Early on a Sunny morning in August 1982, Gene Klein strolled through the grandstand at Del Mar racetrack near San Diego and bumped into Dick Butkus, the former linebacker of the Chicago Bears.
This is an article from the May 9, 1988 issue
"What are you doing here?" Klein asked. Butkus explained that he was part owner of a couple of racehorses. He was there that morning to watch one of them work out and to get together with the horse's trainer, a man named D. Wayne Lukas. Klein had read about him.
"Lukas. Doesn't he have Landaluce, the great filly?" said Klein.
"Would you like to see her?" Butkus asked. Klein followed him to the barns; Lukas was there, and Butkus introduced them. Eugene Klein and D. Wayne Lukas shook hands, and the racing game hasn't been the same since.
At the time, Klein was the principal owner of the San Diego Chargers of the NFL. He had turned 61 that year and had suffered a heart attack a year earlier that had nearly killed him. Moreover, he was sick of the football business. He had had it with the demands of players to renegotiate contracts, the shenanigans of opportunistic agents, the stress of lawsuits, the tedium of NFL owners' meetings.
In 1982, Klein had endured his most disturbing episode in football. A few months after the Chargers had beaten the Dolphins 41-38 in Miami in the playoffs, Klein says, he was told by a federal investigator that one of his players had purchased a kilo of cocaine in Florida, brought it back on the victory flight and shared it with some team members in San Diego. "On the bleeping airplane!" Klein bellows now. The next week in the AFC championship game, the Cincinnati Bengals beat the Chargers 27-7; in frigid Riverfront Stadium, the windchill factor made it feel like 59° below zero.
"That team was in a stupor that day—and I thought it was the cold," says Klein. "A lot of them had a lot of cocaine in them. And here was our shot to get to the Super Bowl! I said to myself. What are you doing? You want to go back into intensive care?" The players denied the allegations to Klein, and charges were never brought, but Klein had had enough.
So on that morning at Del Mar when he ran into Butkus, Klein was a man in search of something else to do with his time—and his money. The visit to the racetrack that day had been suggested by his wife, Joyce, whom he married in 1976 after the death of his wife of 30 years, Fran, and a shortlived second marriage. Joyce had acquired a half interest in three broodmares, but Klein paid little attention. "I didn't know what a broodmare was," he says. A notoriously impatient man with no interest in handicapping, Klein could never figure out what to do at a track between races. "There wasn't enough action for me."
But then he shook hands with Lukas, who was already on his way to redefining all the old notions of action in racing and to becoming the nation's leading trainer. Since then, Klein has been the most conspicuous presence at Lukas's side—writing checks to buy many of the horses that the trainer selects at sales; building a 120-stall training center in Rancho Santa Fe, Calif., near San Diego, where Lukas can supervise the conditioning of the animals; and walking into the winner's circle at tracks across the land.
It has been a dizzying ascent to the top of the racing world. Since he and Lukas started doing business together in 1982, Klein has established himself as the winningest owner in America. For the last three years he has accepted the Eclipse Award as the nation's leading owner. In 1987, horses he owned won 41 stakes races and $5,743,134, both American records. So far in Klein's short career, his horses have won more than 300 races and some $19 million in purses.
Klein has campaigned some of the most gifted horses of their generations, including four champions who as a group have won six Eclipse trophies, and the '85 Preakness winner, Tank's Prospect. The brightest of all his leading lights was Lady's Secret, the 1986 Horse of the Year. After the little gray daughter of Secretariat won the Breeders' Cup distaff at Santa Anita in 1986, Hall of Fame trainer Woody Stephens said she was the greatest female runner he had ever seen.
"To own a filly like that was pure pleasure," says Klein. And now he has another gem, a strapping roan named Winning Colors. After her resounding victories in the Santa Anita Oaks on March 13 and in the Santa Anita Derby on April 9, Winning Colors is a favorite to win the Kentucky Derby on Saturday. A victory at Churchill Downs would put her in the company of Genuine Risk, the 1980 Derby winner and only the second filly in history to wear the roses (the first was Regret in 1915). As circumstance would have it, Winning Colors will have to outrun another favorite, Private Terms, who happens to share bloodlines with the legendary Ruffian, rated by many the greatest filly of all time (see following story). If Winning Colors is triumphant in Louisville, it will be the first Derby conquest for either Klein or Lukas and will add the proudest prize yet to Klein's already crowded collection.
The desk in Klein's office at his Rancho Santa Fe farm is a glittering testament to his success in recent years. It is rimmed with nine Eclipse and five Breeders' Cup trophies, an extravagant display of wood and brass. When Lukas first walked in and saw them arrayed there, he could only laugh. "That is obscene!" he declared.
Such prizes don't come cheap. Klein says it costs him $300,000 a month just to keep his far-flung stables in action at seven different tracks. Moreover, he has spent almost $39 million on yearlings and weanlings, mostly at public auction, since 1983. "Even if you say it fast," he says, "that's a lot of money."
With Klein's freewheeling expenditures backing Lukas's exceptionally keen eye for horses, the partnership has wrought what many horsemen see as a revolutionary new strategy in the game of racing. With guts, money, intelligent judgment and a willingness to flout tradition, the Klein-Lukas duo has become a dominant force.
"I'm not a safe player," Klein says. "I never owned a government bond in my life. I never clipped a coupon and never will. That's one of the reasons Wayne and I get along so well. We both go for it. If we have a reasonable shot, we're both prone to pushing the button: Go! We have an extraordinary chemistry."
Klein has been pushing and going since he was a kid growing up in the Bronx in New York, the son of a Russian immigrant. He worked his way through New York University by selling cheap sets of encyclopedias door-to-door; he got in the front door by mumbling that he was taking a census for the "survey department." When he wasn't selling or studying, he was going to baseball and football games. At the Polo Grounds on a Sunday afternoon in December 1941, Klein watched the Giants play football. During the game it was announced that the Japanese had attacked Pearl Harbor.
Klein spent the next five years as an Army Air Corps navigator, logging so many hours in the cockpit amid roaring engines that he now has to wear a hearing aid. But when he was on the ground, he took on another job: selling cars. While stationed in Wilmington, Del., he would take a train to New York, buy a used car for $700, then drive it back to Delaware and put an ad in the paper: ARMY OFFICER TRANSFERRED. MUST SELL '39 BUICK. $900. By the end of the war, he had a wife, Fran, a 5-month-old baby girl, Randee, a 1940 Chrysler and a road map showing him how to get from Wilmington to Los Angeles. "I thought that California was kind of the land of opportunity," he says.
He was kind of right. Klein opened his first used-car operation in the San Fernando Valley, north of L.A., on a dirt lot with four cars, and he sold three of them the first day. Southern California in the late '40s was paradise for a hustling used-car salesman. "I didn't have to know what I was doing," Klein says. "Prices kept escalating; cars were scarce."
But Klein added a few tricks to his trade. "Hamburger meat went to a dollar a pound," he says. "Everybody was screaming, 'Hamburger's a dollar a pound!' " So Klein began slapping price tags on the windshields of his cars: 55 CENTS A POUND, 66 CENTS A POUND. He advertised on television, too, and was the star of his own commercials. Dressed in cowboy boots and hat, he called himself Cowboy Gene and affected a Texas drawl, welcoming viewers with "Howdy, pardner."
Klein capped his career as a car salesman when he agreed to market a small Swedish automobile in California, but only after the Swedes agreed to a little Americanizing—more chrome, sexier colors. Thus Klein, with one partner, introduced the Volvo to the U.S. marketplace in 1957. Two years later the partners sold the distribution rights for $2.6 million. "My first taste of big money," says Klein.
A 39-year-old millionaire, Klein took over as the head of the struggling National Theatres and Television Corp., which owned 230 movie houses across the country. By 1972 he had parlayed that into a conglomerate called National General with assets of more than a billion dollars. But by then Klein wanted out. "I figured I had won the conglomerate game," he says. "I'd built a billion-dollar company, and the question I asked myself was, Do you want to go for $2 billion? And then $4 billion? Is that what you want to do? Or do you want to run a football team and have some fun?"
In 1966, while he was building National General, Klein was offered the chance to buy the Chargers for $10 million. Assembling a large group of investors, Klein seized the opportunity—and took 20% of the action himself. For most of his 18 years with the Chargers he loved it.
"The games, the training camp, learning the inside of the business—the football was fun," says Klein. But other aspects of the game began to wear on him. The NFL owners' meetings became trying and tedious. When another owner would launch into a long-winded tirade, Klein would often flick off his hearing aid and sit in blessed silence.
In May 1981, Klein suffered his first heart attack; he was stricken on the witness stand while testifying in the antitrust suit that Al Davis had brought against the NFL. Davis had accused Klein of conspiring with NFL commissioner Pete Rozelle and Los Angeles Rams owner Georgia Frontiere to keep his Raiders out of L.A.; the suit, ultimately dismissed, was one of many clashes between Klein and Davis, his despised antagonist. A year later, at the time of the NFL draft. Klein suffered a second seizure; by then he knew it was time to get out of the game.
"What did I need lawsuits for, agents, drug problems," Klein says. "Phone calls in the middle of the night telling me that one of my players is hanging around in drug-dealing bars. When I had the heart attacks, I said, 'Bull——!' I was burnt out."
When Klein met Lukas that morning at Del Mar, he was ready to begin his life anew. Two weeks later Lukas joined Gene and Joyce for lunch at their home in Rancho Santa Fe. Flashing his wraparound smile, Lukas was, as usual, glib, charming and confident.
"You'll get a fair shake from me if you want to do some business," Lukas told Klein. "I'm not going to cheat you. I don't need to fill stalls."
Lukas had driven to Klein's house in his new Rolls-Royce, and when Klein walked him to his car he remarked that he didn't know horse trainers drove such fancy rigs.
"I said I wasn't going to cheat you," Lukas said. "I didn't say I was going to work for nothing."
Lukas went to work immediately. He picked out three fillies for Klein, who bought them for $600,000. One of them died before she got to the races, but a second, Gene's Lady, eventually won almost a million dollars in purses and sold at auction last fall for $600,000. And the third? She was a little gray weanling who grew up to be Lady's Secret. She retired last year with earnings of $3,021,425, more money than any other female runner has ever earned.
"I had no idea of getting into racing as anything except a dabble," Klein says. "I had thought it would be kind of a nice hobby—10, 12 horses. I forgot to realize that I never do anything that way. It just kept getting bigger and bigger. Horse racing helped me sell the Chargers because I knew I could get interested in something else."
When he sold his interest in the football team in 1984, Klein says, he walked away with more than $50 million. "I was just as happy as I could be to get out," he says. "When I signed the papers, I went to bed and woke up in the middle of the night laughing."
Klein has been in racing for five years now and still savors the change in his sporting life. "When Lady's Secret became Horse of the Year, her agent didn't call me to ask to renegotiate her contract," he says. "Or to tell me she wanted a bigger stall or a different grade of oats and wouldn't run on Saturday. Horses don't complain. They don't stay out at night and drink. And they don't have agents."
But they do demand time, and the business of racing has kept Klein, at 67, as busy as he wants to be. This is no idle hobby. "I know I can have losing years," he says, "but I'm not in it to dissipate money. It's my main business. If it were a constant drain, I wouldn't continue."
So far so good. Lukas's general manager, David Burrage, estimates that if Klein were to sell all his holdings now, he would ring up about $31 million in profit, after expenses. "That's a good ballpark figure," Klein says. "If I sold all my stock at auction, I'd make a huge profit."
He has also suffered some staggering losses. On a recent morning at his farm Klein opened the door of a stall and pointed to a well-bodied son of Seattle Slew named Devils River. "Look at this colt," Klein said. "He's absolutely gorgeous." And he is absolutely washed up. Klein paid $1 million for him as a yearling, but the colt won only $21,600 at the track before he bowed a tendon. Klein is trying to sell him for $50,000 as a stud prospect. "You've just got to roll with it," he says.
On the other side of the ledger, Klein bought Tank's Prospect, a son of the prepotent Mr. Prospector, as a yearling for $625,000. The colt not only won the Preakness but also earned $1,355,645 in a 14-race career. Putting him at stud, Klein sold nine shares in the horse for $400,000 each, $3.6 million in all, and still kept 31 shares for himself. Last year Klein spent almost $8.5 million for all or part of 30 yearlings in the hopes of finding another Tank's Prospect, or something even better.
"I buy so many because I believe strongly the law of averages is going to work," he says. "I don't know if it will be the million-dollar colt or the $150,000 colt. Some of them will make it, some will not. But if I have enough of them going, and they're all selected by Wayne, I feel we'll win our share."
It is impossible to separate Klein's extraordinary success in the business from that of Lukas. "Gene is dead game," Lukas says. "All my life I've put my head on the chopping block and it has worked. Gene has done the same thing. He's not afraid to take a chance. That's why we get along so well. He'll question me on the pros and cons of something, but if I say to him, 'Gene, this is a good deal,' he'll say 'Go!' and he never backs up."
What these two men have done and the way they have done it would have been impossible 30 years ago. Back then, yearling sales were a sucker's game, offering generally weak pedigrees and little promise of big rewards for the buyer. Until the 1960s most of the best bloodlines in America were owned and controlled by the owners of the big, private nurseries—by families like the Whitneys and Wideners, the Guggenheims and Klebergs, the Woodwards and Phippses, and by farms like Calumet and Claiborne. None of them sold their yearlings at commercial auction, and for any of them to sell a young champion race mare would have been regarded as an act of heresy. After racing, the good mares went home to the old manse—where they themselves had been bred and born—to be mated to the best stallions.
It was largely an insider's game, dominated by old money and by men who took pride in breeding and racing their own best horses. Making a profit was not the primary object. Among the old family breeders the unspoken wager was a sporting one: "I bet I can breed and race a better horse than you can." In 1920, when Sam Riddle was offered a blank check for Man o' War, old Sam declined, saying, "This horse is not for sale at any price."
The game began changing dramatically in the '60s. As the old dynasties began to wane, younger men, commercial breeders, moved in on the action. As the purses and the sport grew bigger and richer, a major stallion prospect became so valuable that it was economically imprudent for one person to retain sole ownership. Sam Riddle might have been able to brush off a blank check for Man o' War in 1920, but could he have turned down a hard $40 million in 1970? Better to share the risks of ownership—injury, death or infertility—with others. The best stallion prospects began to attract syndicates made up of 32 to 40 investors. Many of these syndicate members were commercial breeders who were not only buying shares of the best stallions but were also purchasing the best mares at the dispersal sales of the once inaccessible farms. These breeders then offered yearlings with outstanding bloodlines at public auction.
The rising quality of those yearlings is indicated by the records of Fasig-Tipton, the New York-based auction house. From 1930 to 1970. Fasig-Tipton sold only one Kentucky Derby winner in each decade: Cavalcade (1934), Gallahadion (1940), Count Turf (1951) and Kauai King (1966). In the decade 1971-80, the company sold four Derby winners at auction: Foolish Pleasure (1975), Bold Forbes (1976), Triple Crown winner Seattle Slew (1977), and Genuine Risk (1980). In the same decade, not incidentally, two more Derby winners came out of the Keeneland sales: Canonero II (1971) and Spectacular Bid (1979).
By the early 1970s, spurred by their strong economies, the Europeans, the Japanese, and then the Arabs invaded the American sales and spent lavishly, driving up prices and making it even more lucrative for Americans to offer their most fashionably bred yearlings for sale. By the '80s, most of the best lines in American bloodstock were stepping into sales rings from Keeneland to Saratoga. For Lukas and Klein, the timing was perfect.
Their "program," as the two men describe it, is as simple and solid as a horseshoe. They go to all the big sales. Lukas looks at every yearling, grades and sets a value on each one and decides which he wants most. When the bidding starts, with Klein and other wealthy clients at his side, Lukas usually gets what he wants.
He then ships the horses to the training center in Rancho Santa Fe, which Klein built but leases to Lukas. Periodically, Lukas wings in from Santa Anita in a Sikorsky helicopter, owned jointly with Klein, to supervise the training. When the horses are two years old, Lukas ships them to his various stables around the country.
If a colt performs well, he is syndicated as a stallion, and the money is plowed back into the buying of more yearlings. If a filly does well, she is sold at auction, and the proceeds go to buy more yearlings. Last fall Klein auctioned off eight fillies and mares for $13.99 million, including Eclipse winner Life's Magic, in foal to Alydar, for $4.4 million. "I can't afford to hold on to all the great mares and keep buying at the yearling sales," Klein says. "It would become an endless thing. I'd end up with 200 mares."
Nonetheless, the very idea of selling top-class racing mares—much less champions like Lady's Secret, who was sold by Klein for $5.7 million in November—is so contrary to conventional wisdom that it has startled nearly everyone in the business, and has offended many horsemen.
"When a horse has been that good to you, you don't peddle her like some piece of meat," says Eddie Gregson, a California trainer. "Everybody was shocked when he sold Lady's Secret. You can't sell a horse like that. It destroys your karma."
Laughing at that, Klein says it was certainly not to salvage his karma that he eventually bought back Lady's Secret in January from Fasig-Tipton, who had acquired her by prior arrangement when she failed to bring more at auction than her guaranteed price of $5.7 million. But he stoutly defends his program. "There is no reason not to sell champion mares. You syndicate stallions, so why not sell the mares? The object is to get the money back so you can keep pouring it in to buy the yearlings."
"The selling of those mares has been revolutionary," admits Gregson. "It's a new notion of attacking the game. There is no loyalty to any of your retired champions. Let them go; let someone else breed them. This approach is so different."
Other horsemen are not convinced that this strategy will hold up. One prominent Kentucky breeder says, "Gene Klein doesn't know this yet, but he is going to have to become deeply involved in the breeding end of the game. I don't think you can only attend the yearling sales. That wheel of fortune can stop anywhere. It's just too risky, too much to ask that you repeat this thing year after year."
Klein stiffens when he hears that old-time religion. "I disagree with that," he says. "We can continue to buy the yearlings and be successful. We've done it for three straight years, so I don't think it's been a fluke. We have yet to have one bad year. It's all Wayne Lukas. He gets better every year. Oh, I'll breed some to race and hope I can get lucky. But in my book, the odds are much more against you when you breed your own because you never know when you'll breed a crooked-legged foal. At the yearling sales, you can see what you get."
The breeders and sellers, of course, love the whole idea. "It's just beautiful. It's the lamb slaying the butcher," says John Finney, chairman of Fasig-Tipton. "Everybody has always said that buying yearlings is such a mug's game, a crapshoot. What Lukas and Klein ire saying is this: You don't have to have an enormous stud farm and $50 million or $100 million invested in production equipment if you go to the yearling sales and have a very sharpeyed team and then manage your horses well on the racetrack. They are showing that you can actually make money on it as well as have some real fun." Says Ted Bassett of the Keeneland Association, "Gene has served as a tremendous advertisement for American racing."
Breeder John Gaines of Gainesway Farm in Lexington says, "Some people have felt that Gene is somewhat out of control in his spending and in his approach to the game. Gene Klein is about as much out of control as Magic Johnson."
It's not surprising, though, that the Klein-Lukas assault on the racing game has stirred some resentment along the way. "If you go into a race with a horse worth $40,000 and Klein has one worth $2 million, you have to be ready to get beat eight out of 10 times," says trainer Jose Martin. "And then you go to the sales and try to buy a horse, and they outbid you. You have to be jealous and have anger in you."
Billy Turner, the trainer of Seattle Slew, understands well the frustration of trying to compete against Klein and Lukas's other wealthy owners. One year Turner took a millionaire of his own to the sales to buy yearlings. Turner picked out eight prospects. "The Arabs bought two of them, and Lukas bought the rest," Turner says. "It was a blowout. I couldn't compete."
Turner says he fears that so strong a force as Team Lukas, with rich and risk-taking owners like Klein behind him, might come to dominate the sport. "You've got to keep it diversified, spread it around," Turner says. "If it gets concentrated, everybody else gets discouraged and heads for the exits, and it hurts the game."
Not to worry, says Woody Stephens. "Nobody ever broke up the game, did they? They won't, either. The game's too big. Klein will buy his horses, and then somebody else will buy one for $50,000 and knock his brains out."
"I've been training horses for some 50 years, and owners come and go," says Hall of Fame trainer Charles Whittingham. "And anyone who puts up the kind of money Klein has, dammit, he's in the game! Most people who do the squawkin' don't put up nothin'. They want to milk the old cow, but they don't want to feed her too much."
And Martin, though he confesses to jealousy, also says, "There's a lot of owners with as much money as Gene Klein, with more money, and no one is stopping them from doing what he's doing. You've got to have guts to do what he and Lukas are doing."
Even with his adventures in racing, life is considerably calmer now for Klein than it once was, and friends have seen a mellowing of the man over the years. When Fran died after suffering a stroke in 1973, he was cut temporarily adrift. After his brief second marriage ended in divorce, he courted and married Joyce Finberg, a former stockbroker, now 50.
"I've seen Gene Klein through two entirely different periods of his life," says longtime friend Jerry Steinbaum. "In the early days he was tough and sometimes hard to be around. He'd get angry. He almost forced his will on you. People were afraid of him. He was so driven toward success. When he found Joyce, he found exactly what he needed to bring him peace of mind."
"Boy, it's great to have a love affair like this," Klein says. "Especially in my later years."
The two are almost never seen apart. When he climbs into the helicopter to go watch his horses run at Hollywood Park or Santa Anita, Joyce climbs in next to him. When he decides to buzz across country in his Gulfstream jet to see a horse run in New York, she is there, too, reading the Daily Racing Form.
Home to Gene and Joyce Klein these days is a Spanish-style house on a hill with a sweeping view of their 33 acres in Rancho Santa Fe. Klein is an art dealer and collector, and he has adorned the landscape with 20 pieces of sculpture by some of the world's most celebrated contemporary artists. He likes to wander out here in the mornings, as if to assure old Cowboy Gene that what he is living is true.
Five miles from his home, Klein built the training center and his farm on 280 acres of a flat, dried-up bean field; there he constructed a 32-stall barn for horses not in training and crisscrossed the land with almost 10 miles of paddock fencing. "The farm itself is not a profitable venture," he says, "but I wanted my own so I could take care of my horses myself." Although the lifeblood of his operation remains the yearlings bought at auction, he does dabble in breeding. Klein owns 30 to 40 broodmares, many of whom he ships to Kentucky each year to be bred; he then has them flown, pregnant, back to his farm "so they can enjoy the weather and not be in strange hands." In the spring, he flies them back to Kentucky to foal, to be bred again and returned to the farm.
"I like sitting in my office and looking out the window at the babies," he says. "And it's a great kick to buy a Tank's Prospect at a sale—to name him, bring him to the farm, watch him grow, watch him train and race and win the Preakness. In two years we'd won a classic. Boom! I looked like the Toyota commercial, where the guy just jumps in the air."
He looks out across the grass paddocks and the bands of roaming horses, sweeps his arm across the scene and begins to tell how he bought the land and planted the grass. "This soil raises awfully good pasture," he says. Then he winks. "What can I tell you? I'm a farmer from the Bronx."