What's the real story behind T. Boone Pickens forking over another $63 million this week to Oklahoma State? The quick and easy answer is that the biggest booster of them all wanted to make sure the football stadium expansion project would be completed at his alma mater.
But considering that Pickens "gave" the athletic department $165 million on Dec. 30, 2005, where did that money go?
First, Pickens never really "gave" that money to the university. Instead, the funds spent less than an hour in a university charity account before being transferred to BP Capital, a hedge fund controlled by Pickens. This was merely a slick way for T. Boone to avoid paying taxes while maintaining control over the money.
Now the hedge fund is coming back to bite Pickens. According to various reports, the $165 million is worth $125 million and is being squeezed. Roughly half the investors have asked to withdraw their money after losses of about 60% this year, a source told Reuters, and the fund's total value is only $400 million.
So Pickens announced his $63 million gift and promised to return $125 million from his gambling fund to the university later this week. Totaled, that's $188 million, much of which will go toward retiring debt.
By some accounts, Pickens has lost over $2 billion so far this year. Andrew Snyder of Today's Financial News writes that T. Boone was forced to show his cards because of collapsing oil prices:
"If you spend any time watching your living room television set, you have seen T. Boone Pickens discussing his proposed energy plan. The 80-year-old has spent over $58 million of his own money to tell the nation it must lose its dependence on foreign oil.
"What the white-haired oil barren does not tell you is that his money is not where his mouth is. While Pickens was telling you and I to fund his $100-billion idea, the fund he manages, BP Capital, was invested heavily in crude. And thanks to Pickens’ investing decisions, the fund has dropped in value by over 60% so far this year."