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Clouds over Calumet Farm

Sept. 02, 1991
Sept. 02, 1991

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Sept. 2, 1991

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Clouds over Calumet Farm

The Bluegrass breeding ground of nine Kentucky Derby winners is struggling to stay alive

Every day the tourists drive past Calumet Farm, near Lexington, Ky., just as they have for years, but now many feel sadness as they gaze over those historic 828 lush green acres, tree-shaded lanes, red-trimmed barns and miles of white fences. No farm has dominated U.S. horse racing as Calumet did in the 1940s and '50s, when its stable included such legendary runners as Whirlaway and Citation. On July 11, to the shock and dismay of an industry that still reveres the Calumet name and tradition, the farm filed a Chapter 11 petition to reorganize under the protection of a bankruptcy court. With its reputation so stained and its future so murky, it's hard to believe that Calumet will ever regain the glory that was.

This is an article from the Sept. 2, 1991 issue Original Layout

A lot of people must shoulder the blame for the fall of Calumet, perhaps none more so than J.T. Lundy, who took over as the farm's president in 1982, upon the death of his wife's grandmother, Lucille Parker Wright Markey, the Calumet matriarch for more than 50 years. When Markey died, the farm was debt-free and turning a profit. Less than nine years later, when Lundy resigned under criticism on April 3 of this year, Calumet was more than $70 million in debt and besieged by creditors who eventually filed more than $27 million in lawsuits.

Even this spring's Kentucky Derby victory by Strike the Gold, a colt born and raised at Calumet, only momentarily lifted the gloom. It was nice, of course, that Calumet had bred a record ninth Derby winner, but it was too bad that Strike the Gold wasn't able to run in the farm's famed devil's-red and blue silks. Last September, as part of a plan to ease Calumet's cash-flow difficulties, Lundy had sold Strike the Gold to a partnership headed by B. Giles Brophy, a New York City securities trader.

It will take years for the lawyers, bankers and accountants to sort out everything that happened at Calumet during Lundy's tenure as president of the farm. But a part of the saga is that behind its breathtaking facade, Calumet was never the paradise it seemed. Within the family, and especially between Markey and Lundy, there was enough bitterness and hatred to provide the script for an equine version of Gone with the Wind.

By almost all accounts, Lucille Parker Wright Markey was the image of a grand Southern lady—gracious, kind, courtly and generous. Especially generous. Under the terms of her will, a charitable foundation was established to fund medical research. By the time the trust expires, in 1997, it will have distributed some $460 million, second only to The Howard Hughes Medical Institute among the world's medical philanthropies.

Lucille Parker was married to Warren Wright Sr. in 1919, when she was 22. He was more than two decades her senior. His family owned the Calumet Baking Powder Company of Chicago, which Warren's father, William Monroe Wright, eventually sold to General Foods in 1928, just beating the Depression.

The elder Wright, who founded Calumet Farm in 1924, had at first raised and trained standardbred horses. The year he died, 1931, the farm's Calumet Butler won the Hambletonian, the top race in trotting. (Calumet is the only farm to have sent out winners of both the Hambletonian and the Kentucky Derby.) Nevertheless, Warren Sr. and Lucille converted Calumet to a thoroughbred farm that year and set out to win the Derby.

It took them 10 years. Their most astute decisions along the way were buying a yearling colt named Bull Lea for $14,000, in 1936, and hiring a Missourian named B.A. (Plain Ben) Jones to be their trainer, in 1939. Bull Lea turned out to be one of the most successful breeding stallions in history, the foundation of the Calumet dynasty; and Jones, along with his son Jimmy, made the devil's-red and blue the most famous and most respected colors in the nation. From 1941 through 1961, Calumet won two Triple Crowns (Whirlaway's in '41 and Citation's in '48) and seven Kentucky Derbys and topped the thoroughbred earnings list 12 times.

Although Lucille's main contribution to Calumet's success had been naming the horses, her husband left the farm in her hands rather than in those of their adopted son, Warren Jr. "[Warren Sr.] set her up as the lifetime tenant in charge of running it, or she had the right to sell it if she so desired," says Margaret Glass, who served as Calumet's office manager from 1940 through 1982. But upon Lucille's death, according to the will, if the farm had not been sold, Calumet would go to Warren Jr., his wife, Bertha, and their four children.

Warren Sr. died on Dec. 28, 1950. Two years later Lucille married Gene Markey, a retired Navy commodore, Hollywood scriptwriter and bon vivant who had been married previously to three of the world's most beautiful actresses—Joan Bennett, Hedy Lamarr and Myrna Loy. Sometime after the marriage, Markey—who was great friends with World War II hero Admiral William (Bull) Halsey—was retroactively promoted to the rank of rear admiral, and thereafter he insisted on being introduced as "Admiral Markey."

The Markeys spent only a few months of the year at Calumet, the rest of the time staying at houses in La Gorce Island, Fla., and Saratoga Springs, N.Y., or traveling in Europe. Among their friends was Aly Khan, who was often addressed as "Aly, darling" by members of the international set—from that salutation came the name Alydar, the last great Calumet horse to run for the Markeys.

Enthralled by the Admiral and their glittering life together, Lucille distanced herself from her first husband's family. She was outraged in the late '70s when Warren Jr. was sent to prison for income-tax evasion.

As family ties declined in the '60s, so too did Calumet's fortunes. Plain Ben Jones retired in 1960 and died the following year. In 1964, Bull Lea died, and Jimmy Jones left Calumet to take a job at Monmouth Park, in New Jersey. But in 1968, Calumet briefly made headlines when the farm's Forward Pass, who had finished second to Dancer's Image in the Kentucky Derby, was declared the race's winner when a then illegal medication was detected in postrace testing of Dancer's Image.

Calumet's fortunes turned upward again in 1976, when Lucille Markey hired John Veitch as Calumet's trainer. Veitch recalls, "The only thing she ever told me, in the way of a direct order, was that neither Warren Jr. nor any of his family were allowed to have anything to do with her horses." Under Veitch, Calumet provided its final moments of glory for the Markeys. In 1978 the farm earned more than $1 million for the first time since 1957, as Alydar finished second to Affirmed in each of the Triple Crown races.

Warren Jr. died before the 1978 Preakness, at the age of 58. Lucille Markey did not attend his funeral in Lexington, and she made it clear to Calumet personnel that she didn't want them to attend the funeral, either.

But as her own health began to fade, Lucille Markey realized that J.T Lundy, the husband of her granddaughter Lucille (usually called Cindy) would assume control of Calumet. Markey's daughter-in-law Bertha was not enough of a horsewoman to handle the day-to-day administration of the farm, and none of Bertha's four children—Warren III, Thomas, Lucille and Courtenay—had shown much interest in the horse business.

Markey hated the idea of Lundy's being in charge. In the late '70s, she almost sold the farm to Will Farish, a Texan and friend of a politician named George Bush. "We thought it was a fait accompli," says Glass. However, Markey eventually backed out.

The Admiral died in 1980 and Lucille followed two years later. Her funeral was arranged by Glass, not by the Wright heirs. "I remember J.T. [Lundy] calling me up," says Glass, "and saying that since I had handled everything else, I might as well handle the funeral."

Lundy had married Markey's granddaughter when Cindy was still in high school. A short man with unruly black hair and a country twang, Lundy was a little too good ol' boy for Lucille Markey. He also made no secret of his desire to run Calumet someday. As his friend Lyle Robey recalls, "He dreamed of it from the first day. I remember him sitting in his house and going over reams of paper, studying all the Calumet pedigrees."

Despite Lundy's aspirations, Markey prohibited him from setting foot on Calumet property after he offended her while having lunch with Markey and the Admiral one day. A former farm employee recalls being told by Markey that when she asked Lundy how he could afford a farm he had just purchased, Lundy said, "Well, when you die, Cindy will have plenty of money."

Indeed, when Markey died, the heirs, as she had feared, ceded administrative control of Calumet to Lundy. In only a few months he got rid of the veteran management team that had been loyal to Markey, among them Glass, Veitch, farm manager Melvin Cinnamon and yearling manager Ewell Rice. Robey, who had previously represented the Wrights, became the farm's general counsel. Lundy brought in Frank Whiteley, trainer of such champions as Damascus and Ruffian, to be the farm's head trainer. Whiteley's son, David, was hired to replace Veitch as trainer, an awkward situation because Veitch and David Whiteley were best friends. Lundy hired Tony Foyt to train a string of Calumet horses in the Midwest, and Calumet became an associate sponsor of the race car driven by Tony's father, the legendary A.J. Foyt. In addition, Lundy changed the name of a colt that had been called John the Bald, in honor of the clean-pated Veitch, to Foyt.

A private airplane was acquired, and a massive renovation and capital construction program was instituted at Calumet. Soon the farm had a new guardhouse, an equine swimming pool, a veterinary clinic, a commissary, a tennis court and a swimming pool at the mansion—now occupied by Bertha Wright. While Glass and Veitch insist that a lot of the renovations were unnecessary and extravagant, Robey maintains that the farm was badly in need of an overhaul. "They had just been painting over deteriorating barns," he says. "That made them look good, but that's about all. J.T., following family orders, tried to put it in first-class shape."

The cordial relationship between Lundy and the Whiteleys lasted only a couple of years. After they parted ways, Lundy spread the Calumet racing stable among a number of trainers, but he didn't really hit the jackpot until 1988, when he turned over a string to D. Wayne Lukas, the country's leading trainer. Soon Calumet was again competing in major races and winning its share.

On the business side, Lundy took over a farm in 1982 that not only was debt-free but also drew earnings from racing as well as from various Texas oil and gas holdings, all part of the Warren Wright Sr. trust. Despite this, and despite the fact that Alydar had become a money-making machine at stud, Calumet became plunged into debt for the first time in its history. The farm was mortgaged heavily twice, most recently in October 1990, the latter backed with a $44.75 million loan from the First City, Texas bank.

A lot of the money, perhaps as much as $30 million, was used to buy half-ownerships in the stallions Secreto and Mogambo, both of whom have so far been disappointing as sires. Lundy was also investing in broodmares at a time when changes in the federal tax laws had eliminated the incentives buyers had traditionally enjoyed, thereby knocking the bottom out of the thoroughbred market. As Robey sees it, Lundy was an aggressive businessman who was a victim of timing.

Lundy's detractors claim that he was a loose cannon. "He operated it more as a personal thing instead of as a corporate head," says John T. Ward Jr., who was installed as Calumet's chief operating officer on April 3 of this year. Some loans Lundy had guaranteed personally; others he guaranteed in the name of the farm. Lundy was also secretive, generally avoiding the media and rarely giving interviews. One horseman, citing the guardhouse and the wrought-iron gate that Lundy had installed at Calumet, said, "I felt like I was looking at the wall cutting oil" East Germany."

Lundy's defenders say that he was only doing what the Wright family wanted him to do, and they point out that at no time during his tenure did Lexington's Commerce National Bank, the trustee for about two thirds of the Wright trust, overrule or even question his decisions. Others say the family rejected the bank's involvement. "The family wanted Calumet to be returned to a first-class farm, and he did that," Robey says. "But these things are not cheap. They don't come free."

Calumet's finances didn't collapse until Alydar had to be destroyed last Nov. 15 after breaking his leg in a stall accident. Alydar's offspring include not only Strike the Gold but also Alysheba, Easy Goer, Criminal Type and Turkoman, four of the greatest runners of recent years. The stallion was the farm's meal ticket: In the '80s, he had brought as much as $300,000 a breeding session. Says Ward, "Alydar was the steam engine that was able to generate the massive amounts of cash that we needed to service the [Calumet] debt."

Of all the controversial things that Lundy did, the one that most displeased racing purists was the way he managed Alydar. He sometimes bred the stallion to more than 90 mares a year, about twice the norm, and he further dismayed Alydar's fans by breeding him to a few quarter-horse mares.

"I was offended, yes," says Veitch. "They had a great stallion, and instead of breeding him to a select group of high-quality mares, they were jeopardizing his life by breeding him so much. I guess nobody realized how badly they needed the cash. Everything was a house of cards based on Alydar, and when he died, it all collapsed."

The sadness caused by the loss of Alydar was alleviated, to a certain extent, when Criminal Type was named the 1990 Horse of the Year, the first Calumet campaigner to win the honor since Citation, in 1948. At the Eclipse Awards dinner last February in San Francisco, much credit was given to Lundy for bringing Calumet back to the top. Apparently all the accolades were too much for Bertha Wright, who stood up in the packed ballroom of the Fairmount Hotel and screamed, "Don't forget the Wrights!" Lundy, by then estranged from Cindy, was humiliated. Two months later he resigned.

As one of Lundy's closest friends explained it, "J.T killed himself by being asinine enough to take Bertha out [to San Francisco] and embarrass her by not giving her the credit she thinks the Wright family deserves."

Today Calumet is being run by another outsider, Ward, a third-generation horseman whose own farm is two miles up the road from Calumet. Ward had hoped to reorganize Calumet, pay off the debts and keep it in the hands of the Wright family. But as the lawsuits piled up, his hopes collapsed.

Ward refuses to criticize Lundy publicly, though he points out that "the decisions to take that much debt on a corporation that was family-held was a considerable risk to the family itself." Since the Chapter 11 filing, Ward's most important job has been to find the capital to keep the farm running while trying to locate a buyer who will honor the Calumet tradition.

On July 26 in U.S. bankruptcy court in Lexington, Ward testified that 15 potential buyers had expressed interest in the farm and that five or six were "serious" and "of the highest quality." Ward also told Judge Joe Lee, who had approved a $3.3 million loan from First City, Texas to keep Calumet operating for six months, that he expected it would be October or November before a purchase price could be negotiated.

As for J.T. Lundy, he's running his own farm near Midway, Ky., 12 miles northwest of Lexington. I le refuses to grant interviews, but he did take the time to join in a lawsuit requesting that he be given the right to move the stallion Wild Again from Calumet to another farm. His friends say he's relieved to be out from under the stress that he had felt at Calumet.

Lundy's detractors say that Lucille Parker Wright Markey was absolutely right in her judgment of him, except that she never dreamed he would hurt Calumet Farm so badly.

PHOTOEDWARD CLARKFarm founder Warren Wright Sr. posed with Whirlaway during Calumet's days of glory.PHOTOBILL LUSTERThough the grounds look much the same four decades later, the image has been tarnished.PHOTOBILL STRODEMarkey's death in 1982 precipitated Lundy's taking over control of Calumet.PHOTOJACQUELINE DUVOISINThe freewheeling Lundy operated in a style that often stunned and alienated traditionalists.PHOTOBILL LUSTERAlydar's death, following a stable accident, caused financial havoc.