California Chrome's owners are already big winners

California Chrome's quest to become the first horse to win racing's Triple Crown since 1978 has captured the imagination of sports fans around the world because the three-year-old stallion's story is both heartwarming and improbable. Regardless, his owners are poised to reap a huge financial windfall.

According to media reports, co-owner Steve Coburn got into horse racing because he was looking for a tax write-off. He acquired an $8,000 mare named Love the Chase and bred her with the stallion Lucky Pulpit, whose stud fee was reduced to $2,000. Top-flight mares can fetch six or seven figures, and some stallion owners charge six-figure stud fees.

Not surprisingly, California Chrome's owners have turned down a $15 million purchase offer, thanks to his victories in the Kentucky Derby and the Preakness Stakes.

"California Chrome shouldn't be in contention based on his pedigree. But he is -- and that is the magic," wrote Daily Racing Form CEO John Hartig in an email. "Owners with billions of dollars have not been able to breed a horse capable of winning the Triple Crown, and yet this thoroughbred looks like he can. ... Certainly, everyone loves a great underdog story, and a possible Triple Crown winner could reignite the passion for racing in old fans while also growing a new younger fan base for the sport."

If California Chrome wins the Triple Crown, he could command stud fees of around $40,000, according to Bill Shanklin, who edits the site Horse Racing Business. His fee would be roughly half that if his quest for the Triple Crown is unsuccessful. Top stallions can breed 150 to 200 mares in a given season (artificial insemination isn't allowed for thoroughbreds). The first progeny of California Chrome may not be born until 2016 at the earliest.

"It just goes to demonstrate that a good horse can come from anywhere," said Andy Schweigart, director of industry relations and development for the Thoroughbred Owners and Breeders Association. "What's captivating the attention of fans is the back-story."

California Chrome is expected to be the odds-on favorite to win the Belmont Stakes on June 7. The four-legged Rocky already is in some illustrious company. In the history of horse racing, 38 horses have won both the Kentucky Derby and the Preakness Stakes, while only 11 have won the Triple Crown.

Horse racing surged in popularity in the 1970s after the success of Triple Crown winners such as Secretariat ('73), Seattle Slew ('77) and Affirmed ('78). The foal population exploded in the 1980s, and fans flocked to the sport. The pari-mutuel handle (the industry term for the amount of money bet on a race), rose from the 1970s through the 2000s.

Lately, though, the "sport of kings" has hit some hard times. Surging interest in casino and online gaming has caused some tracks to be shuttered, and interest in the sport has waned.

The North American pari-mutel handle was $11.5 billion in 2013, down from $15.9 billion in 2002, according to data from the Jockey Club. Interest among TV viewers has fluctuated. When Smarty Jones was chasing the Triple Crown in 2004, viewership skyrocketed only to fall the following years.

Racing has other problems. The fees that racetracks collect on winnings, also known as the take out, equal about 18 percent, turning off many gamblers. People who play casino games such as poker and blackjack don't incur this cost.

"A lot of big-time gamblers have left because of the take out," Shanklin said. "If they lower the take out, you get more big bettors back, and the bettors that are there now would bet more."

But, he added, racetracks are reluctant to trim the take out for fear of lowering their bottom line.