Fund Raising With Life Insurance

According to Greg Johnson, Oklahoma State Univ. insures sports future, LA Times, March 26, 2007:

Billionaire T. Boone Pickens is being credited with a novel — some would say morbid — financing plan that his fellow Oklahoma State University fans hope will lift their beloved Cowboys football team to the top of the Big 12 Conference standings.

Over the course of the last year, Pickens, 77, steered his alma mater’s athletics department to buy life insurance policies for himself and a posse of aging Cowboys donors. The department hopes to net about $250 million from the proceeds by the time the last donor dies.

The insurance program is in addition to about $200 million in cash that Pickens has donated in recent years so Oklahoma State can better compete against rival Big 12 football powerhouses Texas, Nebraska and Oklahoma.  * * *

The Cowboys borrowed $20 million from a booster association to pay the premiums for $10 million in whole-life insurance policies for each of the 25 or so carefully selected donors, including Pickens, who are between the ages of 65 and 85. * * *

Oklahoma State’s donors were selected because their age, gender and health “best matched the university’s needs,” said John Lee, chairman of Dallas-based Management Compensation Group, which is managing the insurance program. To put it less delicately, the donors selected are expected to die in a timely manner to generate the $250-million payout.

Special thanks to Prof. Joel C. Dobris of the University of California-Davis for bringing this article to my attention.