on/off Street expectations for Churchill Downs to acquire the Preakness, given its past underperformance and takeover by the State of Mary. In short, we believe the operating upside opportunity from state operation and fee structure in principle on limited CHDN capital investment are positives for growth and valuation, which should be reflected in the shares between now and the earnings report on 4/22 AMC and over time.
“We think a longer-term play could be for Churchill Downs to take over operations, where we could see meaningful synergies/upside – especially with the track currently undergoing a ~$400M renovation,” said Truist Securities analyst Barry Jonas. “We expect to hear more after Churchill Downs reports Q1 earnings tomorrow .. Churchill Downs remains one of our favorite names heading into the print with a strong Derby setup.”
