Horse racing powerhouse the Stronach Group has spent millions of dollars trying to lure younger fans and higher-profile horses to the Preakness Stakes, the second jewel of the sport’s Triple Crown and one of Maryland’s marquee sporting events.

It seems to have been a bad bet. Long viewed as the anchor of the state’s storied but declining thoroughbred racing industry, Preakness has gone from a moneymaker to a financial loser in recent years.

The race’s earnings have been in free fall since 2017, with it losing about $2 million last year and $3 million in 2022, according to a Maryland Jockey Club presentation in September. The Canada-based Stronach Group owns and operates 1/ST Racing and Gaming and the Maryland Jockey Club, which in turn runs the state’s two main thoroughbred tracks, including Pimlico Race Course where Preakness is run.

Maryland Racing Commissioner Konrad Wayson noted in 2023 that Preakness usually generated enough to cover losses at Pimlico and the Laurel track — but that expenses nearly doubled in 2021 and 2022 without corresponding revenue increases.

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Preakness has been losing money in part because it is spending more on infield talent to attract a younger demographic to Pimlico, racetrack officials told the Maryland Racing Commission last year. (Kaitlin Newman/The Baltimore Banner)

Club officials have attributed the financial pit to the rising cost of entertainment and escalating prize money to keep top horses coming back. At $2 million, the Preakness purse is the highest it has ever been.

Mike Rogers, acting president of the Maryland Jockey Club and executive vice president of 1/ST Racing and Gaming, told the Maryland Racing Commission a year ago that the idea of contracting with more expensive entertainers is to draw a younger demographic to Pimlico.

Alan Foreman, counsel to the Maryland Thoroughbred Horsemen’s Association, a group representing owners and trainers, said the Stronach vision to turn Preakness into a spring break-like party “is a failed experiment, as their own numbers show.”

In earlier years, when the overhead was lower, Preakness was profitable.

“It was a Maryland party. It was a Baltimore party. It was the racing industry’s event of the year,” Foreman said. “And I think they got away from it.”

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Preakness also has been hampered by the overall decline of the horse racing industry and the crumbling facilities at Pimlico. In a deal struck this year, the state is taking over the aged horse track with plans to run it through a nonprofit and spend $400 million renovating it and building a separate horse training facility.

This nonprofit will also oversee Preakness starting in 2027, leasing the rights from the Stronach Group.

In January, the Kentucky Derby raised the race’s purse to $5 million, up from $3 million in 2019, the last time it was raised. The Belmont Stakes bumped its $1.5 million purse to $2 million. Preakness followed suit, increasing the purse from $1.65 million last year.

“Purses are a major part of this as far as sustainability for a first-class racing state like Maryland,” said Phil O’Hara, an associate professor at the University of Arizona Race Track Industry Program.

Mystik Dan (right) wins the Kentucky Derby in a photo finish May 4. Preakness, the second jewel of the Triple Crown, bumped its purse to $2 million this year, the highest ever. (Justin Casterline/Getty Images)

Luring younger fans through music

Increasingly, 1/ST has turned to the long-standing appeal of the often muddy and beer-soaked racetrack infield to attract a younger crowd that may not have any interest in horses.

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This year, Jack Harlow, Channel Tres, Chantel Jeffries, Frank Walker and Gryffin are set to play, and the event has attracted top musical acts including Maroon 5, Lorde and Diplo in previous years.

“As you look around the entire entertainment landscape, it’s important for us to be able to compete with all of the other events for the excitement,” said Tiffani Steer, vice president of communications at 1/ST.

But these performances haven’t turned out the crowds they used to, and they haven’t paid off even when attendance is above average, according to the Jockey Club’s presentation.

Grammy Award-winning Bruno Mars performed at InfieldFest last year, helping bring about 47,000 people to Preakness. That was a sharp attendance improvement over the previous two years, in the aftermath of COVID-19, but far short of earlier years.

In 2017, with DJ Zedd and singer Sam Hunt as infield headliners, the event saw a crowd of more than 140,000. That was its best year for attendance, yet Preakness pulled in about $2.5 million less than the previous year.

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“They’re trying to get a younger crowd interested in racing that, hopefully over time, will pay dividends with a whole new generation of fans,” O’Hara said. “Whether or not that’s going to work out, I think only time will tell.”

Maryland steps in after years of decline

The sport is partly funded by wagering, but that formula faces headwinds with waning track attendance and the rise in other forms of gambing, such as off-track betting.

Earnings for Preakness from 2013 to 2015 were stable, about $7 million each year. In 2016, the event earned almost $9 million.

Then the slide began.

Preakness earnings ticked down to $6.4 million in 2017, $4.1 million in 2018 and just $400,000 in 2019, the last year before the pandemic sowed havoc on all events.

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“They’re working on less money for every dollar wagered than they would have been 25 to 30 years ago,” O’Hara said. “It’s a challenging environment for everybody.”

This month, Maryland Gov. Wes Moore signed the law allowing the state to form a nonprofit to take over Pimlico. Renovations are to be financed by state-issued bonds that would be paid back using existing racing subsidies from the casino industry, along with state lottery proceeds.

Gov. Wes Moore smiles in the winner’s circle after jockey John Velazquez won the Preakness Stakes riding National Treasure last year. This month, Moore signed a law allowing the state to form a nonprofit to take over Pimlico. (Ulysses Muñoz/The Baltimore Banner)

Under the deal, Laurel Park is to close and thoroughbred racing will be concentrated at the newly renovated Pimlico track. A location for the horse training center hasn’t been determined.

The Stronach Group will still own rights to Preakness, running the event in 2025 and 2026 and leasing it to the state starting in 2027. The nonprofit will then pay the company $3 million per year for 10 years, plus 2% of the gross handle on Preakness and Black-Eyed Susan days.

Maryland leaders say they believe new leadership and a better facility will turn the tide on Preakness losses. Foreman said the state is likely to abandon the focus on landing bold-faced entertainers.

“We look forward to changing the atmosphere,” he said, “and bringing back what was so successful historically.”

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