How Triple Crown Contender California Chrome Benefits the Whole Horse Racing Industry

Although a Triple Crown winner might not be a cure-all for the horse racing industry, it produces a nice halo effect for all those involved.

Jun 7, 2014 at 8:06AM

A Triple Crown contender is exciting for everyone involved in the horse racing industry. There are the obvious benefits to television ratings and both on- and off-track betting, and of course the stud fees and sponsorships for California Chrome's owners. There's also a trickle-down effect that makes it to the concessionaire and even increased foal production in the industry. Here's a rundown of all the interests expected to benefit when California Chrome races for the Triple Crown today:

Belmont Stakes

Six-figure attendance is expected this year, typical for previous Triple Crown attempts. The record attendance at Belmont came in 2004 when 120,139 fans packed in to see Smarty Jones go for the title. Attendance at Belmont the past three years, with no Triple Crown contender, has paled in comparison: 47,562 in 2013, 85,811 in 2012 (when Triple Crown contender I'll Have Another was scratched on the eve of the race), and 55,779 in 2011. Among other things, increased attendance means more on-track betting, as detailed below.

Obviously, increased attendance also benefits businesses associated with Belmont. Concessionaire Centerplate said in a press release that revenue from hospitality services are generally twice as high when there's a Triple Crown contender than years where there is not.

Television

NBC (a subsidiary of Comcast (NASDAQ:CMCSA)) is milking the Triple Crown bid for all it's worth, and rightfully so. The network began 16 hours of coverage from Belmont on NBC and NBCSN beginning on Friday at 5 p.m. According to a press release from NBC, the full stable of its networks – CNBC, MSNBC, and The Weather Channel – will be at Belmont on Friday.

In addition to the television coverage, NBC will live stream on race day, including alternate camera angles. If you're only tuning in to watch California Chrome – and millions of you will – you can watch a camera angle that follows the Triple Crown contender from start to finish.

NBC is a winner here whether California Chrome wins or not. According to Nielsen, viewership doubles when the Belmont has a Triple Crown contender. With no Triple Crown on the line the past five years, viewership has ranged from 4.9 million to 7.7 million. Big Brown's attempt in 2008 drew an audience of 13.1 million, but it was Smarty Jones' second-place finish in 2004 that attracted the most viewers: a whopping 21.9 million. Industry analysts are expecting Smarty Jones' numbers, but no doubt the telecast will draw a large audience.

The gambling industry

The gambling industry is always a big winner when there's a Triple Crown contender. Smarty Jones' failed bid for the Triple Crown in 2004 set a betting record of nearly $111 million. Compare that to last year, where betting was estimated at $88.7 million. 

"Anytime there is a chance of a Triple Crown, it is great news for us as we will take at least two times the amount of money we would on the Belmont in regular circumstances, but I can see it being even much higher than that," says Bovada.lv sports book manager Kevin Bradley.

In a typical year, the Kentucky Derby is the second busiest day of the year for Bovada.lv, behind the Super Bowl, but Bradley has no doubts the Belmont Stakes will claim that second spot this year. 

California Chrome's owners 

California Chrome cost his owners just $10,500: $8,000 for the mare and $2,500 to breed her with a stallion. That's pennies in the horse racing industry. Mare fees can often run in the hundreds of thousands, and stud fees can hit six figures as well.

If California Chrome is indeed a Triple Crown winner, his breeding value has been estimated at $15 million to $20 million. That's a good return on their investment, but perhaps not what they were expecting. The AP reported his owners received a $6 million offer for a 51% share in the horse before he won the Kentucky Derby, and after winning the Preakness his trainer estimated his worth at $60 million.

By way of comparison, Smarty Jones was reported to have been syndicated in a deal for $39 million, and Big Brown was reportedly sold in a $50 million deal. However, they were both considered to have a more attractive pedigree.

California Chrome's owners stand to benefit from more than just stud fees. Skechers has already announced it will produce caps, clothes, and horse blankets branded for California Chrome. Other sponsorships – and perhaps even book and movie deals – would be expected if he wins the Triple Crown.

The horse racing industry 

John Hartig, CEO of Daily Racing Form, says a Triple Crown winner could have an enormous impact on the horse racing industry. Following three Triple Crown winners in the 1970s, foal crops doubled to a record 51,000 born annually. The estimated foal crop for 2014 currently sits at just 22,500.

"Clearly, a doubling of this number would have a positive impact on racing and handle," says Hartig.

In addition, Hartig says a Triple Crown win could attract new owners to the sport. Daily Racing Form acquired a tournament business last year, and Hartig says 10% of their tournament players are new players. Per the National Thoroughbred Racing Association, 38% of tournament players go on to become horse owners.

"[G]rowing new fans who are prime candidates for horse owners will continue to boost long-term growth of the sport," says Hartig, and a Triple Crown winner can only help.

All that being said, Hartig acknowledges there are other issues in the industry – issues like drugs and the need for uniform rules – that a Triple Crown winner can't solve.

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