General

Oklahoma State Would Like to Renegotiate That Mortgage Right About Now, Please

Oct 23, 2008, 9:00 PM UTC

Oklahoma State University has this odd relationship with billionaire oil tycoon T. Boone Pickens. To be specific, T. Boone sort of owns the athletic program lock, stock, and barrel in a way that only Phil Knight at Oregon can really rival, having given the university $165 million that ballooned to $300 million dollars at the peak of its value.â†µâ†µOne wrinkle, though: the donation was left in a hedge fund by Pickens, who insisted on a loan for the purchase of the materials for improvements to Lewis Field and other athletic buildings on the Stillwater campus, which totaled around $200 million. The money in the hedge fund -- swollen by massive global oil prices -- was used as collateral. Early warning signs last week pointed to a reduction in the value of the money making all of this borrowing possible, but now the situation may be far, far worse: the entire donated sum may have been eaten up by cratering oil prices and inept line calls made by T. Boone’s fund managers.â†µ

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â†µFrom OUInsider, via 100% Injury Rate: â†µ

â†µâ†µâ‡¥Officials were told that actually, the entire $ 165 million donation, and the earnings, which once inflated the gift to over $300 million, had recently been eliminated by margin calls due to drastically falling oil prices.â†µâ‡¥â†µâ‡¥As of Monday OSU’s gift had flat-lined completely and was declared ‘gone.’â†µâ‡¥

â†µâ†µ100% Injury Rate wonders if a university has ever declared bankruptcy, but that seems drastic. Remember that the really wealthy never go broke, they just “manage illiquid financial situations through proactive partnership with investors and capital solutions” or if you like English, they “borrow more money” or “sell stuff.” Pickens himself is still worth a huge amount of money even in a bearish oil market, and could probably bail out the university’s liability on the loan by himself.â†µâ†µBeing A MAN WHO IS 40 (times two), he probably will do something like this, but for the moment take note of two things. First, Oklahoma State University at this instant may have an outstanding liability on a football stadium used six or seven times in a given year that exceeds 40% of their net 2009 projected general revenue as a university. Two, the global financial crisis has finally affected even precious football, whose economic demand has been notoriously inelastic and impervious to the effects of numerous recessions.â†µ

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This post originally appeared on the Sporting Blog. For more, see The Sporting Blog Archives.

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