Maryland will own Preakness brand after matching Churchill Downs’ $85 million offer

Gov. Wes Moore’s administration will match Churchill Downs’ $85 million offer to purchase the Preakness Stakes’ intellectual property from 1/ST Racing, meaning Maryland will own — not rent indefinitely — the right to use the Preakness name and branding, according to a letter Moore sent to 1/ST and Churchill obtained by The Banner.

This arrangement replaces an earlier deal that would have seen a state-created nonprofit pay annually for rights to the Preakness.

It caps a shift in recent years of thoroughbred racing properties switching hands from 1/ST Racing, the Canadian company also known as The Stronach Group, to state entities. That includes Pimlico Race Course, Laurel Park (pending final approval from legislators) and now the Preakness race itself.

Moore said in a statement his administration has made “historic investments” to ensure the future of Maryland’s racing industry and the $85 million decision will secure a “vital asset for our state.”

It will “preserve Maryland’s position as a key power player in the Triple Crown for generations to come,” he said.

Although the intellectual property is an intangible asset, it’s a valuable one. Without the rights, organizers could not refer to the race as the Preakness Stakes.

Churchill Downs Inc., the massive racing and gambling company, reached a deal in April to buy the rights from 1/ST, but Maryland law permitted the state a chance to match the offer.

“We understand why the state of Maryland would decide to acquire the Preakness IP rights as a state-owned asset from 1/ST Maryland LLC,” Bill Carstanjen, chief executive officer of CDI, said in a statement. “We remain committed to working with the Governor and other elected leaders and horse racing constituents in Maryland to fully realize the potential of a redeveloped Pimlico and Preakness Stakes within the Triple Crown and the broader sports and entertainment landscape.”

Funding for the $85 million payout to 1/ST will come from bonds issued by the Maryland Economic Development Corp., a quasi-governmental agency. Between $6 million and $7 million a year in revenue from the racing industry will pay off those bonds over 30 years, totaling about $200 million, state officials said.

The payment amount is similar to the old agreement, in which the Maryland Jockey Club, a nonprofit created by the state in 2024 to operate racing, would have paid in perpetuity an annual fee (roughly $6 million now, though there was a small yearly escalation) in Preakness revenue for the race’s branding. A news release from Moore’s office Thursday categorized that deal as “disadvantageous.”

State officials are confident the Preakness, the second leg of racing’s storied Triple Crown, will generate enough money to annually pay that amount and break even. If it is unable to, the Jockey Club is backstopped with state money generated by slot machines that typically funds horse racing purses.

Money distributed away from that purse account — which goes to prize money for winning horse owners — could have snowballing consequences for the industry. That won’t be an issue, however, as long as Preakness can generate the money state leaders expect it to.

The lucrative race used to attract over 100,000 fans a year but has lost money in recent editions, according to 1/ST officials. Optimistic observers believe it will soon have a new lease on life in the form of a new venue. After decades of decay and ridicule, Pimlico has been knocked down and is being rebuilt by the state.

Next year’s edition is slated to take place at a still-not-quite-ready Pimlico, with full renovations expected to be finished in 2028.

The state is planning to convert Laurel Park, which held this year’s miniature Preakness, into a training facility after backpedaling on plans to locate it in Carroll County. All of that racing construction is expected to cost more than $500 million.

Churchill’s move to acquire the Preakness rights in April surprised many, given the Jockey Club’s 2024 agreement with 1/ST to make annual payments.

Some worried that Churchill, which runs the Kentucky Derby, could alter Maryland’s oldest sporting event or move it out of the state.

Moore wrote in a letter to 1/ST and Churchill on Thursday that he hoped the state could collaborate with Churchill and others to “unlock growth and drive innovation to benefit the Preakness Stakes, Maryland’s horseracing industry, and the entire Triple Crown.”

Racing industry officials largely applauded the decision. Katharine Voss, the Maryland Thoroughbred Horsemen’s Association president, said in a statement: “This is a defining moment for Maryland racing.”

And Bill Cole, the former head of the Baltimore Development Corp. who has long been involved in the Pimlico redevelopment, likened the move to paying down a mortgage each year.

“It was the only logical decision,” he said.

Steve Hershey, a Republican and the state Senate minority leader, didn’t see it that way. He would have preferred the state leverage Churchill’s “expertise.”

“Maryland had the opportunity to partner with the best in the business,” he said in a statement. “Instead, we chose to buy the risk, assume the debt, and hope for the best. That’s not a business strategy, and it’s certainly not the kind of stewardship taxpayers should expect from their government.”

Mark Anthony Thomas, president and CEO of the Greater Baltimore Committee, was part of a group pushing Moore to acquire the Preakness rights.

The economic development organization will work with the state to catalyze the Preakness into a cultural event, akin to the Sundance Film Festival, Thomas said.

“For us, over the last two months, it’s been thinking through: How do you truly make this something that everyone from Cecil to Prince George’s County feels like they have a part of?” he said. “If Preakness is that a decade from now, this will be one of the smartest decisions Wes Moore has ever made.”

Reporter Pamela Wood contributed to this article.