Anyone who has paid attention to Utah's U.S. Senate race this year knows that three of the four main contenders - Joe Cannon, Bob Bennett and Doug Anderson - have put a lot of their own money in their races. In fact, millions of dollars.
Given that either Cannon or Bennett, and maybe Anderson also, will lose Tuesday, a natural question arises over what such personal financial losses mean.The primary losers likely can't raise money to pay themselves back because no one wants to give money to a millionaire who doesn't hold political power. It will be money down the drain.
For the winners Tuesday, however, it's a different story. Being the Republican or Democratic nominee in an open U.S. Senate race means a lot of cash will come your way. Still, it will be difficult to raise $1 million or more to pay yourself back and raise enough money for the general election campaign.
The final winner will be in much better shape. But even for a sitting U.S. senator, repaying a $1 million or $5 million campaign debt - along with raising funds for re-election - may take much of the winner's six-year term.
Federal Election Commission reports show that Cannon has lent or given his campaign $5,068,640. Cannon's net outstanding loan to his campaign stands at $4,300,000.
Bennett has given his campaign $1,478,000. He lent his campaign $188,007 but has already repaid it.
Anderson lent his campaign $1,397,121 but has already repaid himself $277,069, leaving a net outstanding loan of $1,120,052. Anderson hasn't given his campaign any money.
All three campaigns had some cash on hand at the end of the last FEC reporting period. Thus, for the candidates who lose Tuesday, their campaigns could use that cash to pay back some of the money they gave or loaned.
Accordingly, Cannon stands to lose $4,693,125 on Tuesday; Bennett could lose $1,386,448; and Anderson could lose as much as $1,066,350.
Puts a different light on election day, doesn't it? And raises the stakes considerably.
Anderson's wealth comes from his partnership in a three-man international consulting firm. He says he'll just write off his campaign loans and, should he lose, go back to consulting - where he made more than $2 million last year.
Bennett's wealth comes from his stock in Franklin Quest, a company he ran as president until a year ago. In a Franklin general stock offering this summer, Bennett made $3.9 million in cash from a stock sale. He put $1.5 million aside for his campaign, he said, and so if he loses, his debt is already taken care of.
Cannon has a variety of assets backing up his $4.3 million loan, but most of the loan is secured by his Geneva Steel stock. Cannon is the major stockholder in the Orem steel mill, holding about 48 percent of the Class B voting stock, and serves as Geneva's chairman of the board.
"Of course my worth depends, to a large part, on the value of Geneva's stock," Cannon said. On Wednesday, the stock closed on the New York Stock Exchange at $8 a share - the lowest it's been this year. At that price, Cannon's stock is worth between $12 million and $12.8 million. "I'd have to convert my Class B stock to Class A stock to sell it, and there's some variance in the conversion process. My wife and I hold between 1.5 million and 1.6 million shares of Class B stock."
The rumor has been filtering through political circles that Cannon could lose control of Geneva Steel if he loses the primary or general elections. Cannon said that rumor is fostered by his political opponents and "is completely untrue."
"I have other assets, which I prefer not to talk about, that I'd liquidate (to repay campaign debts) before I'd sell Geneva stock. But, yes, the stock does back up the fully collateralized loans (held by Valley Bank)," Cannon said.
But, Cannon said, even if he sold Geneva stock to repay the whole $4.3 million loan, he'd still stay in control of the steel mill. "Alfred Sloan once owned 1 percent of General Motors, and he controlled the company completely. Most chairmen (of the board) or CEOs control a company with 10 percent of the stock or less." In the worst case - where Cannon would have to sell stock to cover the whole $4.3 million loan - Cannon would still own about 30 percent of Geneva.
"No, I'd never lose voting control, especially when you understand that Robert Grow (the current Geneva president who owns about 10 percent of the voting stock) and I would vote together."