When it comes to purchasing real estate, there is a certain mantra: “It’s always a good investment.”
Unfortunately, though, as Arkansas coach John L. Smith learned, real estate can also be a horrible investment. In the aftermath of the housing crash, Smith was left with multiple properties in Kentucky that “went bust,” and as a result, he is reportedly planning to file for bankruptcy.
Smith, who was hired to replace former coach Bobby Petrino, has also coached in Louisville and at Michigan State. Smith had previously been an assistant coach under Petrino for three seasons, before leaving to become Weber State’s new coach.
When Petrino was fired for hiring his mistress in the football department and giving her roughly $20,000 in gifts, Smith was brought in and signed to a 10-month, $850,000 contract. During the entire process, Smith was open about his financial issues. Jeff Long, Arkansas athletic director, said that despite the issues, he was not concerned with Smith’s ability to coach the Razorbacks.
According to Smith, his involvement in the real estate business started gradually, as a part of a group of friends who were interested in investing. He went on to say that after their first subdivision development was successful, and they had all made a little money, they all decided that they would push harder, and try to make a little more money.
As this was during the time when banks were seemingly giving money out, it quickly became dangerous. Smith and his friends found themselves in over their heads, and were unable to recoup their losses after the housing bubble burst.
At this point, Smith does not know an exact amount that he currently owes to creditors, but he has started to gather all of his paperwork to begin filing for bankruptcy. He is not alone in filing either, as one of his former partners, John Mason, filed for bankruptcy back in December. Mason’s liabilities were listed on his bankruptcy forms as between $10 and $50 million.
Many people have applauded Smith’s openness about his financial problems. Smith himself has mentioned that his main goal in all of this was to make sure that his finances didn’t get in the way of the Razorbacks’ season, which is expected to start ranked in the top 10.