Huge margins on mint juleps at Derby

If there's one drink you have to have at one sporting event, it's the mint julep at the Kentucky Derby. And luckily for the folks at Churchill Downs, the margins on the drink are tremendous.

After having a couple of these things over the years (I'm not a fan), I wanted to see if I could figure out exactly how much of a mint the track was making off this one drink.

The folks at Churchill won't talk about the actual calculations, so I decided to take my best educated shot. What did I find out? The alcohol isn't the most costly ingredient in the drink. It's actually the mint.

The ready-to-serve mint julep cocktail that is poured into the glasses this weekend is made by Early Times, which has been making the official drink for the past 26 years. At retail, you can buy the cocktail for $13 for a liter, but given the quantity Churchill Downs uses, it's safe to say they're paying much less. Unfortunately, I don't know how much less, so I'm forced to work with the retail numbers.

To make 120,000 mint juleps, Churchill Downs says it uses 10,000 bottles of the mint julep cocktail, 60,000 pounds of ice and 1,000 pounds of mint. The track also uses spring water (most recipes call for about an ounce in each 12-ounce glass).

So here's our total tally based on current market prices:

10,000 bottles of mint julep mix = $130,000

60,000 pounds of ice = $3,000

1,000 pounds of mint = $20,000

120,000 ounces of spring water = $6,000

So that's $159,000 to make 120,000 mint juleps. That's $1.33 each. Then you add the gross cost of the souvenir glass, which figures to be about $2 considering the glass itself retails for $4, and we're done.

So to recap, based on our rough calculations, the cost for the entire mint julep at the Derby is $3.33. It retails for $11. Now there are some labor costs in here, but considering we used the retail price for the mix, it's a fair assumption they're already baked in.

At $7.67 profit in each mint julep, Churchill Downs would clear more than $920,400 in profits off this one drink. Amazing.