A Look at How the Kentucky Derby Festival Pays For Its 70 Events
With the Run for the Roses a day away and the Kentucky Derby Festival winding down, we took a look at the festival's finances through its most recent Form 990 filing with the Internal Revenue Service.
KDF privately raises more than $6 million each year—half from corporate sponsorship to produce its two weeks of events, including the Great Steamboat Race and the Pegasus Parade. What began as a single event in 1956 on a budget of $640, the Kentucky Derby Festival now has more than 70 events—and those events account for its second-highest source of revenue.
KDF received more than $3 million from “festival events," accounting for more than half of the money made from events and company sponsorships, according to the 990 filing from 2013.
KDF spokeswoman Aimee Boyd said the money the organization makes from the events themselves come from a combination of things including the Pegasus pins, sponsorships, merchandise sold at the event, tickets and registration fees.
The festival is organized as a not-for-profit but operates exclusively for the promotion of social welfare in the greater Louisville area. Since KDF is labeled a social welfare organization—more specifically a 501(c)4—it’s exempt from federal income tax.
Where does the money go? What is it used for?
The organization’s largest expense was attributed to “total salaries, other compensation and employee benefits” weighing in at $1,763,840, according to KDF’s 990 fiscal year ending September 2013.
Of the 25 people employed by the organization, four receive more than $100,000 in reportable compensation, including festival President Michael Berry; Stacey Robinson, senior vice president of operations; Marketing Manager April Zik; and Pat Armstrong, senior vice president of marketing.
The second highest paid expense is the largest annual fireworks show in North America, Thunder Over Louisville at $1,105,546.
At the end of the 2013 fiscal year, KDF’s revenue less expenses equaled $155,566—$84,000 less than Berry’s total compensation for the year.
Boyd said leftover revenue gets funneled back into the budget to help fund festival production for the next year.
“Traditionally, I think we’re very fortunate to most years break even,” Boyd said.
An independent study by University of Louisville’s MBA program in 2011 found that the festival generates an economic impact of about $128 million annually for the local economy. More precisely, the study stated that for every $1 spent producing the festival each year, more than $22 was generated for the greater Louisville economy.