Forget the Kentucky Derby Prize. The Big Return on Investment Is in Breeding.

Whoever owns the horse that wins the Kentucky Derby knows one bet will pay off: The breeding fees for that champion colt will dwarf what he has earned on the racetrack.

Take American Pharoah, who captured the first Triple Crown in 37 years when he won The Derby, the Preakness and the Belmont Stakes in 2015. His stud fees started at $200,000 per cover, the equestrian term for a live breeding, before his fee became private.

“A horse like American Pharoah may breed four times a day,” said John Grau, farm manager at Sunnyfield Farm in Bedford, New York, which has two horses sired by American Pharoah and plans to sell them at auction this summer. “Some of those top stallions can breed over 200 mares in a season and then go to the Southern Hemisphere and breed again.”

In other words, a horse like American Pharoah could earn his owners tens of millions of dollars in a few months. And he isn’t even the highest-paid stallion: That honor goes to Tapit, a white stallion with a so-so race record but a prodigious breeding history. He commands $300,000 a cover.

If horse racing is the sport of kings, thoroughbreds are the kings of horse breeding. And the business of breeding a winning racehorse is as lucrative — and risky — as any investment.

Other types of horses have the potential to be good investments, too. While the auction prices may not be as eye-popping as they are in the thoroughbred world, there is still plenty of money to be made in the dressage, reining, hunter and jumper styles of horses. Still, the risks are plentiful. Grau noted that the full stud fee was payable once the foal could stand and nurse, which can be as quick as 15 minutes after it’s born.

“Then, what do you do if the horse gets sick in the next week and dies?” he asked. “You’ve got to start over.”

The individual ways that people breed horses for profit are as unique as the horses themselves. While there are some large equine operations, the majority of the business remains the province of individuals with deep pockets, big ideas and a high tolerance for risk.

American quarter horses are used in the sport of reining, a sort of Western dance in which rider and horse are in sync as the horse spins and runs around a rink.

Michael Miola, a breeder of quarter horses who made his fortune as the founder of the mutual fund technology company NorthStar Financial Services, runs Silver Spurs Equine. He has farms in Arizona and Oklahoma with 34 stallions and 100 mares, but few horses go to him.

He has set up a system where horse owners can order breeding online for about $3,000 to $5,000. Like any retailer, he offers online discounts, as low as $550 a breeding, and incentives for booking a stallion early.

“I make it up in volume,” Miola said. “We sell about 2,000 to 3,000 breedings a year.”

The push in the reining world, as it is with thoroughbred horses, is to breed a winning stallion as much as possible in his first three years — when his offspring are still unproven in competition. But Silver Spurs also aids in egg embryo transfers for mares that are still competing. Miola’s farms have some 150 mares that act as surrogates, he said.

In dressage, the costs can be lower still. Louise Leatherdale, owner and co-founder of Leatherdale Farms in Long Lake, Minnesota, which is considered among the best breeders of dressage horses, said she might charge as little as $2,000 for two breedings.

But the horses need to be approved by Leatherdale’s farm to ensure that the bloodlines of dressage horses remain strong. (Dressage horses trace their roots to Germany and the Netherlands.)

And raising dressage horses for sale takes several years, largely because championship qualities don’t emerge until the horse is 5 or 6, Leatherdale said.

Tom Grossman, who got into horse breeding 15 years ago as a tax deduction when he worked at Goldman Sachs and then in hedge funds, left the financial world in 2011 to concentrate full time on breeding two types of horses at his Blue Chip Farm in Wallkill, New York. He said his standardbred horses, for harness racing, were like reliable stocks, while he sees his show-quality jumping horses as private equity investments that may pay off big or not at all.

Grossman typically has $20,000 to $25,000 invested in each standardbred horse — which includes a breeding fee of around $7,000 to $10,000 — and looks to sell the horse for around $60,000 after the first year, he said. His highest sale price was $240,000 for a horse he had invested $50,000 in.

One reason for the lower price for these racehorses — which pull a buggy and a jockey around a track — is that the winnings aren’t as substantial. They’re competing in races with prize pools of about $100,000 or less. The Kentucky Derby pool is expected to be around $2 million, with about two-thirds going to the winner.

Grossman said he had branched out into jumpers because he had seen a chance to build a program for a type of horse that was typically bred only in Europe. It began with a mare named Sapphire who won two Olympic gold medals. The farm now has 52 show jumping horses, from a few days old to 7 years.

But he said he couldn’t properly value the show jumping horses until they were at least 5. Annual costs run about $40,000 when their training starts at age 3.

“I have the land and the staff, and I have patience,” Grossman said. “There aren’t that many people willing to invest in a purely cash-flow-negative business for the first few years. It’s like vintages of private equity funds: There are no realizations, just money out the door.” The risks of investing in horses are legion. Foals are stillborn. Colts and fillies break legs. Horses that fetched top prices on great promise can’t run, or struggle to compete. And the horse that makes it through a great competitive career can have complications: Stallions don’t always perform, and mares can die giving birth.

In 2002, Leatherdale bought a stallion named His Highness, considered among the finest in his day. The horse bred 536 times as a 2-year-old. But at age 6, he broke a leg and had to be euthanized.

Still, the return for the horses that make it is enough to keep breeders chasing a great one.

James Fairclough, a professional rider who trains sport jumping horses, said a good rule of thumb was to assume that out of 100 horses, 65 may break even or lose money at sales prices of $5,000 to $15,000. Of the remaining 35, most will sell for above $50,000, but only the top five will command the high six-figure prices that support the breeding program.

These prices are far from the $1 million prices for top 1-year-old thoroughbreds. But whatever the breed, the goal is to raise sound horses and turn a profit.

“When we had our inspections, the inspectors said you just need to keep them healthy for three more months and you’re good,” Grau said of Sunnyfield’s two horses sired by American Pharoah. “It’s a lot of pressure. I’ve been on farms and the horses are just going through the fields, and they break their leg.”