How the economy is affecting college athletic departments

After giving a record $165 million to Oklahoma State in 2006, Cowboys booster T. Boone Pickens gave another $63 million to the athletic department on Monday. AP Andy Staples's Mailbag Have questions or feedback? E-mail Andy Staples. Name: Email: Hometown: Question: SEND Follow Andy Staples on Twitter

In an effort to cut costs, newspapers across the country have merged their sports and business sections, but even the most miserly publisher couldn't have predicted how the worlds of college sports and business would collide in Tuesday's edition of the Tulsa (Okla.) World.

In one top story, billionaire energy magnate T. Boone Pickens announced a $63 million donation to the Oklahoma State athletic department to bolster a fund that had lost $282 million in the past four months. In another, an attorney for Tom Kivisto acknowledged that his client had received a termination letter from SemGroup, the Tulsa-based energy company that collapsed during Kivisto's reign as CEO. What does that have to do with sports? Kivisto, a former Kansas basketball player, remains on the hook for a portion of the $12 million donation he made to build the Jayhawks a new football practice facility. That donation inspired Kansas athletic department officials to name the school's football field after Kivisto.

The examples at Oklahoma State and Kansas are extreme, but almost every athletic department in the nation must deal in some way with the fallout from the recent economic plunge. Like most businesses, college athletic departments invest their money, hoping for a higher return than if they simply stored it in a savings account. Most years, that's exactly what they get. This year, however, stock and commodities markets have tanked, and that loss has drained athletic department endowments and pension funds. Making matters worse, the credit crunch that precipitated the decline has made it more expensive for programs to secure financing for construction projects.

To cope, some schools will have to use operating funds to cover interest they typically would have received from their endowments. Others will have to either adjust timetables or halt capital improvement projects such as stadium or arena renovations. In the meantime, all will have to encourage donors to keep giving in spite of uncertain economic times.

At Oklahoma State, several city blocks have been cleared to build an athletic village that would include facilities for the baseball, softball, track, soccer and equestrian teams as well as an indoor practice facility the football team would share with other sports. The estimated completion date was 2011. That space will remain empty, however, until officials can raise the money to complete the project. At a press conference Tuesday to announce Pickens' most recent gift, Oklahoma State athletic director Mike Holder said the department will focus on renovating the west end zone of Boone Pickens Stadium and on building the indoor facility, for which donor Sherman Smith gave $20 million.

"We'll get that [indoor facility] done," Holder told reporters. "I just can't tell you when that will be. Three months ago, it would have happened a lot sooner than it will as of today."

Earlier this year, funds for the project existed -- on paper. In January 2006, Pickens donated $165 million to Oklahoma State's athletic department. It was the largest single donation to a college athletic department in history, and it provided Oklahoma State with a significant base for its fundraising efforts. Pickens took it upon himself to grow that investment, asking that his gift be invested with BP Capital, Pickens's own hedge fund. So Holder allowed BP Capital to invest that money along with an earlier $6 million gift from Pickens as well as another $31 million Holder had raised from other sources.

Holder said the original $202 million swelled to $407 million in July. Then the bottom fell out of the stock market. By the time Oklahoma State officials cashed out of the fund, they had $125 million remaining. The market had swallowed the other $282 million. Oklahoma State's athletic department fared better than Pickens. A 60 Minutes story that aired Sunday revealed that BP Capital lost $2 billion in value.

But like Pickens, who has weathered the rise and fall of markets before, Holder hopes to have Oklahoma State's athletic department building again. "My only regret is ... we need to take a pause," Holder said. "I don't want to use the term stop, because I really believe it's a pause. We have every intention to build what we started north of the football stadium. It's just a matter of it's going to take a little bit longer than we anticipated."

Athletic departments across the country likely will take a similar approach. Susan Parrish, the controller for Florida's athletic department, said the market drop will have its greatest effect on long-term, capital projects.

"For the very short term, it's depressing, but it hasn't had a tremendous impact on our day-to-day operations," Parrish said. "However, your long-term projections and projects like buildings and things you would use your long-term money for, you now have to re-evaluate. You may not have that money to do that, and you certainly wouldn't want to sell [investments] and lock in your loss."