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2017 Annual Report

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2017 Annual Report 2017 ANNUAL REPORT 1 2 TABLE OF CONTENTS Message from the CEO ............................................. 2 2017 Accomplishments ............................................. 4 Championship Racing .......................................... 4 Del Mar Delivers ............................................. 6 Revenue Records ............................................. 7 Nominations ................................................ 8 World-Class Racing Competition ..................................... 10 2017 Facts & Figures ......................................... 10 New for 2018 .............................................. 12 Breeders’ Cup Challenge Series .................................. 12 Relentless Focus on Integrity and Safety ............................ 14 Brand Enhancement & Experience .................................... 16 A Celebration of the Sport and Lifestyle of Horse Racing ................. 16 Television Exposure .......................................... 18 Cheval: A Collection by Breeders’ Cup .............................. 19 Providing A Customer and Participant Experience that Matches ............ 20 the Quality of our Championship Racing Product Financial Performance ............................................ 22 A. Selected Financial Data ...................................... 22 B. Management’s Discussion and Analysis of Operating Results ............. 22 Appendix ...................................................... 32 A. Breeders’ Cup Directors & Members ............................. 32 B. Breeders’ Cup Staff ........................................ 33 C. 2018 Breeders’ Cup North American Challenge Series Schedule .......... 35 D. 2018 Breeders’ Cup International Challenge Series Schedule ............. 36 E. 2018 Breeders’ Cup Challenge Series Television Schedule ............... 37 1 MESSAGE FROM THE CEO On behalf of our Members and Directors, I am very proud to share the highlights and accomplishments of 2017 – a record-setting year for the Breeders’ Cup. The 34th edition of the Breeders’ Cup World Championships was held for the first time at the beautiful and picturesque Del Mar racetrack, Where the Turf Meets the Surf, and by all accounts was a resounding success. Most, if not all, of our key performance indicators (KPIs) showed strong growth year-over-year, as outlined further in this report, and Del Mar and other surrounding San Diego communities welcomed our participants and fans with open arms and picture perfect weather. A festive and fun crowd was on hand to witness the history-making performances of some of the highest rated fields ever assembled in Breeders’ Cup history. Led by 2016 Breeders’ Cup Classic winner and the world’s all-time leading money earner Arrogate, nine returning Champions and 150 other racing superstars from around the globe competed in front of 70,420 fans over a two-day period. The two-day race schedule included 13 Grade I Championship races and an additional nine undercard races. Total purses and awards for the two days, including undercard races, exceeded $29 million. Average starters for the 13 Championship races increased to 12.2 in 2017 from 11.5 in 2016. Despite capping tickets sales at 37,500 people each day, Del Mar generated an all-time, two-day on-track wagering record of $25.2 million and the second highest ticket sales revenue number in history at $15.4 million. All sources handle for the event was $170.8 million, the second highest in Breeders’ Cup history (behind only Churchill Downs in 2010 when there were 14 Breeders’ Cup races versus 13 in 2017). These results, combined with active management of expenses, led the Breeders’ Cup to recording its highest-ever net income of $11.8 million and record-setting net operating income of $4.1 million. Breeders’ Cup’s decision to introduce new venues (to date, Keeneland and Del Mar) continues to produce positive results in customer experience, community support and ultimately financial return. Del Mar has clearly earned a spot in the Breeders’ Cup host-site rotation. Our long-term television partnership with NBC Sports (now the self-described television home of horse racing) continues to expand the Breeders’ Cup brand throughout the Summer and Fall while simultaneously constructing a storyline leading up to the Breeders’ Cup World Championships in November. In 2017, NBC provided its most extensive Breeders’ Cup coverage in history with 25.5 hours of programming across the Challenge Series and Championships. Plans for the 35th running of the Breeders’ Cup World Championships to be held at Churchill Downs are well under way. The 2018 Breeders’ Cup will be a record-tying ninth time that the event will be held at Churchill Downs and we are excited by the possibility of seeing the second Triple Crown winner in history compete for the Grand Slam in the Breeders’ Cup Classic. The Breeders’ Cup card will expand to 14 races again this year with the addition of the Juvenile Turf Sprint and I can assure you that the Breeders’ Cup will live up to its reputation as one of the highest caliber international racing events in the world. We also look forward to highlighting our two-year-old races on Future Stars Friday as the Dirt Mile and Longines Distaff move to Saturday to provide a blockbuster finish to the event. As always, we would like to thank our nominators for their continued support. The Breeders’ Cup would not be possible without their efforts as nomination fees totaled $15.7 million in 2017. Through the support of our nominators and the participating constituencies of the Thoroughbred industry, we are well positioned to meet the demands of a competitive future. Sincerely, Craig R. Fravel President and CEO 2 3 2017 ACCOMPLISHMENTS Championship Racing The 2017 Breeders’ Cup World Championships featured history-making performances of some of the highest rated fields ever assembled in Breeders’ Cup history. Nine returning Champions – starring Gun Runner who forced a showdown with America’s highest-rated runner, Arrogate – and racing superstars from around the globe competed in front of 70,420 fans over a two-day period. An all-star international cast of 187 of the world’s best Thoroughbreds, including a record 46 from overseas, were pre-entered for the 2017 Breeders’ Cup World Championships. Pre-entries were highlighted by Arrogate, Whitney and Suburban winner Gun Runner, Longines Distaff standout Stellar Wind, defending Longines Turf winner Highland Reel (IRE), Juddmonte International winner Ulysses (IRE) and Filly & Mare Turf star Lady Eli. 168 horses were officially entered into the 2017 Breeders’ Cup World Championships and by the conclusion of day two there were 159 Starters with 141 Grade/Group I wins among them and an aggregate of 327 graded wins prior to the Breeders’ Cup. A total of 71 individual Group or Grade I winners were represented in the 13 Grade I Championship races and 38 international runners competed in the 2017 Breeders’ Cup, a new record for international participation and seven more than in 2016 at Santa Anita. At pre-entry, ten of the 13 races had full fields or were oversubscribed. Six races fielded a maximum number of starters and the Breeders’ Cup races averaged 12.2 starters. 4 Gun Runner wins the $6 million Breeders’ Cup Classic 2017 Breeders’ Cup at Del Mar Forever Unbridled wins the $2 million Longines Breeders’ Cup Distaff 5 Del Mar Delivers Hosting its first-ever Breeders’ Cup, Del Mar racetrack and the surrounding communities exceeded expectations across the board. Breeders’ Cup fans coming in from around the world were greeted with luxury accommodations, fine dining, sandy beaches and two days of world championship racing and entertainment. Breeders’ Cup worked with Del Mar on capital improvements and temporary structures including Chalet Village, temporary box seats and The Beach. Chalet Village served as the Breakfast Marquee during the week and the Trophy Lounge and high-end group sales areas on Championship weekend while The Beach offered a fun, festive San Diego experience in the infield. An 8,000 square foot tent constructed on the grounds of Powerhouse Park overlooking the Del Mar beach hosted Breeders’ Cup events all week and provided participants and fans an experience unlike any other. Life-sized replica Breeders’ Cup Torrie horses painted by local artists were placed around Del Mar, La Jolla and Solana Beach as part of the Breeders’ Cup Festival while Breeders’ Cup-themed banners lined the streets. All these efforts brought Breeders’ Cup fans to San Diego earlier and provided them with a myriad of entertainment options all week long. The result was a record-high economic impact of $96 million according to a study conducted by third-party research firm SMRI. 6 Revenue Records 2017 proved to be a record-setting year for Breeders’ Cup with $11.8 million in net income and $4.1 million in net operating income – both of which are the highest in company history. Despite capping attendance at 37,500 to ensure a positive and comfortable guest experience, Breeders’ Cup at Del Mar was a virtual sellout with $15.4 million in ticket sales, the second highest in Breeders’ Cup history and a 60% increase over 2016 at Santa Anita. The on-track handle of $25.2 million was an all-time record and generated a 22% increase over the 2016 event at Santa Anita. Total handle of $170.5 million was the second highest in Breeders’ Cup history, second only to Churchill Downs’ $173.8 million in 2010 which featured 14 Breeders’ Cup races versus 13 in 2017. Viewership of the NBC and NBCSN telecasts
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