by Diedrie Biles
from THE BLOOD-HORSE
(photo by Anne M. Eberhardt)
If you live outside of Kentucky, you might not know about Henry Clay, whose former home, Ashland, is a tourist attraction in Lexington. But if you're involved in the Thoroughbred industry, you probably have heard of one of his descendants, Robert N. Clay, the master of Three Chimneys Farm.
Known for his devastating wit and skill as a compromiser, Henry Clay was a leading national political figure for at least three decades back in the 1800s. He served as a Secretary of State, Senator, and Speaker of the House, and he also made several unsuccessful bids for the presidency.
A soft-spoken man who chooses his words carefully, Robert N. Clay heads one of Kentucky's most successful commercial breeding operations. In addition, like the ancestor he describes as a "very, very distant relative," the 52-year-old Clay has a flair for leadership. He sits on the boards of such influential industry groups and institutions as the National Thoroughbred Racing Association, Keeneland Association, and Breeders' Cup Limited. He's also a member of The Jockey Club, secretary of the American Horse Council, and vice chairman of the board of trustees of The Blood-Horse, Inc. (publisher of this magazine). His past positions include the presidencies of the Thoroughbred Owners and Breeders Association, National Thoroughbred Association, and Thoroughbred Club of America.
"Leadership, I think, is something you're sort of born with, either you like it or you don't," Clay said. "I don't mind being the guy who says, 'Let's go'; it just comes naturally to me. I grew up in a small town, and every year there was an election at school, I was the president of my class."
With Clay in charge, from the summer of 1990 until the spring of 1993, TOBA made great strides. The organization intensified its outreach efforts, more than doubling its membership to 2,800, educating prospective investors in the industry through its New Owners Program, and expanding its board of trustees to include the presidents of eight state breeders' associations.
At a time when the sport of racing was fragmented and in decline, Clay and his TOBA colleagues started calling for unity and a national marketing strategy. They consulted with a top executive at a major ad agency in Atlanta, and they also raised funds from horsemen and racetracks in Illinois, Kentucky, and Ohio to establish the Tri-State Marketing project, which conducted research on racing customers and developed proposals for national advertising.
In addition, TOBA's leaders came up with a national money-raising mechanism, similar to ones already in use by beef, pork, and dairy producers. But the plan, which would have required federal legislation to implement, was controversial. The involvement of government was a key sticking point with many of its critics, and racetrack owners, in particular, were concerned about the proposal's funding source, which was a percentage of the pari-mutuel wagering takeout.
"I think TOBA wanted to be the catalyst, but we finally came to the conclusion that it wasn't going to work politically," Clay said. "But at least we put some ideas on the table and helped further the notion that centralization could be good for all of us."
Frustrated, but not ready to give up, Clay looked for other ways to promote the concept of national advertising. He worked first through the NTA and then with an industry alliance that included the NTA. The end result was the NTRA, which was launched in April of 1998 as racing's first centralized marketing office.
The NTRA's creation involved many people, and Clay had a key role in the process, said Tim Smith, the NTRA's commissioner and chief executive officer. Smith called Clay a "consistent source of good judgment and common sense" and "an influential leader who has the ability to forge compromises and bring people together, which, of course, everybody relates to his ancestry."
According to Smith, what Clay did in particular was "to see that the interests of the owner and the breeder were kept in the mix. It wasn't easy. In many ways, the last critical step was to get the racetracks to join the NTRA, and a lot of time and attention was paid to them. We could have become somewhat imbalanced, but Robert was a steady voice representing the interests of owners and breeders, without being confrontational or unrealistic."
Clay's contributions also were praised by Ed Friendly, a founding member of the NTRA board, and formerly chairman of the Thoroughbred Owners of California and co-chairman of the NTA.
"The TOC beget the NTA, and the NTA beget the NTRA. Robert was the in-between glue that brought it all together," Friendly said. "Along with John Gaines and a couple of other people, I would give Robert absolute credit in the development of the organization."
Thoroughbred dreams
Clay's roots were not in Lexington's Thoroughbred industry. Instead, he was raised to the east in Mt. Sterling, where his family was in the tobacco business. His father, Albert Clay, would later become an influential leader in the horse world. But when Robert Clay was a teenager, his relatives were just beginning to dabble in Thoroughbred ventures.
Clay earned a business degree from the College of William and Mary in Virginia and also attended the University of Kentucky for a while. He served in the Navy during the Vietnam conflict, then returned to the Bluegrass State and started working for a fertilizer company that was owned in part by his father.
Clay's exposure to the Thoroughbred world was limited, but what little he observed intrigued him--and his interest was keen. He had written a college thesis on equine economics, and also had ridden with a veterinarian and worked at Spendthrift Farm. In addition, while dispatching fertilizer trucks and selling soil sampling services, he had met a lot of farm managers.
"I saw people who were working on the farms, and their lifestyle was more attractive to me than the fertilizer business," Clay said. "I guess I got the bug."
In the early 1970s, he purchased 100 acres of undeveloped land near the town of Midway and started Three Chimneys Farm. The Federal-style two-story house on the property once had six chimneys, but only three remained after renovation. Even so, Clay said, the farm's name actually came from the address of a fraternity brother, who lived in Bermuda.
In 1973, Clay sold the first yearling under the Three Chimneys banner. Consigned to the Keeneland September sale, the Bold Tactics colt, which was bred by Clay's father, brought $37,000. The yearling, later named George Navonod, grew up to win the 1974 Norfolk Stakes (gr. I), the 1976 Charles H. Strub Stakes (gr. I), and six other added-money events.
The fertilizer business, meanwhile, was thriving.
"My dad and I had bought out the other partners, and I had become the CEO," Clay said. "We had grown from $500,000 in sales to $60 million."
But in 1984, with few regrets on his part, the company was sold to a large agricultural conglomerate. Clay was free to concentrate on Thoroughbreds, and much of his energy was directed into a project that was already under way--establishing Three Chimneys as an important player in the stallion syndication game.
Inspired by courses he had taken at Harvard's business school and a professor he had met there, Clay wanted to create a unique identity for Three Chimneys. His plan was to establish a small, exclusive stallion "boutique," with six top horses.
"At the time, there were three big players in the stallion market, Spendthrift, Gainesway, and Claiborne," Clay said. "They were like Ford, General Motors, and Chrysler, and they had about 30 stallions, or more, apiece. To differentiate ourselves, wedecided to build a stallion barn with only six stalls and try to get the top horses that might not want to go to one of the factories."
The first stallion Three Chimneys lured was Slew o' Gold, who was syndicated by Clay for racing and breeding purposes in 1983, when the big bay runner earned the first of his two Eclipse Awards. In 1984, Clay coordinated another syndication deal that involved Chief's Crown, who was voted that season's champion 2-year-old male. The following year, Seattle Slew was moved to Three Chimneys from financially-troubled Spendthrift.
The emphasis on quality, according to Clay, helped the farm survive the Thoroughbred industry's sharp downturn that closed out the 1980s. Now, the farm has 11 stallions in all, including three--Wild Again, Dynaformer, and Rahy--who ranked among North America's leading sires by progeny earnings in 1998.
"We're a little larger than a boutique," Clay said, "but we're still not a department store. We'll never have more than 14 stallions."
Other ventures
Three Chimneys' growth has not been limited to the stallion sector of the business. The farm has increased in size to 1,500 acres, which are divided into six divisions, and during the breeding season it is home to approximately 300 mares. No longer a one-horse consignor, Three Chimneys ranks among the leading sellers of yearlings and breeding stock at Keeneland, accounting for millions of dollars in gross revenue each year.
The farm's breeding and racing programs, along with its auction ventures, regularly churn out talented horses like champion Hidden Lake and grade I winners Gorgeous, Seaside Attraction, Storm Trooper, Subordination, and Tap to Music. Clients include a host of industry stalwarts, among them Allaire du Pont, Daniel Wildenstein, George Steinbrenner, and John Mabee, who described Clay and his staff as "forthright and honest."
Success, for Three Chimneys, has been no accident. An enthusiastic reader of both financial and Thoroughbred publications, Clay is known for his creative business strategies, and in 1995, he was honored with the University of Louisville's John W. Galbreath Award, which recognizes an entrepreneur who has made a significant impact on the equine industry.
Three Chimneys was a pioneer among Thoroughbred farms on the Internet and in race sponsorship. For two years, the farm hosted a unique camp that was designed to teach members of the racing media about how horses are bred and raised.
Clay, however, does not take all the credit. He praises the input of his employees, including general manager Dan Rosenberg, who has worked at Three Chimneys since 1978.
"I am a delegator," Clay said. "I absolutely believe that if you surround yourself with enough high-quality people, you're going to be successful. If you let them do their jobs and let them roll, they'll come up with the good ideas. They'll keep those good ideas coming, and all you have to do is pick the best ones."
Another Three Chimneys strategy is to seek out business. That means traveling extensively and making lots of phone calls to recruit mares for stallions and to talk to industry newcomers. Late in 1996, Clay hired John Hamilton, a former executive director of TOBA, to handle market development, market research, and client services.
"This is a business of relationships, forging new ones and sustaining the ones that already have worked," Clay said. "You can't simply wait for someone to walk in the door. We try not to step on the toes of other farms, because they are our customers, too. But we're not going to sit back and let our clients be picked off."
What Clay termed "an oversupply" of stallions has increased competition in recent years. But he expressed optimism about the Thoroughbred business, in general, and Three Chimneys, in particular.
"The economy is very positive and the demographics, with the baby boomers and their wealth, are also very positive," he said. "I think that prosperity will continue for at least 10 years, and America is going to be the center of it. I also think the NTRA is going to allow us to move ahead as an industry and compete with other forms of entertainment--as long as we are really patient and give it enough time."
As for Three Chimneys, the game plan won't change much. "We want to continue to differentiate ourselves with quality horses, quality people, quality customers, and quality service," Clay said. "If you read our brochure, you'll see that one of our values is 'honesty without hesitation.' We want to distinguish ourselves as a team of people that you have a lot of confidence in and a certain comfort level in doing business with. That will give us an opportunity to stand more top-quality stallions, and one day, we hope to raise one of our own."
And as for himself, "I think I know what I want to do for the rest of my life--run Three Chimneys," Clay said. "But Blythe, my wife, says that if I don't continue to find other fish to fry, I won't be easy to live with. One of the good features about the NTRA board is it's not permanent. We'll all go off it eventually. But I'm sure there will be other issues, and if someone wants to call on me, that will be fine."
