The Rise And Fall Of Calumet Farm

LEXINGTON, Ky. - A sense of relief spread through the equine hospital at Calumet Farm that day in November 1990. It had begun to seem that Alydar, the farm's great stallion, would survive a broken leg.

But then Alydar, supported by a sling, slipped. "I heard the crack, and I knew it was all over," said William A. Baker, one of the veterinarians. Alydar had broken another bone. There was no hope of recovery.

A day and a half of tension turned to tears. Alydar, 15, had to be put down.

A brilliant competitor, he had run a close second to Affirmed in each of the 1978 Triple Crown races, and their rivalry had become etched in racing lore. At stud, he had proved even greater. His offspring had become champions, and Alydar, when he died, was the world's leading sire.

With Alydar's death, Calumet, already staggering, soon collapsed. Few horses have ever meant so much financially to a farm.

Alydar's success at stud had meant millions of dollars to Calumet, the elegant, white-fenced Lexington farm that produced Whirlaway, Citation and six other Kentucky Derby winners.

Now, with Alydar gone, some people wondered what Calumet would do next - and how well the farm could get by without him.

It would not be long before Calumet's severe financial problems became public knowledge.

By the spring of 1991, Calumet's board learned that the farm had $400 in the bank and $40 million in debt currently due. It was a steep plunge for a farm that had been transferred, debt-free, to a new generation of owners less than a decade before.

A raft of lawsuits were filed and allegations of waste, self-dealing and mismanagement have been made against Calumet's management under J.T. Lundy.

Last Thursday the farm and all its equipment were auctioned.

How could Calumet, long the envy of the racing world, have fallen so far?

Many of the answers might come as legal action unfolds, but it is clear that at least some of its problems arise from years of bitterness within the family that has owned Calumet for seven decades.

The wealth that created the Calumet dynasty began in the early 1900s in Chicago, when an ambitious salesman, William Monroe Wright, invented a better baking powder and named it Calumet.

His son, Warren, a nuts-and-bolts businessman, joined the firm and its fortunes soared. At a time when biscuits were homemade, the two Wrights built Calumet Baking Powder into a company that commanded $32 million when it sold in 1928, shortly before the Depression.

The elder Wright had a passion for breeding and racing trotters. In 1924, he moved his standardbreds to a Lexington farm called Fairland, which he renamed Calumet. It became his home until his death in 1931.

Warren Wright inherited his father's farm but not his interest in trotters, which he quickly replaced with thoroughbreds. He and his wife, Lucille, a native of Tollesboro, Ky., eventually built a home at Calumet but rarely spent more than a couple of months a year there.

Dapper with a dry sense of humor, Warren Wright was also exacting. He was fair, but if you strayed from the straight and narrow, "he was through with you, that was it," his daughter-in-law, Bertha Wright, said in an interview in 1991.

Bertha's husband, Warren Wright Jr., was the only child of Warren and Lucille Wright. The senior Wrights said Warren Jr., born in 1920, was adopted, but for years speculation has circulated that he was actually the natural child of one or both of his adoptive parents. The son did not appear to have the intellectual ability of either parent, but people who knew the family found physical similarities.

Warren Jr., by most accounts, fell far short of his father's hard-driving expectations.

"Warren would stay in the hot seat all the time," Bertha Wright said of her husband. "He couldn't win."

Nevertheless, Warren Sr. provided for his son. When he died in 1950, his will established trusts for his son and for his widow. A third trust gave his widow oil and gas properties as well as control over Calumet Farm while she lived. On her death, 20 percent of its holdings were to go to charities, 30 percent to Warren Wright Jr.'s children and 50 percent to Warren Wright Jr.

Two years after Warren Sr.'s death, Lucille Wright remarried. Her new husband was Gene Markey, a writer and bon vivant, married three times before to Hollywood beauties.

Gene Markey tried to reconcile the family, gathering them for dinners at the Campbell House Inn in Lexington.

But a series of rifts and disappointments, insults and responses erased any remnant of warmth between Lucille Markey and her son and his family.

Warren Jr., who had an insurance agency, ignored his tax bills and wound up in prison. He showed neither interest nor ability when it came to running Calumet. He was allowed to see his mother only by appointment.

In 1978, as Warren Jr. lay in the hospital, his mother gave an interview. She had praise for Alydar, the brilliant 3-year-old who had run second in that year's Triple Crown races. But she voiced only contempt for her son.

"If there was any way in this world I could keep him from having it (Calumet), I would," she said.

A short time later, Warren Jr. died at age 58. His interest in the estate was left in trust for his widow, Bertha.

For all her misgivings about the prospect of the Wrights' inheriting Calumet, Lucille Markey could not bring herself to sell the farm. "She would have done anything else to keep it from going where it went," said Margaret Glass, who for 42 years ran Calumet's office.

Markey did have at least one opportunity to sell. Will Farish, a wealthy Texan who would later buy a farm in nearby Woodford County, approached her about buying Calumet in the late 1970s.

But Markey could not give up being "Mrs. Calumet." After some discouraging years, Calumet had come back. Her new young trainer, John Veitch, had produced classic winners like Davona Dale, Our Mims and Alydar. She loved her horses, and she loved the winner's circle.

But there was more to Markey's reluctance than sentiment.

Old and ill, Markey also feared a legal battle if she tried to sell Calumet.

She had reason for concern.

The Wrights, or at least J.T. Lundy, who had married her granddaughter and namesake, Lucille "Cindy" Wright, had taken an active interest in the affairs of Calumet. Glass said Lundy, through his friend and attorney, Lyle Robey, sent a steady stream of letters commenting on operations at Calumet in the 1970s. He suggested another trainer when Veitch was hired. He wanted gates installed at the farm's entrances for security. And when Alydar began his career as a stallion, Lundy criticized the mares chosen for him.

Robey, in an interview, confirmed that the Wrights would have taken steps to prevent the sale of Calumet.

Lucille Markey died in July 1982, and Lundy became president of Calumet, something he had wanted for a long time.

Some people thought Lundy knew stallions well enough, but his only experience running a farm was his own small operation in Midway, Ky.

Lundy had married Cindy Wright in 1962 when he was 21 and she was 16.

By the time Lucille Markey died 20 years later, the Lundys were living apart. Their status has not changed since.

Cindy Lundy did not share Lundy's desire to be part of Calumet.

"I didn't want to be in Calumet Farm in the first place," she said in a deposition last December. "I have known my grandmother better than any of the other grandchildren, and I lived there, and I have bad memories of the place."

Nor did Bertha Wright or her other three children seem interested in an active role.

As recently as last October, Bertha's son, Warren Wright III, testified that he would not recognize Wild Again, one of the farm's leading stallions, and that he never looked at a Calumet financial statement.

With Lundy as president, Calumet remained the showplace it had always been. The fences were a clean and beautiful white, the grass never grew weedy and the barns were in perfect order.

Beyond that facade, however, Calumet was not the same place.

Lundy wasted no time cleaning house. Key people who had operated Calumet for more than a generation left soon after his arrival.

Margaret Glass, who had gained the respect of horse breeders during her tenure, retired. Farm manager Melvin Cinnamon went to work at W.T. Young's Overbrook Farm. Ewell Rice, who had worked with Calumet yearlings since before World War II, went to Claiborne.

Veitch, son of a Hall of Fame trainer and himself a trainer of champions, resigned. He was replaced by Frank Whitely, an accomplished and respected trainer.

But other key people were less experienced.

Janice Heinz, 27, became the pedigree consultant, choosing the breedings for Calumet's famous horses. She had worked at horse farms and for The Jockey Club and had horses of her own. She had also been in business with Lundy's daughter Katherine, buying and selling horses that ran in claiming races, far below the level of racing where Calumet had competed so effectively.

Susan McGee, Heinz's roommate and business partner, soon appeared as an office manager. She had worked at an animal diagnostic laboratory and cared for mares. She was 25 when she went to work at Calumet.

At a farm where lifetime employment had been the norm, turnover increased dramatically. Farm managers came and went, as did veterinarians.

The changes did not inspire confidence in everyone. "I started mourning Calumet in 1982," said Joe Riddell, a Lexington bloodstock agent.

Lundy's concern about security was intense. Armed guards roamed the farm at night.

McGee answered all incoming calls, screening them and any messages. Visitors were not welcome unless they had been approved in advance. Employees and clients rarely had contact with Lundy unless they went through McGee.

McGee "was always very protective and very unhelpful," Betty Marcus, a partner with Calumet in a number of horses, said in a deposition.

Massive spending began.

A second story was added to the master office suite, including a bedroom. The main house, where Bertha Wright now lived, was renovated.

Calumet leased a jet for $500,000 a year and in some years, spent an equal amount on travel and entertainment.

The farm bought a fleet of vehicles from the Houston dealership of Lundy's friend, race car driver A.J. Foyt Jr. Calumet sponsored one of his race cars.

Calumet also began spending heavily on horses.

Calumet paid $20 million for a half interest in Secreto, a son of Northern Dancer, in 1984. Two years later Calumet gave close to $8 million for a half interest in Mo-gambo. Neither proved worth the price as a stallion.

Business relations changed, too. Breeders who had long dealt with Calumet found they could no longer book their mares to the farm's stallions.

Just getting a look at the stallions could be difficult.

But for those on the inside, the new Calumet could be a very generous place.

Lundy's son, Robert, sold horses for Calumet, earning substantial commissions. Lundy's sister's insurance agency, Equus Unlimited, insured Calumet horses. A.J. Foyt's son, Tony, was given a string of Calumet horses to train.

Lundy, though not paid a salary, received hefty commissions. A farm accountant testified in bankruptcy court last year that Lundy got about $5.8 million during his tenure.

Calumet's attorneys have charged that Lundy also received free breeding rights, or seasons, that should have gone to Calumet. Lundy, who refused requests for interviews, has said he was entitled to the seasons.

"Very few complimentary seasons went down the road at Calumet," in the old days, said Glass, who never received one.

But at the new Calumet, as many as 20 complimentary breeding rights were handed out each year, testified Kim Day, who maintained the stallion records.

In at least one case, an agent who was working for another farm testified that he got free rights for making a deal with Calumet.

Heinz, paid $50,000 a year as a pedigree consultant, also got free breeding rights, as did McGee, bankruptcy documents show.

Heinz and McGee have not been available for comment.

Another sign of the new Calumet was the way the names of the horses changed.

Few things mark a thoroughbred farm like the names it chooses for its horses, and in the old days, the Calumet style came through with Ponder, Pensive, Citation, Armed, Iron Liege. Under Lundy a certain style emerged as well with horses named Chubby Hubby and Judge Smells, named for a character in the comedy film "Caddyshack."

For a long time Alydar generated a lot of cash for Calumet.

Beginning in October 1982 Lundy sold lifetime breeding rights to Alydar for about $2.5 million each. Those rights, Lundy has testified, raised over $50 million.

Despite Alydar's earnings, by 1986 Calumet was mortgaged to Mutual Benefit Life Insurance Co. to guarantee a $20 million loan. Two years later the land was pledged again, this time to First City Texas-Houston. First City eventually lent Calumet more than $40 million, taking pledges on many of Calumet's horses.

In court documents, people inside and outside Calumet recount deals put together from 1986 on because the farm had to have cash. By 1990 Calumet was pre-selling seasons to Alydar to "pay interest and to pay payroll and to feed the horses," Heinz said in a deposition.

Lundy had Alydar breed 100 or more times a year, about twice the industry average, at prices averaging about $200,000.

And when Alydar died in November 1990, creditors and partners, buyers of pre-sold breeding rights, everyone who had an interest in the stallion, looked to Calumet for compensation.

Calumet's problems burst into public view in February 1991.

Racing's elite had gathered at the Fairmont Hotel in San Francisco for a black-tie dinner to present the prestigious Eclipse Awards.

Accepting the Breeder of the Year and Horse of the Year awards for Criminal Type, Lundy praised his trainer but ignored the Wrights. When the trainer, D. Wayne Lukas, made a vague reference to "the Calumet family," Bertha Wright exploded.

"By damn we're going to be recognized," Wright shouted. At the microphone Lukas' smile froze. Behind him Lundy shook his head and laughed, uncomfortable in his tuxedo.

Soon after, Wright hired an attorney to look into Calumet's business affairs. Within weeks, Lundy resigned and his two leading assistants were escorted from the farm.

Lundy was replaced as president by Lexington horseman John Ward, who found Calumet to be "a company in total financial disarray."

Within months, Calumet was in bankruptcy. A dispersal sale was held in November, and by the end of 1991 no horses were left.

"Their house of cards was based on Alydar," said John Veitch, the former Calumet trainer. "And when he died, the house of cards fell."

Lundy, Lyle Robey and others have blamed many of Calumet's problems on the ills that befell the horse industry during the 1980s. The market for yearlings fell, and stud fees dropped behind them. Tax laws changed. Investments that made sense in the early '80s seem extravagant now, they say.

Others don't see how a farm that had so much could wind up with so little. In 1982 Calumet was handed over free and clear of debt. The farm was in good repair; Alydar was in the stallion barn. Bad times have hurt many horse farms, and plenty have seen bankruptcies and auctions. But the $127 million total debt Calumet accumulated in nine years eclipses all others.

One of J.T. Lundy's first actions after going to Calumet was to change the name of a horse.

The colt, a full brother to Alydar, had been named John the Bald in honor of the farm's trainer, John Veitch. A 2-year-old at the time, he had not yet run but showed great promise. Lundy changed the horse's name to Foyt.

Foyt eventually started 13 times, winning five races and earning not even a tenth as much money as his brother.

"There are some superstitions in the horse industry," said Pam Michul, the former Calumet office assistant. One of them, she said, is that "changing a horse's name is the kiss of death."