It was a tossup this morning between this story and the one about how J.P. Morgan has virtually destroyed the New Castle school district through dodgy swaps with enormous undisclosed fees, now being investigated by the fraud unit of the FBI. New Castle is in western Pennsylvania near the Ohio border. McCain country. We'uns don't want any of that commie socialism here, unless it is for the good of the Republican party and the banks what ripped us off.
This one about Oklahoma State seems to have more pathos since at one point they were actually ahead 70%, borrowed against ti all and spent it, and then went bust on margin calls that wiped out the gains and principal, leaving them holding the debt.
And they were not really defrauded directly it appears, just recklessly foolish and badly used by an egotistical windbag.
Maybe they can get a co-signer loan from the Aggies or the Sooners.
Oklahoma State Is Officially Screwed
You probably heard a few years ago that T. Boone Pickens, who chairs the hedge fund BP Capital Management, gave Oklahoma State a $165 million donation to be used all for helping the school's athletic program. And the largest portion of it was going to be used to beef up the school's football stadium and football facilities.
Well, there was one problem with Boone's donation. He left the donation in the hedge fund, which initially seemed to be a good idea 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 by fund managers, who were managed by Pickens.
Anyway, Pickens resisted pleas by some OSU Regents to bank a good deal of the balance out of the fund when it exceeded $300 million, which was only 14 months ago. Instead Pickens decided on borrowing almost $200 million needed to expand and renovate Boone Pickens Stadium on the Stillwater campus, despite the fact that the donation was dropping in value.
Now, here's the bad news. Yesterday all indications were that OSU Regents had been told last Friday afternoon that a large portion of the Pickens donation in the BP Capital hedge fund was virtually wiped out by margin calls on the funds investments in the third quarter.
Well, that's not actually the case. It seems that ALL of the money is gone (the link provided is for a members site, but you can read the full article here).
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 'gone.'
And just so you know, the school has already made a lot of those improvements to the football field . That's because the school borrowed almost all funds used in the stadium expansion plans using the $300 million balance in BP Capital as collateral.
Yikes. So, um, Oklahoma State is now in debt of close to $300 million dollars.
I have no idea how in God's name they're going to get out of this. State schools don't exactly have an extra $300 million sitting around.
Has a college ever actually declared bankruptcy? I'm not sure, but we're probably about to find out.
It can only get better, it can't get any worse...