J. Brady McCollough
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Sunday, August 10, 2008

Friends concerned about former KU basketball player Kivisto



The Kansas City Star


LAWRENCE | Roger Morningstar is worried about his good friend. He has called him 30 times in the last three weeks, but the friend doesn't answer. It never bothered Roger that he was always the one who had to pick up the phone and dial the number. His friend was a busy guy.


Inevitably, Tom Kivisto would flip open his cell phone in Paris, or Dubai, or some other faraway land, and they'd update each other on their families and maybe reminisce about their days as Kansas men's basketball teammates. Tom would talk about how different Dubai was, if only Roger could see those man-made islands!


The last time they spoke, about eight weeks ago, they philosophized about how great it would be to make a movie about Wilt Chamberlain's years at KU. Tom wanted to give the talented, small-time independent filmmakers in Lawrence a chance to do something great. He was always thinking about things like that.


But today, just like every other day since July 18, Roger can't talk to Tom. Neither can most of the other people who care about Tom Kivisto. He has disappeared since his former company, SemGroup LP, removed him from his post as CEO and filed for bankruptcy. Court documents say that Kivisto owes SemGroup, a midstream oil company he built with his bare hands, $290 million from losses incurred by his personal trading company in the oil futures market.


Kivisto surfaced once, to read a prepared statement to media in Tulsa, Okla., where the company is based. He did not stick around to answer questions.


Morningstar, a teammate of Kivisto's on KU's 1974 Final Four team, doesn't want to ask Kivisto about his business mistakes. He doesn't want to find out whether Kivisto will be able to make good on his promise of $12 million to finance the new Anderson Family Football Complex at Kivisto Field.


"You want your friends to know that you love them and you care for them," says Morningstar, who lives in Lawrence. "Tom Kivisto has a lot of friends. All of us are worried for him and how he's handling this thing emotionally. We're not worried about how his company is doing financially, but how is he doing? Is he OK?"


Marcello Angelini, the artistic director of the Tulsa Ballet, is one of the few friends who has gotten to ask Kivisto that question.


"He will not answer," says Angelini, whose company has received $4 million in donations from Kivisto. "Tom is a very proud man. Anytime I try to ask him this question, the conversation goes somewhere else. I have never gotten a straight answer."




Vulnerability is not something that Tom Kivisto does very well. Anybody who followed Kansas basketball during 1972-74 knows that. During Kivisto's first two years as the Jayhawks' starting point guard, KU went a combined 19-33 and didn't sniff the NCAA Tournament.


Kivisto took most of the heat from fans. He was the 25-point-per-game scorer out of the Chicago suburb of Aurora, Ill., the team's best player.


"They were on Tom," says former KU coach Ted Owens. "They just wanted him to do something that wasn't possible. He suffered. We all did during those two years."


But Kivisto didn't whine or blame his teammates. "We'll do better next year" was his natural response.


In Kivisto's senior year, he was the team's unquestioned leader. He won every wind-sprint, every suicide, and, if a player didn't make time, he didn't answer to Owens. He heard from Kivisto. Morningstar remembers coming in a few minutes past the 11 p.m. curfew. Owens brought Kivisto in to help decide Morningstar's punishment.


"Well," Kivisto said, "he shouldn't start tomorrow night."


Morningstar didn't question the decision.


"Everyone looked up to Tom," Morningstar says. "He wasn't so much someone you went out and jerked around with. He was always somebody that I respected as much as I liked."


Morningstar, also from the Chicago area, was in awe of Kivisto growing up. Kivisto's father, Ernie, was a legendary high-school basketball coach. His teams were always competing for state titles. It was the late 1960s, and East Aurora would do a warm-up before games that mimicked the Harlem Globetrotters.


"I didn't know Tom at that time," Morningstar says. "I just sat there and gawked at him."


Kivisto was one of the reasons Morningstar decided to attend KU. Once he got to know Tom, he realized there was much more to the guy than basketball. Tom was pre-med, and he often spent bus trips reviewing vocabulary flash cards. You could always distract him with a good conversation, though. He could wax on anything from referees to religion.


"Tom was really deep," Morningstar says.


He was just different. Growing up, Bob Kivisto was constantly shaking his head at his little brother. Nobody in the family had any artistic ability, but Tom could do amazing things with a pencil in his hand. Tom learned how to cook by himself and would make desserts in his spare time. He even did his own laundry and ironing.


"I hate to say it," says Bob Kivisto, who played at KU during 1969-71, "but we probably thought it was a little strange."


In 1973-74, the Jayhawks followed Kivisto to the Final Four and a 23-7 record. They lost to Marquette in the national semifinals, but nobody would soon forget the turnaround Kivisto had orchestrated.


Owens recently spoke with Rick Suttle, a player on that team.


"Tom Kivisto was my hero," Suttle reflected.




Dewey Bartlett Jr. is a mover and shaker in Tulsa, the son of a former Oklahoma governor and an oil man. Over the last 15 years, Bartlett rarely missed an opportunity to hear Tom Kivisto talk about the oil futures market.


"He was always in very high demand to speak to people in the energy industry," Bartlett says. "I've been to several different meetings where he was the main speaker. The room was always packed."


With the same confidence that Kivisto brought to KU, he had built a name for himself very quickly in the oil business. He moved up the ladder at Koch Industries in Wichita, becoming the executive vice president of crude-oil marketing. Kivisto left in 1993 for Tulsa to start his own business, the one that would eventually be known as SemGroup.


SemGroup, founded in 2000, is the middle man of the energy business, specializing in transporting oil from the well to the refinery. Kivisto operated SemGroup the only way he knew how - fast. In eight years, the company made 47 acquisitions, according to Forbes.com, and became one of the nation's largest private companies, bringing in revenues of $13.2 billion.


It seemed that Kivisto could see the future, and his vision extended past the oil fields. Kivisto looked at Tulsa, a midsized city in a small state, and saw a budding cultural center that could have the best of everything.


"He moved here, and boy, for some reason, he really grabbed onto Tulsa," Bartlett says. "He saw this as a great community where he could grow, and the community would grow with him."


Kivisto started a non-profit organization called "Project Single Parent," which awards scholarships to help single parents get through college. When the LPGA tournament threatened to move from Tulsa because it had no corporate sponsor, Kivisto and SemGroup ponied up. He has given millions of dollars to the arts. In short, if something important is happening in Tulsa, Kivisto makes it his business.


"What was always so impressive to me was that he always answered his own phone," says Susan McCalman, director of development for Family and Child Services. "When you raise money, you have to go through a lot of levels sometimes to get to the right person. I had his direct line."


The Tulsa Ballet became Kivisto's pet project. He saw similarities between running a basketball team and a ballet company. He called Angelini "Coach." Thanks to Kivisto, the Tulsa Ballet is now regarded among the top groups in the country.


"Tom is interested in excellence," Angelini says. "He cannot stand provincialism. He wanted to teach us how to fish for the big fish, and he has succeeded in that.


"Tom is a prince, a gentleman that has come to town and revolutionized the city of Tulsa. He is the man that has showed everybody the potential that this city has. He opened everybody's eyes."




Kivisto was everybody's man of the year. To Owens, a Tulsa native, it seemed like he was attending a banquet in honor of Kivisto every week. When times were good, Owens would joke with his former protégé.


"I'm disappointed you haven't made an acquisition this week," Owens would say.


What Owens didn't know, what nobody knew, was that a bust was looming on the Oklahoma horizon.


Kivisto had made most of his money through a process called hedging, which is a way of minimizing market risk. Glen Grabelsky, who has followed SemGroup closely at Fitch Ratings, gave an example of hedging: SemGroup buys oil for $70 a barrel and stores it in its facility to sell two months later. SemGroup predicts the price will stay below $90, so it commits to selling at $90 a barrel. If the price doesn't fluctuate much in the two-month waiting period, then SemGroup profits.


But if the price moves above $90, SemGroup has to post collateral equal to the difference. With oil prices going higher and higher during the last six months, SemGroup was posting collateral way too often. It appears that Kivisto must have believed the price was irrational and would come back down. So he kept hedging, and the banks are now coming after their money.


"The collateral postings were eating up their liquidity," Grabelsky says.


Bartlett, who runs Keener Oil & Gas company, says that hedging is risky business. Whether to hedge is a decision every oil executive has to make.


"I don't do it," Bartlett says. "I don't understand it and I think it's very difficult to understand. Sometimes people guess wrong and it really hurts financially."


Kivisto was the last person anybody thought would guess wrong. Now, he's in the fight of his life. His former teammates and coaches comfort themselves by comparing this battle to what he went through his first two years at KU. But this is beyond comparison.


Grabelsky says there is a lot of speculation about Kivisto's personal involvement in SemGroup's bust. His supporters stand by his integrity, but there's no way of knowing until more facts come out.


Here's what has been reported: Kivisto borrowed $290 million from SemGroup to make trades with his personal trading company. When SemGroup failed in the oil futures market and went bankrupt, the company asked Kivisto to repay his debts. It is undetermined whether Kivisto has the money to do that.


According to Forbes.com, "it's a violation of securities laws for Kivisto to hide huge undisclosed trading losses while soliciting additional financing for the company."


The Web site quoted Dallas corporate bankruptcy attorney Richard Levy as saying, "He would be as guilty as any of the Enron guys." To translate, there's a chance that Kivisto could be headed to prison.


As for KU, Kivisto's fellow donor, Dana Anderson, said he believes Kivisto has paid somewhere around $8 million of the $12 million he promised - the Tulsa World reported he had given $4 million.


Kivisto's family at Kansas isn't concerned with his money, though. Owens has never asked how much Kivisto is worth.


"I never wanted to know," Owens says.


Morningstar just wants to know one thing. Is his buddy OK?


"Tom Kivisto isn't a guy who's gonna crawl in a hole and hide," Morningstar says. "There's no way. He's a guy who's going to face whatever comes with him head on. We'll hear from Tom again."

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