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Yum! Brands wants to renew Kentucky Derby partnership

Posted: Monday, May 24, 2010 8:29 PM

by Ed DeRosa

Yum! Brands Inc., the Louisville-based fast-food company that signed on as a presenting sponsor of the Kentucky Derby (G1) in 2006, hopes to continue that sponsorship after its five-year agreement expired with this year’s Derby.

Jonathan Blum, chief public affairs officer for the world’s largest restaurant company, said on May 20 that Yum! wants to renew its sponsorship, and his company and Churchill Downs Inc. have begun discussions.

“It will really come down to negotiation, and what we find acceptable,” Blum said. “I believe you’d find mutual interest to re-up on both ends; we intend to re-up. We enjoy the sponsorship and enjoy our association with the Kentucky Derby. Hopefully, Churchill Downs feels the same way.”

Blum said Yum! pursued the sponsorship in order to grow its brand among investors. Many people are familiar with the Yum! Brand franchises, which include Pizza Hut, Taco Bell, Long John Silver’s, and A&W Restaurants, but are less familiar with Yum! as the corporate identity of that group. The presenting sponsorship, which was the first in the Derby’s history, included signage throughout Churchill Downs and seven 30-second commercials during NBC’s broadcast of the race.

“The viewer of the Kentucky Derby race tends to have a higher income, and therefore, it’s attractive to us to reach individual investors since Yum! stock trades on the New York Stock Exchange,” Blum said. “This is a way to reach them with a concentrated effort. It’s only one day a year and one race on that day, but it’s a way to associate our identity with a prestige brand, and that creates the potential for investment.”

Since announcing its Derby sponsorship on February 1, 2006, the Yum! stock increased in value by 68.9% through April 30, the last day of trading before this year’s Derby. That period also included a two-for-one split on June 27, 2007, and trading at a corporate high of nearly $44 on April 23, 2010.

The executive team in place at Churchill now is different than in early 2006, when Tom Meeker was company president and Steve Sexton was racetrack president, but current Churchill racetrack President Kevin Flanery echoed Blum’s statement that the partnership benefited both companies, adding that discussions already have begun regarding continuing the sponsorship in ’11 and beyond.

“We’re pleased with the relationship, and now we’re having ongoing discussions,” Flanery said on April 24. “We’ve been valuable for each other, and it’s been good for racing to have that money in the sport and for [Yum!] to have confidence in the industry.”

The sponsorship by Yum! was not without some landmines. Two weeks after Barbaro won the first Derby under a Yum! banner, the Dynaformer colt broke down at the start of the Preakness Stakes (G1) and was euthanized early the next year. In 2008, Derby runner-up Eight Belles collapsed on the turn beyond the finish and was euthanized.

Yum! issued a press release following the Eight Belles tragedy expressing its sympathy for her connections but affirming its faith in the Derby as an American institution and Churchill as a company that wants the best for racing.

“Churchill has done a superb job in working with the industry and addressing those issues,” Blum said of the safety of racing participants. “We didn’t receive any criticism because of it.”

The Derby is the only major athletic event Yum! sponsors. The company has the naming rights to Louisville’s new downtown arena, and it exercised those rights to call the facility the KFC Yum! Center. It also sponsors professional golfer and Kentucky native J. B. Holmes.

“I don’t think there is any more prestigious event than the Kentucky Derby,” Blum said. “It’s a badge of pride for us because we’re local to Louisville as is Churchill.”

Ed DeRosa is news editor of Thoroughbred Times