This is an amazing story. In short: Boone gave $165 million to Oklahoma State, his alma mater, for an upgrade of its athletic facilities. The gift came with strings attached, that Boone would stipulate how it was to be managed. OSU regents wanted to put the money in the bank; Boone insisted that it be left in his hedge fund, to be used as collateral for OSU to borrow against. But Boone bet wrong on oil, shorting it as the price rose and going long as it fell. Now the hedge fund is floundering and OSU is on the hook for the principal and interest of the loan. The sports web sites are all over this story, but here is an MSM version from the AP. OKLAHOMA CITY (AP) — Oklahoma State University officials cheered when oil tycoon T. Boone Pickens gave a record-setting gift of $165 million to his alma mater two years ago for athletic programs and then invested it in his BP Capital hedge fund so that it would grow even more. But now the fund has dropped so low amid the national economic downturn that university officials won’t say how much is left and the fancy athletic village it was supposed to pay for has been put on hold. Pickens himself has lost “well in excess of $1 billion” as oil and natural gas prices have plummeted, said Jay Rosser, Pickens’ spokesman. In 2007, Oklahoma State athletic director Mike Holder trumpeted growth in the school’s athletic facilities construction fund. Pickens’ generous contribution, together with other donations and market appreciation, had allowed the fund to mushroom to $288 million. OSU spokesman Gary Shutt on Wednesday declined to say how much is left. “Construction on facilities in the athletic village area will begin when the economic climate improves,” Shutt said. “Like all investors in these uncertain times, we are exploring all options as we consider our future plans.” Shutt said he couldn’t specify what those options are. Pickens, whose fortune was pegged by Forbes magazine at $3 billion in 2007, had hoped investing his money and contributions from others into BP Capital would provide enough money to cover the costs of the athletic village. The project is expected to include a new indoor practice facility, stadiums for baseball and softball and venues for baseball, tennis, soccer, equestrian, and track and field. Work on the west end zone project of the football stadium, named Boone Pickens Stadium after its benefactor, continues and remains on target for completion in 2009. Rosser said the company is no different than “any other industry, business or household in America. “We’ve been hit hard by the economic downturn.” Rosser said the company is in contact with the school and they’re “working together” on the funding issue, but he referred questions about the fund’s value to Oklahoma State officials. Oil prices fell below $67 a barrel on Wednesday, 55 percent from its peak of $147.27 in mid-July. The sports web sites are much more entertaining: 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. For a skeptical view of a huge tax break Pickens got as a result of his donation, see the Tax Policy Foundation’s blog here. Another version of the story appears on