Cot Campbell
Aiken, South Carolina
October 23, 1992

(Transcript of lecture) 

     The Equine Industry Program at the University of Louisville is a unique curriculum designed to train students in the business techniques, which will be necessary for the horse industry in the 21^st Century. As a business program, we wanted to provide our students with concrete examples of people who have demonstrated business skills in horse operations. This goal coincided with an award, named for the late John W. Galbreath, the department established in 1990 to recognize those in the horse world that have demonstrated entrepreneurial success, vision, and leadership.
     The award winners have each agreed to meet with the students at the University of Louisville to discuss and answer questions about the state of the industry. The recognition of business acumen is useful but the opportunity for future industry executives to learn from these business leaders is the most important aspect of the Galbreath Award.
     The 1992 winner, Cot Campbell, addressed the students and faculty on October 23, 1992 and answered their questions about a variety of issues confronting the industry. Mr. Campbell has achieved tremendous success in marketing and managing equine partnerships. Not only has he brought scores of new people into the industry—many of whom have gone on to be successful owners in their own right—he has shown all segments of the horse world the ingredients needed to attract and keep new participants. Our students gained many valuable insights from Mr. Campbell’s remarks. In turn, the department believes these comments should be shared with a larger audience.
     We appreciate the time and contributions Cot Campbell has made to the Department of Equine Administration at the University of Louisville. We would also like to thank the following people who were involved in selecting the 1992 award winner: 

Jim Ahern                    Carol Alm                    Jane Atkinson

Don Burt                     Alice Chandler             Van Clouse

David Grissom            Mike Kallay                 Rich Rolapp

Wayne Shumate

Copyright 1992, Equine Industry Program

Equine Industry Program
College of Business and Public Administration
University of Louisville
Louisville, KY 40292
Dr. Robert G. Lawrence, Director
Office: 502.852.7617

Robert Lawrence: 

     Welcome to our 1992 Galbreath Award Lecture. I want to just point out that this award is given annually to somebody that has demonstrated outstanding entrepreneurial skills in the horse business. We are looking for people who have taken the risk, who have shown management ability, and who also have made an impact on the industry. We really couldn’t have a better example of that than the gentleman with us today.
     Cot Campbell has taken risks. In 1973, he gave up a successful business partnership, cut all his ties with a major advertising agency in Atlanta and formed Dogwood Stables. Using his skills as a salesman, manager, and horseman, he has been tremendously successful. He has brought 700 people into this game, and has raced at least 43 stakes winners. All of us remember Summer Squall that won the Preakness. As an entrepreneur and in terms of innovation he took a common business tool—the limited partnership—and made it a pleasurable way to own horses. He has been extremely successful with that. To go to the winner’s circle with Cot Campbell looks more like a company picnic. When he came through with Summer Squall, he had 28 owners that could have been in the winner’s circle. It’s really great to have him here. He has a horse in the ninth race today at Keeneland so we don’t want to keep him from his picnic. Cot we welcome you to UofL and we are very interested in what you have to bring to us today. 

Cot Campbell:

     I do have a horse in the ninth and I don’t think it’s going to be a major attraction to get over there and see him. I am delighted to be here and very proud to have won the Galbreath Award. I certainly follow in the footsteps of a couple of distinguished gentlemen.

     Racing generally has its peaks and valleys and God knows we are in a valley right now. It has problems and it has to find solutions to those problems. But I do want to say this and I say this perhaps simplistically. I think any sport or industry that has the charm to entice Queen Elizabeth, the Aga Khan, the Arab sheiks, Winston Churchill, and some of the great names in this country, some of which have helped make this country great, along with such diverse characters as Magic Johnson, Wayne Gretzke, and M.C. Hammer…Any sport or business with that sort of charm will endure and flourish!
    Oversimplified, all of us are concerned with the ability of a large four-legged animal to get from point A to point B faster than some other large four-legged animal. But thank goodness racing has a great deal more to offer than that. What we are really about, what it all boils down to, is that we are in a quest for class. That is a hard word to define: guts, courage, poise, character—class. A great sport and a great industry revolves around one thing and that is the horse and whether or not he’s got class—that is the charm of it.
     At this point I’m going to tell you a story that some of you have heard. To me it captures the essence of what the sport and the industry are all about. It has to do with a man who has a very heavy problem at the moment. It’s a light moment about Bill Shoemaker.
     About 10 years ago, I went to the Keeneland summer sale and I bought a Seattle Slew colt for $450,000, which is a lot of money to pay, especially for me. I don’t buy horses at that level. I syndicated him as I do all the horses, gave him a lot of time, treated him very conservatively and in the fall of his two-year-old year, he was at Santa Anita getting ready to run. To say that a great deal of pressure attends this debut is a masterpiece of an understatement.
     I went out there for the race, and we are taking our best shot. John Russell is training him and we got Shoemaker to ride him. I am pretty nervous and anxious for Shoe to know that this is not just another race. This is a special occasion. A very good opportunity for him! I was in the walking ring, John had finished putting the saddle on the horse and he and I were waiting for Shoemaker.
     I know better than to do this but when Bill walked up to me we exchanged pleasantries and I said, “Bill this colt is by Seattle Slew” and he looked up at me and said, “Uh huh.” I said, “he is out of a mare named Miss Suzuki and she has had nothing but stakes winners!” He looked at me and said, “Uh Huh.” Now I am getting worried because I don’t seem to have ignited the fire. I said in desperation while the horse is in the walking ring, “Bill look at him over there. He is a big good-looking son of a gun, isn’t he? A grand looking colt, isn’t he Bill?” Shoe looked over his shoulder at the colt and looked back at me and said, “Well, if this big son of a _______can run a little bit, we’ll be alright won’t we?” That is what it boils down to.
     It has been a rather strange and unorthodox odyssey that has brought me to this fine occasion in the horse business. I use the word ‘unorthodox’ advisedly because I am no stranger to the unorthodox. I grew up around horses. I am going to give you a little of my background, which you may find interesting.
     Among other things, my father was a Coca-Cola bottler in Des Moines, Iowa, in the thirties. He decided suddenly that he was going to go into the racehorse business. We had some horses and I had been showing them but he decided to go into the racehorse business. This was 1940, a year before the outbreak of World War II and two years before a ban was put on many racetracks because racing was not considered an essential wartime activity.
     My father did not go into the horse business at a very propitious time. In the war years you couldn’t give a horse away. You literally could not get someone to receive one as a gift. My father went broke. But it hooked me pretty well on horse racing and I have been interested in it all of my life.
     I should probably point out that your previous Galbreath Award winners are graduates of Yale and Princeton I believe, but I am an oddity. I am a person who never graduated from grammar school, high school, or college but went to all of them. In my early days I was known as a rather free-spirited, fun-loving young man and I had a very checkered career. I lived many places and I did many things. Everything from being an ambulance driver to an apprentice mortician for about two weeks to master of ceremonies for the water-ski shows at Cypress Gardens in Florida to being a sportswriter on some insignificant daily newspapers and a lot of other things I really shouldn’t mention. If I had been a racehorse I would not have broken my maiden until I was five-years-old. I would have been on the starter’s list and would certainly have ended up a gelding.
     I came to Atlanta, Georgia in 1950. I had been living in Huntington, West Virginia. One night there after a long period of intense revelry I fell asleep with a lighted cigarette in my hand. The upshot was that I burned off the top floor of a boarding house. The next morning I was confronted by the disagreeable attitude of the other guests and the proprietor of the boarding house. I decided that perhaps another city might offer more opportunities for a young man of my talents. Indeed another region seemed to be called for! So Atlanta, Georgia was selected as the lucky city, and I went there.
     I went to work on the Chevrolet plant assembly line in Atlanta helping make Chevrolets and God help anyone who bought one of those automobiles from that period. It was my custom every afternoon when my shift was ended to change hurriedly into a blue business suit and rush downtown and call on advertising agencies. One of them finally hired me for $225 a month. I started my career in advertising.
     I straightened my act out not long after that and began to make some progress. I started my own agency in 1964 and I became Chairman of the Board of Burton-Campbell, which became one of the largest agencies in the South. When that agency started to do well I bought a horse with a couple of pals.
     I was obsessed with the subject of horse racing and, necessity being the mother of invention, I figured out a way to get into the horse business. After buying a horse with a couple of friends I decided to buy another one and form a limited partnership to own a racehorse. The concept being that a person could get in and control the amount of financial exposure, get some tax benefits, have the horse managed by someone who was presumably reputable and knew what he was doing.
     I did two or three partnerships, and then one night at a two-year-old in training sale in Florida at Hialeah I bought a filly with a crooked ankle who came from one of George Widener’s great families. We named her Mrs. Cornwallis. She could “run a hole in the wind,” and she put me in the horse business. She won three stakes, placed in six others, and won the Alcibiades. She didn’t exactly break up racing but she was very important to me.
     One day in 1971, I looked around and had 45 people, 18 horses and I thought that I either had to be in the advertising business or the horse business but I didn’t believe I could continue to do both. I sold my advertising agency and I went into the horse business.
     I bought a farm 60 miles southwest of Atlanta and started Dogwood Farms. Ninety-nine percent of the people in the world thought I was an absolute lunatic. You see before you today living proof that energy and enthusiasm can overcome stupidity and bad judgment!
     We have enjoyed some success. We have bought around $75 million worth of horses at the auction sales. That does not exactly rival the Maktoum family but it has been steady business for the horse sale people, Fasig-Tipton and Keeneland. We may not be the most powerful but I doubt if there is a buyer in the last 20 years that has been steadier than Dogwood. We are always there and we buy a lot of horses. This is money that wouldn’t be in the horse business if it weren’t for the partnership concept.
     Incidentally, Dogwood buys the horses, pays for them, and then we form the syndicates and sell the shares. We’ve brought over 750 people into racing since we started. I am very proud of the fact that today 22 percent of our clientele are breeders or owners of horses in their own right and some big names in racing are involved with us. A lot of our clients have gone on to form their own racing stables. We have always pitched our partnerships as something that could make money but don’t expect it to--something that has respectable but not sensational tax benefits and something that is a great deal of fun and excitement. If that third ingredient doesn’t appeal to you, you shouldn’t touch it with a ten-foot pole.
     When I first started our limited partnership contract was three pages long. I didn’t know any better and after a while I ran an ad in a magazine about a Dogwood limited partnership. A lawyer friend of mine in Atlanta said, “Do you realize you are in violation of the Securities and Exchange Commission?” I said, “I certainly don’t. What can they do to me?” He said, “They can make you stop and give the money back. If you don’t do that they could put you in jail.” None of that sounded very good, so, from then on, I did it by the numbers and developed a proper limited partnership agreement. It was about the size of the Manhattan phone book and we had to go through a vast amount of ghastly regulatory practices. Although we were considered to be exempt from the SEC jurisdiction, we still had to comply under what was called “Regulation D. That meant that I had to belong to the National Association of Security Dealers, which was one group I had no ambition to join.
     It got so complicated that if a person in, say, Idaho called me and said he wanted to look into buying into one of our partnerships, before we could send a prospectus to the man we had to get it approved by the Attorney General of Idaho. It took about three people working full-time to handle those sorts of things.
     Any way we did limited partnerships for many years. The general partner has absolute control, while the limited partners’ involvement is restricted to the amount of money he or she agrees to put up.
     Two or three years ago we reached a degree of success where I could indulge myself a little bit and I said we aren’t going to do any more limited partnerships, we are going to do strictly general partnerships and sell four shares in every horse, which is what we do now. We used to take five horses and put them in a package, crank in enough money to keep them for two years and then sell 40 shares.
     Bob mentioned Summer Squall. Summer Squall was one of five horses that I sold 40 shares to 28 people. Maybe finding seats for those 28 people at the Preakness and Derby caused me to go to the general partnership approach. At any rate I did that. I’ll be delighted to answer any questions later about general or limited partnerships.
     Let me turn to new owners. We need new owners in the horse business. There was a time in the late 70s when racing was a fad and everybody and his dog wanted to get into racing. It was the thing to do. But the tax reform measures of 1986 and the fact that the bubble in the market has burst, have taken the bloom off the rose. Certainly racing at the moment is not the most inviting venture from several standpoints.
     A lot of things have contributed: everything from a bad day at the Breeders’ Cup in 1990 when that good filly broke down to the demise of some major farms and racetracks. I think it is good that racing is mindful of attracting new owners. Lord knows it is at the moment. The Thoroughbred Owners and Breeders Association (TOBA) has been at the forefront of trying to attract new people into racing. There are a number of things that bring people into racing. The main ones are glamour, status, and recognition. A lot of people got into it early on to make money but realistically that should not be the prime motivation. That is why it is wonderful when you see great tycoons in business like John Kluge, Joe Albritton, Bill Young, and Carl Icahn get into racing.
     I also think it is wonderful that the Arabs are in racing. From a psychological standpoint, I think racing needs mystique, mystery, and excitement. I think the Arabs bring that. They also have contributed enormously. I am a great Arab lover. I make no money off the Arabs but am delighted that they are in it. One thing is that they love their horses and they like racing. They aren’t in it so they can go to some party and talk about it. They are in it because they like horse racing.
     I do not think the owner gets much recognition and that is a sore point with me. I think the trainer could do a little better job of dragging the owner into the picture and making things a little more interesting. It is dreadful when some print publications—and their number is increasing—do not use the owner’s name. I do not profess to have been a brilliant journalist but I did work on newspapers and I have a rough idea of what is germane and what is not. I believe that the name of the person that owns the horse is pertinent information when that horse wins a race.
     I remember running a horse in a million dollar race at Pimlico on a Saturday. The main story of the Daily Racing Form was about that race. Not one place in the story did it mention the name of an owner of a single horse. That has got to be ridiculous. I don’t think the media has the responsibility for bringing new owners into the business. That is not their problem. I maintain that they should use owners’ names simply because it is germane information.
     The relationship between trainers and owners is the strangest, most complex, bizarre relations in the history of American commerce. It is ripe for problems. The proper attitude should exist on both sides. The owners should give a horse to a trainer and then let them train the horse but the owner is entitled to plenty of information about what the horse is doing.
     Some trainers—not as many as there use to be because a lot of them are hungry now—take the position that it is none of the business of the owner what the horse is doing. Maybe the trainer will call and tell you when the horse is going to run if he gets around to it. Some of my great friends are trainers and I don’t want to come down too hard on them but they have not done a great job of communicating with the owners. To some extent, “the inmates are running the asylum.”
     I am in this business because I like racehorses but there are easier ways to make a living. I like all horses and adore a good horse, a horse that will try. Again I think we have many negatives but I think the future is going to be good. The beauty of this sport is that no problem exists in it that cannot be solved—at least temporarily—by winning a horse race. You win a horse race and cold-hearted bankers begin to ooze charm and accountants who haven’t smiled in years begin to bubble with enthusiasm. We are lucky people to be involved in racing. It is the greatest game in the world but anybody in any phase of the racing business had better like horses because there are easier ways to make a living.
     It is a game that requires enormous resilience and great optimism and for the great peaks of victory there are a lot of dark valleys to walk through. I, for one, am willing to walk through the valleys but I have to have an occasional peak. Let me illustrate that.
     Dogwood came out of 1987 and into 1988 with the strongest stable we had ever had. We had a national champion. We had another horse that was a millionaire. We had four other stakes winners. I thought 1988 was going to be the year in which we would tear them apart.
     In a period of six weeks from the first of March to mid-April, the national champion, the millionaire, and two other stakes winners were dead—a very bizarre thing. It certainly was a demoralizing situation. If you liked horses, it broke your heart. If you were making a living from horses it made you pretty uncomfortable because the people that invest in them were certainly not very bullish at that point.
     But I went to the summer sale as I always do. I buy about 25 yearlings and two-year-olds every year. I went to the summer sale in 1988 and spent $1,800,000 for some yearlings and brought them back to Aiken and we started breaking them. We named them and one of those horses became Summer Squall. That I think illustrates the charm of racing. I wish I would have known in April that he was coming in July. It would have helped a whole lot. The fact that he did come was wonderful. Of course we went on to a tremendous upswing from there. Thanks to him and some others.
     Now I will be glad to take some questions.

Robert Lawrence: We have solicited from students a selection of questions and I will ask you a few of them. 

Question: You mentioned your partnerships. What level of income does one need to participate in a Dogwood partnership? What percentage of the partnerships are profitable and what does an investor receive from being in a Dogwood partnership? 

Campbell: We have just come out of what I call the fall catalog. Six horses, four shares in each and the shares range from $12,500 to $60,000. They are payable in cash or in terms over eight months. Then the person is billed on a quarterly basis for the maintenance that will run about $2000 a quarter per share. I would say that is the typical range, $12,500-$60,000. I would say that 25 percent are profitable or breakeven considering the tax benefits.
     What the partners get out of it is that they get a lot of tender loving care and a lot of communication. They get to participate in a high-class prospect in a high-class way. We train with the best trainers, we train at the best racetracks, and we try to go first class with what is meant to be good stock. Lord knows plenty of them turn out not to be.
     We keep five percent of every partnership. That means that 95 percent is split into four shares and that is 23.75 percent per share. I maintain that a person owning one share with us will get more communication, more amenities than the average person who has 10 horses with a trainer. We are going to call him or her a lot. Half of our partners are women.
     When they’re yearlings and early two-year-olds there is not a whole lot to say but we are going to say something every two or three weeks. When the tempo picks up we spot races for them. Say there is a race on the second of November that we are pointing for and then 48-hours ahead of time we will call that person and tell them the horse is in the 5^th race and who the jockey will be and we will make arrangements for them to sit in our box. We provide passes and that sort of thing.
     I am brutally frank about a horse and I found that is the way to be. When they are babies I am optimistic because there is no reason not to be and I don’t ever condemn one till he needs to be condemned. I will call a spade a spade and say we made a mistake. I bought a horse that is not any good and we better get rid of it the best way we know how. That is the smart thing to do. 

Question: Did the 1986 Tax Reform Act cause you to change the type of investor you are looking for? 

Campbell: I don’t think it caused me to change. The 1986 tax bill certainly shook a lot of people out of the horse business that were marginal and should not have been in it to begin with. They were wise guys that were playing with Uncle Sam’s money. Getting them out probably was healthy in a way.
     A lot of our clients are recession proof, I’m happy to say. Our business right now is quite good. We have some heavy hitters. Most of our owners come from word of mouth. 

Question: Would a team ownership approach, i.e., a group of owners with a stable of horses competing against other groups be feasible in racing and would it increase or decrease owner interest? 

Campbell: I think it’s a good idea. It seems to me that something like that has been suggested and I don’t know how you would implement it or get it going. If you had a Nebraska vs. Missouri it would be very interesting. It’s kind of like the American Championship Racing Series. I think it would generate interest, and that is what racing needs. Racing has been slow to adapt things of that sort. I’d be all for somebody trying to work that out but it would be complicated to work it out. 

Question: Why has racing in Japan been so successful? Can Japanese racing be open to more international competition? 

Campbell: That is one of the things that falls into the category that I don’t know much about. Dogwood horses went to Japan twice and ran in the Japan Cup. They pay your way over there so you are stupid not to go. I did go once. The next time the horse went without me. I was flabbergasted to go to the racecourse and see 105,000 people betting $21 million. I have heard they are great gamblers but other than that I don’t know. 

Question: Who do you feel should implement a drug free work environment—the owners, trainers, tracks, or commissions? 

Campbell: The track has the primary responsibility but certainly the owners and trainers do too. The owners don’t want to get involved in it—they will but they aren’t going to tale the leadership role. They are in racing for the fun. The trainer should take a position before the owner. The track is the one that should get the ball rolling and get behind it. It’s their responsibility. It’s their grounds. It’s what is going on at their place. 

Question: Over the four years you’ve been involved with the Substance Abuse Conference, do you find more trainers becoming sensitive to the problem? 

Campbell: Yes, I do think so. The progress is not nearly enough but there has been good progress, and I think more and more people are becoming aware of it. There will always be a few trainers that don’t care about their employees but there are others that are high-class people and run high-class outfits. They are becoming increasingly sensitive to this problem. 

Question: Here is a question that relates to health insurance, which is a topic of interest to Governor Jones. You recently described the people who work in racing as its most precious asset. Yet health insurance is rarely provided for backstretch personnel. What is the industry likely to do about providing health insurance? 

Campbell: I am going to have to say—nothing. It isn’t going anywhere. Unionization is the only thing that will get that done. I hope I am wrong. I hope there is no unionization but that is likely the only answer to the health care problem.

Question: There have been renewed discussions about restructuring racing with owners assuming a primary role. What aspects of the sport should the owners be more involved with and can they be persuaded to be more involved? 

Campbell: They can. Fred Pope, the advertising man, has run ads suggesting that there be a new owners organization that would take hold of the sport and run it. In a way, the last thing racing needs is another organization but the owners should take control of the sport and try to take a position, and that could happen. There are plenty of concerned and committed owners but this is their hobby and pleasure. They are not going to want to involve themselves in the day-to-day operations. There are a few key owners that might do that. The problem with racing is it’s fragmented. I think it would be wonderful if racing had a czar—a person that ran racing and called the shots. I hope Fred Pope’s deal goes through but I doubt if it has much of a shot. 

Question: In the light of the recent strong showing of the September sales of the middle of the market, is the industry really beginning to improve? 

Campbell: The industry is improving. I think the September sale results were pretty good. The fact that the Arabs, Lukas, and Paulson were not strong made a difference. Some of the heavy hitters that have dominated and propped up the sales weren’t there. I think you saw a lot of new names, new action in the $75,000 - $200,000 range and I thought that was a very healthy sign. Many of the breeders paid lower stud fees to produce those horses and as a result, more of them made money than they did for a while. Two years from now, most of them will be making money.
     It’s interesting that the summer sale has become somewhat of an anachronism and I wonder how long the summer sale will go on. The truth is the fall sale is a very logical place to buy horses. If you can’t find among those 3500 horses selling in September a horse that will suit your pocketbook or you, that would surprise me greatly. The summer sale is fun to go to, it is a happening, a lot of exciting people there but you wonder how long that is going to carry it. 

Question: Excluding Summer Squall, which one of your horses stands out as a personal favorite and why? 

Campbell: I had a horse called Dominion that I went to England and bought. He was third in the 2000 Guineas and he won a couple of stakes over there. I brought him back here in 1977 and he won six stakes and placed in 21 others. Every Saturday afternoon he went out there and did his number. He ran all over the country and he put the limelight on us. We won the Bernard Baruch with Dominion in 1978. At that time, Dogwood had certainly been well received in racing but some of the old guard traditionalists still looked down their noses at the syndication concept. However, when that horse came through and won the Bernard Baruch, you could feel things thaw in the box section at Saratoga and everybody decided that maybe this guy is okay. So Dominion was one of the horses that you adore because he was a trier, a fighter. I loved him for that reason but also he did a lot for my new career and me. He was a marvelous horse. 

Question: What factors should be taken into account when you select a trainer? 

Campbell: First, where is he going to race? You got to get one that is going to go where you want to go and the circuit is most important. I think you want to talk to a few other people. I think you want to figure your own personality and say how is it going to work out with this guy. I know some wonderful trainers in New York and elsewhere who brook no interference at all. I am not saying there should ever be interference but there should be communication. You have to find out the chemistry between you and the trainer.
     I trained for a while this winter with a trainer I won’t name but he’s maybe one of the greatest of our time. A lot of people would say so. But he charged a 17 percent commission. He charged to take a horse to the paddock. If you didn’t win, it still cost you about $200 - $300 for the groom and the hotwalker just to run. I love the man and I love his ability but I owed it to the people that I represented to work out a better economic arrangement.
     How much does he charge and what are the arrangements? Some of the arrangements that we have with trainers we aren’t going to be able to change but they aren’t fair. You pay a trainer 10 percent of the gross. Let’s say you supplement for a stake as I did last Sunday. You spend $15,000 and we ran fourth and got $9,000 back. Now we have to pay a commission on the $9,000. The truth is, the arrangement ought to be you pay a commission on the net amount. You should subtract that which it costs you to enter the race. I am not saying this is ever going to happen—it’s not. But the truth is that would be a fair arrangement.
     Personality is another key element. Are you the kind of guy that is going to want to be on the phone every night talking to him? If so, is he the kind that will go for that? Is he a good trainer? Is he honest? What does he charge and where is he going to go? Those are factors I am looking for. 

Question: How do you go about choosing your yearlings and two-year-olds? Do you use an agent? 

Campbell: I choose them. I grew up around horses and have been fooling with horses since I was a little boy. I choose them because I am the one who has to live with them. I have to be enthusiastic about them. I have a trainer that has been with me in Aiken and was on the farm in Georgia for 13 years that I am very fond of. He and I go to Keeneland together. He starts in one barn and he works one way and I work the other way and we meet in the middle and we see what we have left. He and I think alike. He knows what I am trying to do. The chemistry is good. I work with him at Keeneland.
     When I go to Saratoga, he doesn’t go and I buy them there by myself. I have them vetted before hand if there is time. Certainly, nowadays you need to have them vetted after the sale because if there is something wrong with them you can kick them back. I don’t have time for gait analysis or development of a nick. All that is fine and I have respect for it. Dosage—I think that is wonderful. But when you buy a lot of horses, especially in fall sale I don’t have time for all of that. I once had a guy who measured horses for me. The truth is if they measure well, if he likes the measurements, I like them too. It’s mostly balance. I can see a well-balanced horse.
     I don’t buy sprinters over stayers. I like to buy a combination. Of the 25 that I buy—and I buy them in the summer sale at Keeneland, Saratoga, fall sale at Keeneland, two-year-old in training at Calder, and now at the Keeneland two-year-old in training sale next April in Lexington—I don’t buy them all in one place because I don’t want to pay for all of them all at one time and carry them.
     People ask me how I mark horses up and sometimes—very infrequently—they ask if I mark these horses up too much. The answer is I don’t mark them up enough. I deal with the most perishable commodity in the world. You buy a horse in July and you bring him back to Aiken, South Carolina and there are three or four months before they are going to be syndicated. They can find numerous things to do to themselves that make it impossible to syndicate them. I am going to end up stuck with them. So I deal with a very perishable commodity.
     I will walk you through how I structure a partnership. Let’s say I go to Keeneland in July and buy a horse for $100,000. Now I am going to form a partnership that the investors will not pay for until November. From July to November 1 I probably have another $10,000 in that horse. When you consider the interest on the money I borrowed to pay for him, my time going to the sale, training, insurance, etc. Let’s say I have $110,000 in him when I sell you a share in November. I am going to mark him up to $140,000 so I am going to make $30,000 and now I am going to manage him for the rest of his racing life. I am not going to get paid for that. So that is my markup and it’s not enough.
     Starting November 1, I am going to bill you on a quarterly basis for your share of the maintenance. At such time as the partner gets all the money back, from that point on, Dogwood is entitled to 15 percent of the net cash flow. So if we hit a homerun like Summer Squall, it is financially beneficial to us but it has been to you also. 

Question: When you decided to shut down your farm in Georgia and moved to South Carolina, what disadvantages were there in Kentucky that you didn’t move the operation here? 

Campbell: Let me go back to when I started in business. It’s good I started in Georgia and not Kentucky because I would have been just another little fish in a big pond and I would not have made it. In Georgia, I was the only game in town, in a big market, and I was the horse genius down there. Then after a few years I was certainly not a “horse genius” at the national level but I was decently respected, as I could be anywhere. I was interested in training and Kentucky, as wonderful as it is, is not the greatest place to train a horse in the wintertime and break yearlings. That’s why a lot of them go south to Ocala, Camden, and Aiken.
     My original plan was to be based in Georgia. I had this beautiful farm in Georgia. I loved it and had great pride in it and operated it for about 15 years. But I got tired of it. I got tired of driving down there and meeting people and worrying about painting fences and hiring people. I wanted to get rid of that. I thought I would send the horses to some training area such as Ocala, Camden, or Aiken. I would continue to live and locate my office in Atlanta and I would go over there and see them train a couple days a week.
     I went to Aiken, talked to Mike Freeman and Mack Miller. They seemed anxious for us to come. They set it up and we moved there. I sold the place in Georgia. Then I fell in love with Aiken and my wife, Anne, and I moved there. I have been out of Atlanta since 1987. 

Question: You said you sell four shares. Is that per horse of is that a package of horses? 

Campbell: It’s just per horse. I don’t do packages anymore. That is per horse and of the 25 horses that I buy every year, yearlings and two-year-olds, each will be owned by four shares and we will keep five percent. I serve as the racing manager. I make the day-to-day decisions but any major decision is subject to a vote of the general partners. That’s the way it works. We also do steeplechase horses and a few older horses. 

Question: You keep five percent as an ownership share and then on top of that you are paid 15 percent of the net cash flow? 

Campbell: We pay the freight on the five percent. We pay our part of the expenses and then once you get all your money back, from that point on, every year there is a net cash flow we are entitled to 15 percent of it. You and the other partners are entitled to 85 percent of it. 

Question: When you had the package of five horses it seems as though it would be better for the owners because they had more horses to go and see, they had diversification of risk, and if you had one star horse out of the five and the other four didn’t do as well as you expected, that there still would be something at the end—a horse that could be sold or a broodmare prospect or whatever. Now you have four people on one horse. It seems as though they are putting all their eggs in one basket.    

Campbell: They are. You have a good point. The packages made sense economically. Emotionally they didn’t. You are one of forty people. That’s kind of like being in the army or belonging to the public library. You don’t identify with the horses as much. Some of my clients were interested in the closer relationship and I reached the point where I could indulge myself a little bit. I wanted to make my own life a little easier. I can do that with the four partners rather than forty.   

Question: I was interested in how you originally got involved with steeplechase horses and do you plan on expanding your involvement in that area of racing? 

Campbell: I enjoy steeplechasing. I think it is fun. I have got probably 15 people on our client roster that also enjoy it. It gives us another presence in another phase of the sport. We have had some good luck with jumpers. We had an Eclipse Award winner named Inlander. We have several now that are okay. I buy about five or six jumpers at any one time, and that’s all I want to do. From a financial standpoint it’s not promising for me or the partners who own the jumper. A steeplechaser is even less promising than a flat racehorse.  

Question: Did you get involved with steeplechase racing while in Aiken? 

Campbell: No, I helped start the Atlanta Steeplechase. I have always enjoyed it and about seven years ago I decided to buy a jumper and syndicate it. 

Question: How do you and your partners disperse of a horse at the end of its racing career? 

Campbell: Any way we can. That does depend on the horse of course. A terrific horse such as Summer Squall you’ll have no problem with. I sold 25 percent of Summer Squall after he won the Preakness for $2 million and, then later, I sold another 25 percent for another $2 million. Presently, the original partnership still owns half of it. He stands for a $30,000 stud fee. But if the horse is a terrible horse, one way is at a paddock sale. I have got two or three horses going to a paddock sale at Belmont on November 10. There you just want to get them out of the barn. 

Question: Do you still have five percent of Summer Squall? Do you go into the breeding of it? 

Campbell: Dogwood has two breeding rights to him. We foal share on those two breeding rights. I manage the 20 shares in the breeding partnership that the Dogwood Partnership still owns and I did four foal sharings on that and sold 16 other stud seasons. We have ex-Dogwood horses in 16 countries. In a few cases, we have breeding rights and we sell those seasons each year.
     A few years ago I was going to cut back drastically to about 35 horses. We had 62 at the time so during that period I cut back from 62 to 58! The truth is I don’t want to cut back. I thought I did for about a week but I really don’t. I adore what I am doing. I am lucky to do it. But it’s tough. I have been the chairman of the board of an advertising agency and that business is known for its stress and pressure. It’s child’s play compared to the horse business.
     I am lucky to be doing what I am doing. I adore it and will keep on doing it. But I am mindful of not letting things get out of hand. At one point we had 33 employees and we did some drastic streamlining. I just like buying horses and I like running them. 

Question: Are tracks doing a better job of taking care of owners? 

Campbell: I think they are. As an example, we thought we were the leading owner at Saratoga, which I would have loved to have been. I called Lawrence at NYRA and asked him what the standings were on owners. He said, “We don’t keep any records on that. We have jockeys and trainers but nothing on owners. We will from now on though.” He, along with others, is aware of treating owners better. Churchill does a good job and Keeneland will call and ask if you want to come to the dining room and that sort of thing. I think it has improved enormously. There is still room for improvement. Going to a racetrack is a formidable thing for a lot of people unless you know your way around. It is not easy to go there for the first time and bet. Going to a racetrack that you haven’t been to is kind of scary. Anything a racetrack can do to help you with that is good. A lot of owners need that. 

Question: What type of competition do you have at your level in the sale of partnerships? 

Campbell: We don’t have much competition and we never have had. There was a time in the mid-80s when everybody and his dog thought they were going to form partnerships. Brokerage horses got into selling partnerships. That was ridiculous. There has to be a personal element involved. I know all the people I deal with and they know me and that is crucial. It should never be too big.
     Plus you are making a difficult sale. I am asking people to put up, say, $50,000. Now you are probably going to lose it—possibly lose all of it.
     I said a while ago there is a 20-25 percent chance that you will break even or make some money. That is a tough sell to do that and not many people can do it, and often they don’t do it right. First they will come to you and say they have a horse and they have an angle that will make money. But that is a hard thing to do and most people have never been able to find the right approach. You just have to throw it out there and if somebody wants it, they will pick it up. 

Question: Can you go through the process of selecting the horse from the time you get the catalog from Keeneland, to eliminating what you are going to see, and from there, pricing what you are going to bid for a horse and creating your offering for the year? 

Campbell: I get the catalog and in any sale I start by looking at pedigrees. I have to have some pedigree. I bought a horse by Naevus this fall. I loved him and he is a grand looking horse but he is going to be tough to sell because he is by Naevus and people don’t know who Naevus is. But if you have a Mr. Prospector, Danzig, or Secretariat, they are magic. I look at every good pedigree in the sale. I finally got smart enough to do that because some of them fall through the cracks.
     Using the summer sale as an example: when they start selling on Monday, I get there on Friday with Dogwood’s longtime farm trainer, Ron Stevens. He starts in barn 1 and I start in barn 24. We look at around 80 horses and when we meet we have cut it down to about 45 horses. We throw out horses that are bad individuals. Then we cull the rest of them by looking together. We have cut it down to 45 by Saturday and on Sunday we will go together and cut it down to 25 and then finally there will be 15 horses that I am trying to buy. I hope to get out of there with three horses. It’s hard work.
     I will buy a horse that has got some improvement in him. I’ll buy a horse that has a minor flaw if I can live with it. I won’t buy one that’s back at the knee or has a bad foot. But if a horse turns out a little or is pigeon-toed and I can get him at a price and I know the Arabs or Lukas are not going for him, then I will get excited about him. I’ll buy a horse with a splint. I don’t go looking for a horse with a splint or a curb. 

Question: How do you arrive at a valuation? He is going to be selling in a few minutes. How do you come up with the price that you will bid? 

Campbell: You know the stud fee, the previous averages, and what the horse is likely to bring. You have been going to the sales for 20 years and you know that he is likely to bring $250,000 but he could bring $300,000. I am going to stay in there until $225,000. I buy at different levels. I did bid a lot on one horse this year. That was Summer Squall’s brother but that was a special situation. I bid a great deal on him but that was unusual. I usually don’t buy over $300,000. You have to figure out and know what he’s worth and know what you want to pay for him. 

Question: Do you go there eliminating a lot of horses considering the competition like the Maktoums who you know have a real interest in the horse? Do you shy away from considering them? Have you ever lost any by thinking someone else was really going to go for it and they didn’t? 

Campbell: Yes, I think you do get fooled. I have learned that you should be ready. You think they are going to go for it but they might not and that thing may just sit there. In the summer sale particularly, some very well bred horses fall through the cracks because people think that the Arabs are going to go for them. Then he comes into the ring and he doesn’t bring a great deal of money. I think you should be organized. 

Question: Foal registrations are down and the impact of fewer foals has yet to reach the racetracks. When it does, how will that affect your operation at the sale or racing level? 

Campbell: I don’t know why it would affect me. Horses are still there to be bought and I have still got the customers. My clients don’t care how many are out there. They would just like to have part of one. I don’t see it being a problem with us. 

Question: You said you had 33 people at your Dogwood operation before you cut back. What type of staff do you keep? Is it mainly grooms? 

Campbell: We don’t employ any barn people. About two years ago, when I began to simplify things, I got Ron Stevens, my long time head trainer in Aiken, to open up his own barn. It became his barn, his grooms, and his responsibility and I am his major client. He has 33 stalls and probably 25 of them are filled with Dogwood horses. We are a wonderful account for him and it’s a good arrangement for me because I have been able to get rid of that headache of paperwork. I have eight splendid people in the office, a PR person who does our newsletter, a treasurer and several people in accounting, a communications guy with an assistant who does nothing but talk to people. They call the racetracks in the afternoons and then they call the partners and tell them. 

Question: You have a newsletter for your owners? That’s great. 

Campbell: Yes, we have a Dogwood newsletter and it comes out about three times a year. It goes to our clients and to many others in the industry. We send memos on every horse about every three or four weeks and call frequently with status reports on the horses. We call with entries and results. 

Question: Any legal people? 

Campbell: We have one person that handles out legal agreement, which is about eight or nine pages long. It’s very simple because it is a general partnership. She gets those ready and sends them out. It’s very easy because I don’t have to be registered now with the Attorneys General of many different states. 

Question: Do you worry about finding new investors because of the “passive losses” provision in the 1986 tax law? Is that a problem? 

Campbell: We say to them that the general partnership puts you in a position where, if you are aggressive, you can take the loss in the year in which it occurred. We have one gentleman involved in many horses. He takes the rightful position that he is in the horse business. He writes them off each year. I would say that 75 percent of them take the losses in the year in which they occur and regard themselves as active investors. Twenty-five percent of them are super conservative and so not do that.

 Thank you.

 Copyright 1992, Department of Equine Business, CBPA, University of Louisville, Louisville, Kentucky.

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Equine Industry Program
College of Business and Public Administration
University of Louisville
Louisville, KY 40292
Phone: 502.852.4859
Fax: 502.852.7672