Why is Forbes writer Josh Freedman raising his eyebrows at college football?
There are so many reasons. But the one he has in mind is ye olde charitable deduction:
T. Boone Pickens gave $165 million to a charitable foundation attached to Oklahoma State University for a new football stadium and new housing and dining options for OSU athletes. Whether that is worthy of charity is not even the issue here: Less than one hour later, the foundation invested all of Pickens’ donation money – plus another $37 million in other donations – into a hedge fund run by Pickens.
Ya follow?
After taking Pickens’ money and reinvesting it into Pickens’ hedge fund, the school borrowed money (tax-exempt) to build the stadium. By borrowing at this lower, tax-exempt rate while investing the original donation and keeping the gains of that investment, the school was attempting to earn money simply off of its tax-favored status.
Got that?
Be sure to read Freedman on luxury seats and executive salaries too.
It’s all a little hard to follow, but the main thing you need to know is that it’s your money paying for this – the seats, ol’ Boone’s largesse…
December 23rd, 2013 at 4:11PM
Hmm… sounds like the ‘financial engineers’ are moving in. It may behoove those good ol’ boys who have been in charge up till now to start tiptoeing to the exits– while, um, at the same time, keeping a firm grip on their wallets.
December 23rd, 2013 at 6:35PM
hedge-funds, big Oil, and football what could go wrong?
December 23rd, 2013 at 8:29PM
Keep in mind that hedge funds have traditionally not had the same government oversight as other investment vehicles. That tightened up after 2008, but there you have it. Our public unis no longer are places where working class kids can get an education, they’re now the pigeon drops for guys like Uncle T. Boone….