"A Gold Mine"
To prove that he really was the newly crowned ruler of Calumet Farm, Lundy began making changes, putting his own stamp on his kingdom. He fired several long-time farm employees. He bought and sold a lot of horseflesh, spending $25 million on one unproven stallion. He launched a massive, and expensive, renovation project on the house, the stables, and the grounds, including the symbolic installation of 15-foot-tall iron gates at the main entrance, which he painted red. He raised the stud fee for Alydar from $40,000 to $250,000, and he offered "lifetime breeding rights" for $2.5 million. He also increased Alydar's life insurance coverage to more than $30 million.
In addition to improvements around the farm, Lundy also bought a ski villa in Colorado, a condo in the Florida Keys, a home in the Virgin Islands, and an eight-passenger private jet. He spent more than $100,000 sponsoring the A.J. Foyt IndyCar race team.
"He jetted around to a lot of places, he entertained a lot of people, and he really had a good time and just burned through a huge amount of money," said Blood-Horse reporter Eric Mitchell.
Within a couple of years, Calumet, which had never carried any debt, was strapped for cash. Lundy hit up local banks for millions of dollars in loans, using Calumet and its prize stallion Alydar as collateral. When Lundy hit the limit at one bank, he just borrowed from another. None of the banks fully realized what was going on at Calumet.
"He kept borrowing from one bank to pay back another, and then borrowing from yet another bank to pay back that bank," Carol Flake said. "These banks thought they were buying into a gold mine. They just didn't know somebody else owned it."