Sunday, September 23, 2012
My Sunday Feeling
"We got in over our heads with land and then the bubble burst and all this land value dropped and we couldn't sustain it."
University Of Arkansas Head Football Coach John L. Smith quoted by the AP last July.
I spent a good bit of time last week with the girls in the Economics classes at Mount Saint Mary Academy just up the street from me. Now, what I know about classical Econ would fill a shot glass. But the teacher over there told me that the kids were interested in my talking about bankruptcy which she and I both found interesting. It made us wonder what was going on in some of their homes. But bankruptcy I know about, having practiced in that area of the law for the length of my career. I had a blast. It was great fun to be in a room full of bright young people. It was fun to be with girls since we have precious few in my family.
I knew that Arkansas's John L. Smith had filed a Chapter 7 up there in the Fayetteville Division. And I knew that he had taken a haircut over millions of dollars in real estate investments in Kentucky during the time that he was the Head Coach at Louisville. But I wish that I had the benefit of the Schedules that John L. filed in his case when I was with the Econ girls. Because his financial situation today is a metaphor for what damn near put the country in a depression around 2008.
John L. has unsecured debt in the amount of over 25 million dollars. I'm guessing that at least a good portion of that indebtedness was secured by something at one time. Or most likely they represent the outstanding balance on personal guarantees John L. made on certain loans to other entities he had partnered up with.
He has assets; namely about $1.2,000,000 in retirement accounts that he is trying to claim are exempt from seizure under the Federal exemptions or Homesteads. I don't know much about that area of the law. None of the Debtors I ever fooled with had much in retirement savings. It wasn't an issue for me.
But what is the most amazing thing to me is that the Head Coach of the Arkansas Razorbacks only has 800 bucks in cash on hand. He is claiming to run a negative balance each month which explains the 10 grand owed and the monthly payments to America Express. He's living on his Amex card.
After all these years in the coaching profession, after all that money he made in sports talk radio in Louisville, all the cash the man has to his name is 800 bucks. He would have to be upwardly mobile to be a turnip.
God, that's depressing.
Because John L. has a reputation for being a good guy. And contrary to what the scholars and journalists on the Internet boards would have you believe, John L. has a proven track record as a football coach.
But boy, just about everything that could go wrong, apart from NCAA sanctions and/or a coach molesting young boys in the shower in the locker room, has happened to the Razorback football program, generously ranked as high as 8th in the country pre-season.
And for this, I place the lions share of the blame, if not the entire fetid mess, at the feet of Bobby Petrino. If Petrino had kept little Bobby in his pants and his girlfriend off the payroll, he would still be the Head Coach. The aforementioned scholars and journalists who are clamoring for Bobby's return and/or excoriating Athletic Director Jeff Long for having terminated him forget that Petrino exposed the University of Arkansas to massive liability when he put Jessica Dorrell ahead of other more experienced if not more qualified people when he hired her. That was the reason Bobby Petrino was fired. And he had it comin'.
And on paper, the decision to bring John L. back as interim coach made sense. The proven track record as a Head Coach. His familiarity with the program and the system. The fact that he was well liked by the players and the community. It made sense. Except for one thing.
Both Long and John L have both stated that Smith disclosed his financial condition prior to his being hired. Long has said that John L. got caught up in some bad real estate investments. He was good with it. After all John L is not the only one in that boat. As I told the girls at St. Mary's, stuff happens. Good people file bankruptcies.
But boy, football feeds the bulldog at most Division I schools. It pays all the bills. Long was on notice that John L had financial problems. Why not do a Dun and Bradstreet before turning over the keys to a guy who is completely insolvent? Carrying that much debt has to weigh on a person. Having your financial misdeeds examined from ESPN to Deadspin has to be the height of humiliation. At the minimum the bankruptcy filing will require John L to visit with his lawyer, attend a first meeting of creditors and who knows what else? If he's lucky, all will go smoothly and he will get his Discharge in a month or so and he can move on. But Lady Luck has not been kind to the Razorback program since last February or so. Shouldn't that have been checked out? How many more distractions do they need up there?
You sure couldn't have predicted such chaos after the Sugar Bowl last year. I just wish that I had those Schedules with me when I was visiting the Econ girls at the Mount last week.
Talk about a teachable moment.