Trouble with OSU's athletics financing?

[Gold]

Maybe there's something here, maybe not.  Great read.

http://ouinsider.com/forums/showthread.php?t=80208

"Special to OUInsider
by BeanBag


"It Can Only Get Better -- It Can't Get Any Worse . . "
Spiraling Oil Prices Doomed O-State's Once Overflowing Coffers


STILLWATER -- "It can't get any worse," that's what one Oklahoma State Regent said Tuesday morning, after getting another dose of bad news regarding funds earmarked for OSU athletics.

Yesterday all indications were that OSU Regents were reportedly told Friday afternoon that a large portion of the Boone Pickens donation in the BP Capital hedge fund was virtually wiped out by margin calls on the funds investments in the third quarter.

Today the news was a little more grim, as 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.

As of Monday OSU's gift had flat-lined completely and was declared virtually 'gone.'

Ironically Pickens will become both the hero and the goat in the drama of high stakes energy gambling, and of forunes won, lost and regained. Pickens made his historic gift in 2005, declaring "I'm tired of losing," when asked why he donated the huge amount to OSU athletics.

But the gift came with a stipulation, as Pickens insisted that he and appointee Mike Holder, who he later named Athletics Director, be given total authority over how the funds were to be spent, and by whom.

And the move appeared to be a stroke of genius as oil prices soared in a post Katrina economic climate, swelling the initial gift to over $ 300 million. That was before things began to turn in 2007, as international demand for oil failed to meet projections, causing the fund to come to a sudden standstill, and then dropping on mistakes made, and repeated by fund managers, managed by Pickens.

As oil prices started to slide in early 2008 Pickens increasingly found himself on the wrong side of the volatile oil futures game, betting 'short' as prices rose to $ 100, and then long as they began to fall, wiping out much of the two year gain in just four months, and causing AD Holder to announce that OSU's future 'Athletic Village' facility expansion had been put on hold in July.

Now the project looks like it will be shelved, as O-State Regents try to just keep their heads above water while swimming in debt.

The school had borrowed almost all funds used in the celebrated stadium expansion, using the almost $ 300 million balance in BP Capital as collateral.

Some OSU Regents are livid that their pragmatic warnings were not heeded when the fund was flush with cash.

Pickens and Holder apparently both resisted pleas by some OSU Regents to bank a good deal of the balance out of the fund when it exceeded $ 300 million, just 14 months ago. Instead both endorsed a plan of borrowing almost $ 200 million needed to expand and renovate Boone Pickens Stadium on the Stillwater campus.

Ironically, the stadium had been re-named after Pickens following his generous donation in 2005. But now that stadium sits as a drain of over $ 1 million per month in interest payments alone, on an already strapped athletic budget, which annually ranks between 8th and 9th in the Big XII conference.

Today, the problem is how to fund the surprise interest that is expected to top $ 13 million annually, when just months ago the school was going full steam ahead on an aggressive expansion of facilities that it believed were already paid for.




_________________________ _________________________ __



NOTE: Over the years, I have covered OSU football for another media source, and my writings for this website have been critically satirical in nature.

However this article, unfortunately, is no joke.

Since his 2005 donation, Pickens has held the University hostage, getting rid of the former OSU President, and Athletics Director, and installing his own appointments, including coaches, throughout the athletic department.

OSU fans can only hope oil rebounds, and next time, that the fund's manager's bank the 'winnings' before doubling the bet.
."

[sgrizzle]

Pickens will fix it, it's just gonna take a few more years for some projects and Pickens will be giving some more out of pocket to cover some things.

[cannon_fodder]

Pickens himself is out $1,000,000,000.00 so far this year, according to his own people.   Granted he still has $2bil left, but still. He might not be in a mood to hand out cash - though, being blamed for the downfall of athletics at Oklahoma State could be motivation.

Nonetheless, it was INCREDIBLY stupid to bet the house, literally, that oil prices would remain at record levels forever.  $150mil in, it grew to $300mil.  Why not take $150mil from that fund and loan it to the board of regents or some other stable investment?  Leaving an amazing $150mil for Pickens to play his high risk game with.

U Tulsa had the foresight before Dot Bust to divest from high risk investments, they road the waive up and hopped off near the crest.  If greed had no driven T Boone and Holder to insist on riding every penny still higher, all the way to the floor, they would not be in any trouble at all.  It was simply irresponsible to play with what had become PUBLIC MONEY in such a fashion and now the board of regents is left holding the bag.

Does anyone know if any of Pickens money was actually spent, or did he give it all, demand control, and then lose it - and only loan money was spent?

[Gold]

TU took a bit of a hit in the late 90's/early 00's.  Part of that was everything lost money there for a minute, or at least it seemed like everything LOCALLY lost money.  You missed a good year or two, Jesse. [B)]

[Conan71]

quote:Originally posted by cannon_fodder

Pickens himself is out $1,000,000,000.00 so far this year, according to his own people.   Granted he still has $2bil left, but still. He might not be in a mood to hand out cash - though, being blamed for the downfall of athletics at Oklahoma State could be motivation.

Nonetheless, it was INCREDIBLY stupid to bet the house, literally, that oil prices would remain at record levels forever.  $150mil in, it grew to $300mil.  Why not take $150mil from that fund and loan it to the board of regents or some other stable investment?  Leaving an amazing $150mil for Pickens to play his high risk game with.

U Tulsa had the foresight before Dot Bust to divest from high risk investments, they road the waive up and hopped off near the crest.  If greed had no driven T Boone and Holder to insist on riding every penny still higher, all the way to the floor, they would not be in any trouble at all.  It was simply irresponsible to play with what had become PUBLIC MONEY in such a fashion and now the board of regents is left holding the bag.

Does anyone know if any of Pickens money was actually spent, or did he give it all, demand control, and then lose it - and only loan money was spent?

He's a degenerate gambler just like Tom Kivisto.
 Just wait and see what happens when natural gas does not hit $20/MCF this winter as TBP was predicting last spring.  I think he's about to lose another huge bet.  Personally, I don't care for anyone who brags along the lines of:

"I've made more money trading in oil than I ever made producing it."

I don't remember when his gift was announced that it was based on trading futures.  I was always of the impression that he had written a check or there was a schedule by which he would write checks to OSU which was not dependent on the vagaries of the oil and gas markets.

[Gold]

Oh, then you need to check out the OU board thread I linked.

I posted this cute, over-simplified explanation on another board (keep in mind it's a sports message board and I was trying to stir the pot some):

Boone: Look at me, I'm giving lots of money to OSU. I'm so great. Love me. Pistols firing!!!

OSU: Thank you for the money Boone. Boone is so great. Here Boone, you are so great, we will give you the money back so you can invest it wisely because you are so great. And we'll make sure you get a tax break for it. Pistols firing!!!

Boone: Yes, I am great. Thank you for giving me this here money to invest. You are so gracious. Hey, y'all other investors, lookee here at this here money. Invest with it in my hedge fund. I know what to do. Pistols firing!!!

Other investors: This guy just gave a bunch of money to OSU. He must be a really smart investor. Here is a bunch of money for you to invest. What are you going to invest it in?

Boone Pickens: Highly speculative margin calls. Don't worry about a thing. The price of oil is going to keep going up, especially if we get enough people to drive to Stillwater to fill our stadium. Pistols firing!!!

[Conan71]

TBP is a truckload of d o u c h e.  Generous donor but still a truckload of d o u c h e.

"I'm rich, so I know what's better for everyone"

[cannon_fodder]

Yes Gold, a lot of people lost money and I'm sure TU lost a ton too.  However, it takes real greed to first spend, and then lose ALL of $150,000,000 gift and have debt to show for it.

[Gold]

Oh, no doubt.  I don't disagree at all.  

The only donation thing just stunk.  It kind of looks like it was now all a PR ploy.  Get the cranes going on the stadium that ws bought with loans, use the collateral and your generosity to attract investors, and then basically gamble it all.

If this actually does play out bad, I hope the NCAA seriously clamps down on this sort of thing.  College football is out of control.  If this becomes a taxpayer burden, we will be a national laughing stock.

[Conan71]

quote:Originally posted by Gold

Oh, no doubt.  I don't disagree at all.  

The only donation thing just stunk.  It kind of looks like it was now all a PR ploy.  Get the cranes going on the stadium that ws bought with loans, use the collateral and your generosity to attract investors, and then basically gamble it all.

If this actually does play out bad, I hope the NCAA seriously clamps down on this sort of thing.  College football is out of control.  If this becomes a taxpayer burden, we will be a national laughing stock.

PR ploy?  No schmitz!  Like pickensplan.com that certainly isn't another self-serving campaign of his.  /sarc.  He's a megalomaniac and if he's done what I think he has with natural gas, his loss of control of Mesa in the mid-90's due to his gambling problem is going to look small by comparison.

[Gold]

Is the national media that incompetent to give him so much face time?

I sincerely want to believe in his renewables plan, but it just won't work at this point and appears to be a cynical attempt to buy up water rights or some other use of these lands.  

But he's on all the networks as some sort of hero.  Even the skeptical folks like Frontline really don't dig that deep into him.  Weird times we live in.

[TUalum0982]

If anyone has ever been to the Reagan Musuem and Library in California, there is a wing (air force one pavillion) dedicated to TBP for his generous donation of 10 million dollars.  

Apparently TBP the Texas State Finance chairman for Reagan's Campaign back in 1980.