July 16, 2012
By: John Clark
John L. Smith, the head football coach for the University of Arkansas, may soon seek debt relief in bankruptcy court after making several failed investments, according to a report from USA Today.
Sources say several land purchases in Kentucky that Smith made in recent years have lost a considerable amount of value, which upset Smith’s previous reported belief that “you may not make money, but you won’t lose money” in real estate deals.
Of course, if the last three years have taught investors anything, it’s that no investment is safe, even traditional outlets like land development, which used to be remarkably reliable sources of income.
Smith’s ill-fated land investments began when he was the head coach at Louisville in the late 1990s, and started with an initial investment in a single subdivision development. After this purchase, Smith reportedly sunk millions of dollars in other real estate ventures.
According to Smith, once one investment went well, he and his partners couldn’t stop, and their efforts were aided by the fact that banks around Louisville in the late 1990s were “willing to give away money.”
Unfortunately, Smith says he and his partners “got in over our head with land” and after the real estate bubble experienced a historic collapse, “all this land value dropped and we couldn’t sustain it.”
While Smith has yet to seek debt relief in federal bankruptcy court, one of his former partners, John Mason, made the decision to file for bankruptcy last December in Kentucky. Smith is listed as one of the creditors in Mason’s filing.
And while Smith isn’t sure exactly how much money he owes to his creditors, his partner’s bankruptcy filing lists his liabilities somewhere between $10 million and $50 million, which may provide a general estimate for Smith’s debts, as well.
Interestingly, Smith’s financial saga is another distraction for a football team that had to dismiss its previous coach, Bobby Petrino, after he hired his reported mistress to work for the football department and gave her tens of thousands of dollars in personal gifts.
Before Petrino was unceremoniously escorted from his position, Smith served as an assistant coach under Petrino for three years.
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