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Derby Is Still On For Now, But How Will Coronavirus Fears Affect It?

J. Tyler Franklin

The Kentucky Derby has an outsize impact on the Louisville region’s economy. It’s Churchill Downs’ signature event. Hotels run out of rooms and short-term rental hosts hike rates. And last year, the day after Derby was the busiest in the Louisville Muhammad Ali International Airport’s history.

With a little more than a month to go until Thunder Over Louisville, the start of the Kentucky Derby Festival, there are questions about how public fears of coronavirus could affect turnout. For Louisville, fewer attendees could mean less revenue for local businesses, according to one expert.

Louisville Tourism projects the economic impact in the region of this year’s Derby and Oaks will be more than $394 million, and expects the events to draw more than 256,000 attendees. The agency believes Thunder will have an additional value of more than $16 million and attract 725,000 attendees.

But since multiple cases of COVID-19, the disease caused by coronavirus, have been confirmed in Kentucky since late last week, officials are encouraging people over 60 to avoid crowds and not fly. They are also encouraging younger people to wash their hands regularly, practice social distancing and to stay home if they feel unwell in an attempt to avoid spreading the virus to others.

Such recommendations are part of the reason the city of Austin cancelled this year’s South by Southwest festival, which was expected to have 100,000 attendees. The city’s mayor said the economic benefit to the city would have been more than $350 million.

So far, Louisville officials say it’s too soon to make any such decisions about Derby.

Mayor Greg Fischer addressed the issue during press conferences Monday. He said his office is in close contact with Churchill Downs and the Kentucky Derby Festival organization. They are considering venues, projected attendance and the status of local coronavirus incidents as factors. He’s also spoken to Austin Mayor Steve Adler.

“Unfortunately for them they’re kind of at the front end of figuring out how to handle these mass events, so they didn’t have nearly the information that they needed, so to err on the side of caution that’s why they canceled that,” Fischer said. “We will have much more information by the time the Derby rolls around.”

During a Tuesday press conference, Fischer said the only criterion officials will use to decide what happens with the events is public health.

“There could be some downstream economic implications, obviously, but that is very secondary to our concern for a safe city and certainly any kind of loss of life,” he said.

Also during the Tuesday press conference, the CEO of the Kentucky Derby Festival, Matt Gibson, said the organization had set up an internal COVID-19 task force to work with industry partners for guidance on best practices.

“We have very extensive emergency action plans,” he said. “And we’ve been working very closely with the folks here in Metro government and in state government as well, to have conversations about how we would implement things a little differently, especially when you’re talking about the challenges that this particular issue creates.”

Jose Fernandez, an economist at the University of Louisville, said it would be appropriate to think about Derby in this context as if it were in the midst of a flu outbreak.

“You’re gathering a lot of individuals in a very close space drinking next to one another and so there is this chance for a contaminant,” he said.

(Side note: The Kentucky Derby did run in 1918, the year adeadly flu pandemic hit the Commonwealth.)

Fernandez said it’s unlikely the Derby itself will be canceled outright, particularly due to television contracts. And he agreed with officials that it’s too early to say how exactly things will play out.

But he said it’s possible the Derby could run without spectators, or that fans might choose not to go. He said he might compare it to a bad weather year, and speculated that up to 10% of in-person spectators might cancel. That could translate to a loss of about $40 million tied to Derby and Oaks alone. And he said it would likely impact Churchill Downs and hotels the most, with ancillary vendors like restaurants and transit providers taking hits as well.

“It’s the outside dollars that would be lost,” he said. “So the travelers that are not from Louisville, who would come here just to spend the time associated with the Kentucky Derby, those are going to be the major dollars that are lost.”

But he said a major Derby activity — wagering — is likely to remain strong. Last year, despite decreased attendance, Churchill Downs Racetrack reported record betting volume, driven by online wagering.

Fernandez said the potential economic impact of the Derby might not be eliminated by any changes to the event. Instead, hotel rates might drop, food and liquor might be cheaper than usual and people might resell their tickets at a discount.

“Maybe Millionaire’s Row is going to be Thousandaire’s Row,” he joked.

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