The Killing of Alydar
Once upon a time he was one of the fastest thoroughbreds in the world. In 1990 he was put down after breaking his leg—an accident, it was assumed, until last year.
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After their marriage, Lundy bought a small farm and started a breeding program to produce racehorses, perhaps to show Cindy and her family that he was serious about his desire to head Calumet. Throughout the sixties and seventies, however, the farm remained firmly in the hands of its matriarch, who by then had married a dashing retired U.S. Navy admiral named Gene Markey. Though approaching eighty, Lucille Wright Markey had not lost her resolve to produce one more Kentucky Derby winner. In 1976 she hired a brilliant young trainer, John Veitch, who began watching a horse named Alydar that had been born at Calumet the year before. At the Blue Grass Stakes in the early spring of 1978, Lucille Markey stood next to the outside rail, gripping it with her white gloves, as Alydar introduced himself to the world, sweeping around the final turn and racing victoriously to the wire. Then, at the Kentucky Derby, the Preakness, and the Belmont—the races that make up the Triple Crown—Alydar and another Kentucky Thoroughbred, Affirmed, staged what turf writers still describe as the greatest duel in horse-racing history. They literally raced side by side, eyeball to eyeball, their hooves pounding like cannon fire as they hit the home stretch. In their fight to the finish at Belmont, they ran dead even for the final seven furlongs.
To Lucille Markey's deep disappointment, it was always Affirmed who got to the wire just ahead of Alydar. Yet once the two horses were retired to their stallion barns back on the farms where they were born, it was Alydar that everyone wanted to see. In the Thoroughbred-breeding business, there is no way to tell which stallion, regardless of its own pedigree, will be able to produce a new generation of winners at the track. The business is a crapshoot, based almost purely on luck. So when Alydar's initial progeny turned out to be strong, fleet-footed foals, the word quickly spread that the most famous second-place finisher in the Triple Crown had semen as valuable as gold.
Initially Alydar's stud fee was $40,000. J. T. Lundy told his in-laws that Calumet's management team was forfeiting the chance to make millions off Alydar. His message to the heirs was clear: Calumet needed a new leader. And who better than Lundy himself? There was no question that he was a hard worker who knew how to make money in the horse business. At the time, Lundy's farm was said to be worth several million dollars.
According to a history of Calumet, Wild Ride, by Ann Hagedorn Auerbach, Lucille Markey despised the overly ambitious tenant farmer's son. She refused to let Lundy breed his horses with Calumet horses, and she even tried to keep him from visiting the farm—which only reinforced Lundy's resolve to take over her kingdom. One story that circulated through Bluegrass circles was that Lundy had taken up jogging to stay in good enough shape just to outlive her. "Here was somebody who may have felt inferior his entire life," says Gary Matthews, Calumet's former chief financial officer. "And he wanted to get to the top just to show everybody he could do it."
He got his chance on July 24, 1982, when Lucille Markey died at the age of 85. Soon afterward, the Calumet heirs announced an agreement with 41-year-old J. T. Lundy, granting him "full discretionary management powers" over the farm. The country bumpkin was now the lord of Calumet Farm.
Almost immediately, Lundy began a multimillion dollar restoration of Calumet. He had workers install iron gates across the main entrance, as if to signify to the world that a new man was in charge, and he had the farm's 23 miles of fence repainted. He ordered the construction of a state-of-the-art veterinary clinic, complete with a treadmill and an equine swimming pool, which alone cost $1 million. He added new freeze-proof water troughs and a five-eighths-mile turf track, and he bought new stallions and racehorses, all in the hope that Calumet would regain the glory of its early days.Lundy was in such a hurry to get his projects under way that in 1983 he took out a $13.2 million loan. His bankers could not possibly have been worried about Lundy's paying it back. The farm was then debt free. What's more, Lundy soon raised Alydar's stud fee to $250,000. He also did something never before heard of in the Thoroughbred business: He started selling what he called lifetime breeding rights to the stallion. For $2.5 million, an owner could send one mare to Alydar's breeding shed each year for as long as Alydar was able to breed.
Lundy's timing couldn't have been better. In the early eighties the Bluegrass world was awash in money. Multimillionaire bidders—from Saudi sheiks to Japanese industrial titans and American oil barons such as Dallas' Nelson Bunker Hunt—attended yearling auctions at Keeneland Park, waving their hands to push the prices higher and higher. And whenever a son or daughter of Alydar was led into the ring, the bidding occasionally topped $2 million—for a single, unproven young horse. In 1983 Alydar was the industry's champion first-year sire: His offspring sold for an average of $760,000 each, at that time a record for a first crop.
Horse breeders who once rolled their eyes at J. T. Lundy were now slapping him on the back—hoping that he would look favorably on them when it came time to pick the new mares who would get to visit Alydar's breeding shed. Lundy even found himself the object of adulation by a respected columnist for the industry's journal, the Blood-Horse, who wrote, "While there has been some criticism of the methods of Lundy in his direction of Calumet, it seems to be based more on envy than fact. Lundy, in my opinion, is doing a great job in rebuilding a grand heritage."But Lundy didn't just want to rebuild a heritage. He wanted to create a Thoroughbred empire unlike any other. He too joined the bidding frenzy for new horses—spending between $20 million and $30 million for a half-interest in a stallion named Secreto. He continued renovating the farm, installing a gazebo and a tennis court and a swimming pool (this one for humans). He renovated his office, adding a second-story with a balcony from which he could survey the farm. Although he still wouldn't buy nice clothes for himself—he continued to wear open-collar shirts, corduroy pants, and Top-Siders to formal events at which every other horseman was dressed in a jacket and tie—he did spend $30,000 a month of Calumet money to lease a private jet, which he didn't hesitate to use for personal trips. (He once flew a group of friends to Maine for a lobster dinner.) He bought property for himself in the Florida Keys. In one of his most perplexing ventures, he made Calumet a sponsor of the Indy race car of A. J. Foyt, one of Lundy's longtime heroes.
Suddenly, J. T. Lundy was a jet-setting wheeler-dealer, sitting in the finest boxes at the nation's finest racetracks, cutting deals with other horse farm owners for horses and breeding rights, and paying himself a reported 10 percent sales commission on every deal he made. Perhaps because Lundy's wife, Cindy, had realized that she would never be able to compete with her husband's obsession with the farm, she began spending most of her time in the Virgin Islands, Scotland, and Colorado—which apparently was just fine with Lundy. He soon had a girlfriend, a young woman he had hired to work in the main office at the farm.
To pay for his newest ventures, Lundy took out a $20 million mortgage on the farm and received another $15 million line of credit from a Kentucky bank. Even in 1986, when the horse-racing industry went into a steep economic slump, due in large part to the collapse of the oil market and the restructuring of tax laws that eliminated one of the tax breaks for the purchase of horses, Lundy kept spending. He received an extra $10 million from the Kentucky bank that already had loaned him $15 million. And in 1988, just as the Thoroughbred market was really souring, Lundy got another bank loan for a staggering $50 million. It came from the flagship bank of Houston's First City Bancorporation, one of the state's largest bank holding companies, with more than sixty banks and $12 billion in assets.
Kentucky horse breeders who were scrambling to stay afloat were baffled. How did Lundy get a loan from a bank in Texas, where no one knew anything about horse racing? What bank officer did he find to approve that deal?
Actually, it was no ordinary bank officer. The banker behind the Calumet loan was none other than the powerful vice chairman of First City, a big, burly, cannonball of a man named Frank C. Cihak.
According to stories Frank Cihak has told his friends, he was raised in an orphanage on the South Side of Chicago and became an amateur boxer. He must have been a formidable opponent: A Wall Street Journal reporter once wrote that Cihak was built like a Chicago Bears lineman. After college he entered banking, worked his way up the ladder at First Chicago Corporation, and in 1976 took control of a string of smaller banks, where he developed a reputation for his relentless pursuit of profits.In 1988 his old boss, A. Robert Abboud, the freewheeling former chairman at First Chicago, made a deal with the FDIC to take over First City in Houston, which then was on the verge of collapse because of hundreds of millions of dollars of bad real estate and energy loans. (FDIC officials, thrilled someone wanted the bank, agreed to spend nearly $1 billion to bail out First City if Abboud would raise $500 million in new capital.) Abboud asked Cihak, then 45 years old, to go to Texas and be his "right hand." The two had a lot in common. Like Abboud, who once had been named one of the nation's "ten toughest bosses" by Fortune magazine, cigar-smoking Cihak was aggressive and abrasive—and he didn't like to be second-guessed. "His employees knew if they questioned what he was doing, they'd likely get fired," says an attorney who knew him. "His modus operandi was to call in a loan officer to his office and say, 'You are going to make the following loan to this guy. I'm vouching for him.'"
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