David L. Bahnsen is an investor and money manager who lives in New York and California and oversees the management of more than $4 billion in client assets at the Bahnsen Group. He previously worked as a managing director at Morgan Stanley and UBS. 

Bahnsen has written several books and is a frequent guest on business TV channels such as CNBC, Bloomberg and Fox Business. He writes for National Review, where he is a board member. He’s also a founding trustee for Pacifica Christian High School in Orange County, California, and a former board member of The King’s College in New York City. 

Bahnsen spoke with Paul Glader, executive editor of ReligionUnplugged.com and a journalism professor at The King’s College, about the financial crisis facing King’s, which has been documented at ReligionUnplugged.com, The New York Times, InsideHigherEd and other publications this spring. Mandie-Beth Chau, a freshman journalism major at King’s and an editor at The Empire State Tribune, joined the interview, which has been edited for clarity and brevity. 

Glader: What led you to join the board of The King’s College? What were your time periods and your experience there?

Bahnsen: I believe I was asked to join the board by former college President Greg Thornbury in the summer of 2017. And then I served on the board up until the very beginning of 2021, at which point I left the board. I believe that was February of 2021.

Glader: Could you tell us why you left the board?

Bahnsen: I’m a founding board member of a Christian high school out in Orange County, California, called Pacifica Christian High School. That was the lion’s share of my commitment of both time and treasure. It’s been a multimillion-dollar priority for me in terms of as a donor. Our trustees are not just doing a board meeting once every quarter or twice a year. I’m extremely hands-on involved. I also serve on the board at National Review, the 70-year-old conservative think tank and media, political organization. I’m very passionate about what the mission of the school (King’s) was, but … it was going to be my third priority as far as these extracurricular activities. And as my business and family commitments grew … I decided one of my three babies needed to go, and King’s was the third baby and so King’s was the one that went.

Glader: As you probably know, King’s is now in financial hardship and has said that it’s considering options such as being acquired by another college or closing its doors permanently. And we probably will get news of one or the other of those this year. Do you have thoughts on what’s brought on this situation? 

Bahnsen: Yeah. I want to be as transparent and open as I can. There may be some areas where it wouldn’t be appropriate as a past fiduciary to go into but, I mean, the obvious answer is (the crisis) was brought on by cashflow. It always is financial. There was never a time when I was on the board that financial issues were not pressing, were not upfront and close. There were different strategic things that were being discussed, some of which did not work out. Then COVID came, and that was a whole other set of challenges, obviously. And then that led to these discussions that ultimately came to a deal with Primacorp. And so I don’t think that there’s any mystery … that for many, many years, the school has had peaks and valleys of its financial health. It’s a very difficult model. I will say that there’s been other times where the school was in the bottom of the ninth inning with two strikes and two outs, and somehow, someone got a base hit. There’s been existentially threatening financial difficulties in the past. It’s definitely been a wild journey. I do believe that there is a need for a school that is worldview minded and is a degree-granting undergraduate institution that is based in the city. I think that there is a benefit where the cultural capitals of media and finance and arts and so forth (are located). As a Kuyperian, I believe that this matters. As much as there are wonderful schools that might be in suburbs or rural parts of America — I have nothing negative to say at all about Wheaton or Patrick Henry or Hillsdale — but I do believe that … there is a real need in the kingdom for something like King’s.

Chau: Because King’s has had this cash flow issue for so long, what would you think would change that going forward?

Bahnsen: It’s a tricky area. I don’t think there’s a mystery that’s the challenge that has never been resolved. It’s a fair question. The challenge is that the school doesn’t get to keep that much of the money that it costs parents to send their kids there, because it’s a more expensive experience in the city. There’s a big need to own property in a place that’s incredibly expensive to own property. There’s a big need to have a larger nest egg or balance sheet of assets that have never been able to be accumulated. It’s always been reliant upon ongoing cash flows, both tuition and donors. And then ultimately, those things, you know — it became much more challenging after COVID.

Glader: During the time you were on board, as I recall, we had the DeVos family giving major generous gifts to the school that started to taper down right into the headwinds of COVID. And I guess, looking back … should leaders of King’s have been doing … a more serious job of cost cutting? Or do you think the board was really doing all it could with the information it had at the time?

Bahnsen: Yeah, I think that the board had limited capacity for the granularity of cost cutting, because you’re largely working off budgets that are coming from leadership that are based on what they believe the minimum need will be. And so a board member can look at a sheet of paper and see a number and say, “Hey, that number would look better if it was a lower number.” But that doesn’t mean that the board member knows what positions are luxuries and what positions are indispensable. And so, you know, along the way, I do think there’s a tension at which you say, OK, well, we cut costs down to a point where the P&L (profit and loss) and balance is better. But we’ve also cut it to a point where the school is totally dysfunctional. And so there you’re relying on administration and leadership to provide a lot of wisdom.

Ultimately, I think that the better play is generally, when your expenses aren’t going to be able to get much leaner, focus on the revenue and focus on some sort of strategic partnership. There were other scenarios that were looked at. 

The DeVos’ incredible generosity had an expiration date before the Canadian option came up. And I think the COVID moment just sort of took some of those strategic partnerships out. And I think they would have been wildly better alternatives in hindsight, but … I think the school did a lot to try to broaden a donor base, and just ultimately … were unable to do so. My time on the board overlapped with that period where there were significant donations coming in from the DeVos family that were transformative to keep the school going. But that, in my understanding of history, is not any different than the past. It just was different donors. There were always a very small number of people who were incredibly generous keeping the school going.

Glader: Do you have any opinion that you want to share about Peter Chung and Primacorp Ventures? I think one big shock to us is just from last fall Primacorp was planning on a future at King’s. We came back from the holidays and the plan changed. There was cost-cutting in the fall, and then all of a sudden, we’re on death’s door. And then we noticed there are issues Peter Chung is facing … in Canada, which does cause us to ponder a lot of questions.

Bahnsen: There are questions I’ve read that you guys in your journalistic efforts are starting to ask that I think are very fair, reasonable questions. As a general rule of thumb, whether you’re talking about an educational institution or a business transaction … it’s nice to be able to transact without desperation. And that desperation or the perception of desperation very rarely leads to an ideal transaction. Now, sometimes, desperation is unavoidable when someone is desperate, if someone feels desperate, because the circumstances are desperate. Oftentimes things can get harder when one’s back is against the wall. 

As far as the questions that I think you guys have been pushing ... I do not know Peter. And there was no time when I was on the board where I got to know him, meet him, talk to him or hear from him. I left the board well before that transaction was consummated, but it was in discussion phases. Now, seeing the way a lot of these things changed … and as a non-board member, I feel comfortable being critical of the way a lot of it has transpired. But I don’t know what circumstances changed that led to the execution of the intent of the deal changing so much. So that’s where I guess I’m hesitant to speak from ignorance. But there’s no question that the intent that was discussed when I was on the board was just categorically different from what has played out. 

Chau: Do you have any thoughts on how the board currently is mostly Primacorp (when it was not supposed to have the majority of the board seats)? 

Bahnsen: I don’t imagine that they had a choice. I would believe that as a condition of the deal that was done … one of the costs to bear was that Primacorp was going to become a strategic partner with certain things they were going to do. And in order for them to do that, they were going to require a majority position on the board. But I do think that it has clearly changed the pecking order of what different actors priorities are.

Glader: Yeah, the 2021, unaudited 990 shows that Primacorp received four of the nine board seats. And when we count them up, now, it’s a 5-4 if you count John Beckett, 5-3 if you don’t count John Beckett. 

Bahnsen: Oh, so they ended up with five instead of four board seats? Then that, obviously, would have been a very subsequent change, that I wouldn’t be privy to, unfortunately.

Glader: If you were an acquiring institution, what are King’s attractive assets? 

Bahnsen: Well, the strategic imperatives of the acquiring institution matter. And so there are a number of different things that could be most relevant. One of the institutions that I was a part of meeting with and negotiating with when we thought a pre-COVID deal with another academic institution might happen …  there was a synergy and strategic relationship between what they were envisioning in terms of King’s particular proximity to Manhattan, being in the capital of finance. Therefore, having an accredited degree-granting institution at the heart of our world’s financial capital was relevant as a strategic partner to this particular academic institution. Other institutions … may simply just want the alumni base — certainly the embedded status with New York as a degree-granting institution. It’s harder to reinvent that wheel than to just acquire somebody else’s accredited status. So the donor base is probably not a huge factor, for obvious reasons. But the alumni base, the institutional reputation in politics, philosophy and economics core, and then I think those who would be looking for a Manhattan base. Again, that Kuyperian mantra that matters so much to me, that would, I think, be the attraction to another institution. If you took away King’s status as a degree granting institution with accreditation, it loses that luster. And certainly I think that the profile and caliber of the faculty has been a strength. But there’s a risk of that diminishing too as more defections are at risk of happening. So, in no particular order, I think faculty, mission, reputation, alumni and degree-granting accreditation status. Those are the various assets. The liabilities are rather well-known: financial position and lack of any administrative heft. 

Glader: What about real estate? How do you value the fact we bought a building for $19.5 million that hasn’t been sold yet and has roughly $10 million in debt now on the building? How does that play into a deal? 

Bahnsen: I don’t know what happened that put leverage on that building. I was on the board when we closed on the purchase of that building. And we bought it. And so something happened subsequently to put debt on the building. And that makes it obviously a lot less attractive that the equity has been eroded by the addition of debt and, of course, property value depreciation throughout and post-COVID. But if … we were having the same exact conversation a week after the closing of that purchase and you were talking about basically a $20 million unencumbered real asset on the balance sheet of the school, that would also be a tremendous advantage to a strategic acquirer or a strategic partner. But based on the erosion of the equity, it’s much less relevant and attractive to a potential strategic partner. 

Glader: From what I understand, King’s has a charter that has some value. I think that relates to what you’re talking about with accreditation to offer degrees within the state of New York?

Bahnsen: Yeah, it’s very state relevant. If you ran, you know, Paul’s Bible College in Birmingham, Alabama, and you got a successful, wonderful school, and you wanted a satellite in New York, you would not be able to piggyback off of your academic certifications in Alabama very easily. There’s a unique accreditation process in the state of New York with its own governance and own protocols that obviously King’s has already gone through that and other non-New York institutions have not.

Glader: What does King’s mean for Christianity in New York? The average Christian person in California or Iowa might scorn or think, “Why did a school like King’s ever locate in New York to begin with?” Is there a different perspective that those kinds of people might want to consider?

Bahnsen: Well, I don’t think I can make the argument for someone who has that viewpoint very succinctly or persuasively. It’s a tragedy that people think that. It’s a plague on the whole evangelical church because you are right that many people do believe that they are wrong. There is an incredible need for Christian presence in influential, populous and culturally-significant urban areas, including New York City. I don’t know if in hindsight King’s could have done more to defend the city post COVID. I think that there were a lot of media portrayals of life in New York. If you watch certain networks or read certain Christian blogs, it sounded as if New York had become, you know, one step ahead of the gates of Hades. And I don’t think it was an accurate portrayal. But I think it was absolutely devastating to recruitment of students.

Glader: So I’m curious, David, how do you see the odds of King’s living in some form versus King’s just disappearing from planet Earth? What are the odds of an acquisition happening? Or some other thing happening?

Bahnsen: My answer is uninformed because … I’m not privy to what efforts may be going on behind the scenes. So superficially, cosmetically, intuitively, I would perceive it to be very low odds of survival. But the caveat I would offer is that I am 100% sure that has also been the case at least two other times in the school’s history, and maybe more than I’m aware of. But on two separate occasions, I think we were in the bottom of the ninth inning to use my prior baseball analogy. And the school got a base hit and lived to fight another day. This feels a lot more severe than that. And I definitely believe it would take some divine intervention. But I believe in a divinity that frequently intervenes … so that’s my answer. It’s going to be a very tough situation. But it doesn’t appear to be a completely shut book yet. 

Glader: Excellent. Thank you so much. Is there anything else that you wanted to tell us?

Bahnsen: I do think that there’s been an awful lot — from faculty to board to administration to obviously students and parents — of stakeholders in the school who are wonderfully sacrificial, tremendous people. The notion of what kind of sacrifice people like Andy Mills, people like the DeVos family put into this school ... it’s incomprehensible. And so I have nothing but incredible affection and gratitude for those individuals. And right now we shall see what God has in store, both for King’s as an institution and the people who are connected to the school. My prayers are very much with everyone.

Paul Glader is executive editor of ReligionUnplugged.com and executive director of The Media Project. He has reported from dozens of countries for outlets ranging from The Wall Street Journal, The Washington Post, Der Spiegel Online and others. He’s on Twitter @PaulGlader.