MSU's $500,000,000 offseason
From yesterday's Wall Street Journal:
Costs From Nassar Case Likely to Exceed $500 Million for Michigan State
https://www.wsj.com/articles/costs-from-nassar-case-likely-to-exceed-50…
Lowlights include:
“I don’t know if it would force bankruptcy (for the university) or not,” Mr. Engler said in a Michigan State Senate appropriations subcommittee hearing earlier this month. “I hope not.”
"Michigan State’s primary insurance policy, reviewed through a public records request by The Wall Street Journal, caps coverage for sexual assault at $39 million per policy year."
Part of me feels sorry for the hardships this will cause MSU, but part of me has zero sympathy for an incestuous BoT that's half former athletes, a former president, and former athletic director who chased a 'national athletics brand' at all costs instead of actually improving the academics of the university.
March 26th, 2018 at 11:39 AM ^
MSU will become a UM satellite campus.
March 26th, 2018 at 11:45 AM ^
an outhouse building
March 26th, 2018 at 11:48 AM ^
I was hearing early estimates that this may top $1B. All the trips to Congress to complain about ESPN is going to top $500M on its own.
March 26th, 2018 at 11:52 AM ^
Mr Jackson you are next.
March 26th, 2018 at 12:01 PM ^
This will be an epic coverage dispute. Can the policies and periods be stacked? Is there an intentional acts exception that applies? Similar to Catholic Church cases but better position I think for MSU as the wrong-doing resembled in some way legit medical procedures.
Agreed. I do coverage work for a living (not involved in this case, though). There's almost no way that an intentional acts exclusion isn't present in the policies, given when they were issued. Also, intentional criminal conduct is uninsurable for public policy reasons (in most states) and because it violates the doctrine of fortuity. So, I highly, highly doubt there is any coverage for Nasser himself.
As for MSU itself: There would likely be a duty to defend negligence allegations against the institution and any of its then-employees.The fight will be over everything else--are punitive damages covered? what about reckless disregard/willful and wanton? Is there a distinction between that and "intentional acts" as defined by the policy? And then you get into the areas where I think the biggest fight will be, a point you rightly raise: horizontal vs. vertical exhaustion of policies; which policies are triggered; which allocation method is employed among the policies. Those three issues will take time to sort out and a lot of money will be implicated. I'd look for the courts to bend over backward to reach as much insurance money as possible, including making new law in the State of Michigan to do it at the Michigan Supreme Court level if need be.
March 26th, 2018 at 12:14 PM ^
Christ. It might be cheaper to just not have an athletic department.
March 26th, 2018 at 12:39 PM ^
but I don't see that they are anywhere close to the bankrupcy and I hope that Michigan Taxpayers do not have to should it.
I don't really dabble in this area of financial management, but my guess is their endowment - like most funds - has restrictions. Very simply, their endowmnent is (probably) contractually structured to pay for [Program / Budget / General / etc.] over [XX] many years. Most funds like an endowment are not legally structured to cover a wholesale check, like $500M.
In fact, I could imagine the interest from their endowment - in addition to regular principal withdraws - is central to MSU's long-range financial stability. The university likely has 30 / 40 / 50 year bonds worth hundreds of millions that the endowment is helping to pay down. As such, in that respect, a $500M hit to their endowment's principle absolutely could "bankrupt" them depending on their loans' interest rates, etc.
I won't pretend to guess how their endownment is structured, but the idea that they may be able to write a $500M check from their endowmne to cover these lawsuits is terrifying. I don't live in Michigan, but I would be very concerned that - at some point - I may have to help pick up the tab for this.
March 26th, 2018 at 12:43 PM ^
They'll pass along the costs somehow.
March 26th, 2018 at 12:52 PM ^
Here is Engler's response behind closed doors:
It clouds peoples political emotions... Probably a strategy from MSU's $1000 per hour law firm or the BOT's $800 per hour firm.
March 26th, 2018 at 12:53 PM ^
It's sweet to see the victims get their justice. It's sweet to see the reign of terror fall.
But bankrupting and embrassasing the second largest public University in the state of Michigan is not good for the taxpayers.
As a Michigan undergrad, I'm a 100% die hard Michigan fan and proud of my degree.
But I went to graduate school at Michigan State. I can't hide from that, and it sucks having to answer questinos from third parties about how I feel about all this. It's an embarrassment and a scarlet letter on my degree.
Furthermore, getting into UofM is extremely competitive. I sure hope my children can get in. I'd be a proud father. But if they don't, and my family (or another) can't afford a private school or OOS then it's a real shame to see what is objectively an average-to-above average university from a national standpoint - and one in the backyard - get completely ravaged.
But, if it's the way it has to be... Guess I just hope Oakland University, Western, or Grand Valley can take a step forward.
Actually, by enrollment, Michigan State University is the largest in the state, by about 6000 students.
Of course, the University of Michigan is the state's flagship unversity.
To many comments above, I concur that seeing a flagship university, one that provides access to higher education in the state, potentially go bankrupt and insolvent is devastating. Imagine seeing UCLA fall apart like this and the effect it would have on thousands of California kids.
This presents a great opportunity for Michigan - the university, not the state, because the state's elected bodies are pretty much backwards in everything they do - to rally the other public universities in the state to ensure the quality of public university education isn't diminished by Little Brother's transgressions.
is wholescale replacement of the BOT and senior leadership of the school. That means every last one of them. Their BOT is, as many have pointed out, an embarassment for reasons that have nothing at all to do with the current scandal. If they want to be a better school ("top" now is entirely out of the question), it needs to start with a dramatic change at the top. No one else can have the credibility needed to get the job done.
MSU will not be at risk of going BK. Engler is a politico at heart and knew saying that would stoke enough fear in the legislature to get some help for MSU (or at least get their foot off their throat a bit).
Between sovereign immunity and other protections, MSU will survive this and the Michigan taxpayer will not be left holding the bag - U of M and MSU get a tiny amount of state tax aid anyway.
The endowment is going to take a hit, the bond rating is going to take a hit, federal grant money may stop flowing as much and they are going to have an uphill battle to get talented students to attend (which, much as people like to mock on this board, MSU has had plenty of talented graduates and plenty of fine academic programs). I say all of this as a proud UM alum.
keep that in mind here. negligence won't cut it to make them liable. it has to be gross negligence and generally the sole cause of the injury - how're you going to prove MSU's ostrich imitation is the 'sole cause' of larry nassar molesting these poor girls? for gov't immunity to be overcome:
quote here: To be proximate cause of injury, alleged gross negligence must be the one most immediate, efficient, and direct cause of injury or damage.
not a complete bar. clever lawyers will fashion a work-around, but it still works to lessen the damages.
Where is the quote from?
head notes, quoting some other cases. and there's also another building case, antrim county building inspector, from around that same time period that holds the same.
Where is the quote from?
Attorneys.
We can't take money from the endowment because it might be illegal, it's supposed to be for buildings. Without access to the endowment, the lawsuits will make us go bankrupt. Therefore, screw the victims or screw the taxpayers... Wow.
Also, is it possible for a University to declare bankruptcy and somehow hold on to a $3,000,000,0000 endowment? Well, we are bankrupt except for the 3 billion in the bank... I need to get me one of these endowment things... What a joke this all is.
Yes, my surname is Throckmorton. And yes, I teach my medical students all about the Throckmorton Sign when I give the lectures on embryology and gross anatomy of the genitals... lol.
Their should be no funds from the People of the State of Michigan. All funds should come from their Endowment or from Alumni fund raising to cover their sins. They let this go for so long I have no simpathy for them. May they burn to ashes for such treatment of all those young girls.
Engler is negotiating.
Step #1, install terror over an outrageous, never in a million years gonna happen result.
Soon come, approximated Engler quote, "While my heart goes out to the victims, the State of Michigan can not afford the burden of losing this great resource that is Michigan State University."
You know the rest.
From one of the older playbooks in human history.
Nobody suing them will accept pizza as part of a settlement. MSU's economy will soldier on with pizza as currency.
Time for Sparty to die. Even my MSU friends are delusional and ignorant to the situation to the point where there's no point in bringing it up. It just leads to false equivalencies and tribalism since "Walverines make it about the rivalry...." as if this isn't universally contemptible.