Michigan football coach Bo Schembechler underwent seven hours of surgery yesterday to replace four coronary arteries inserted during a heart bypass operation 11 years ago. His postoperative prognosis was termed good.

Dr. Otto Gago, head of the surgical team at St. Joseph Mercy Hospital in Ypsilanti, Mich., said the coach was close to having "a pretty large cardial infarction" in the near future without the surgery.

Schembechler, 58, was listed in satisfactory condition and, barring complications, was expected to be out of the hospital within 10 days.

Three of the four arteries from the previous bypass operation were completely blocked, and the fourth was 90 percent closed, Gago said. But, "There was no heart damage."

Gago said it would be two or three months before Schembechler, in his 19th year at Michigan, could return to coaching. Athletic Director Don Canham said chief assistant Gary Moeller will coach Michigan in the Hall of Fame Bowl at Tampa, Fla., against Alabama Jan. 2.

Schembechler had a heart attack on the eve of his first Rose Bowl appearance in 1970 . . .

Earle Bruce, whose Buckeyes beat the Wolverines in Bruce's Ohio State swan song, has turned down the head coaching position at Kansas, a Columbus television station reported. He may have been unable to get the financial guarantees he wanted written into a multiyear contract . . .

Southern Cal's Larry Smith, just rounding out the first year of a five-year contract, angrily denied a report he is succeeding Bruce at Ohio State. He hasn't even spoken to OSU officials, he said.

The USC sports information office said Smith first heard of the report, which originated in the Massillon (Ohio) Evening Independent, on his car radio in California. Smith was so angry he pulled off the freeway and dictated: "I have no intention of taking that job and I have no intention of leaving USC. Is that clear? . . . I'm trying to prepare my team for the Rose Bowl and I'm also trying to recruit. Can't you see that spreading lies like that only serve to hamper those efforts?" . . .

The NCAA Executive Committee decreed Alabama must forfeit $253,447 in basketball receipts for using two players in the 1987 NCAA tournament later found to have been ineligible for having dealt with agents (one was Derrick McKey, now of the Seattle SuperSonics) . . . Cleveland State basketball coach Kevin Mackey and assistant Eric Shanaberger each lied four times to the NCAA, and assistant athletic director Merle Levin did at least once, the Cleveland Plain Dealer reported. Last week, the NCAA put the team on three years' probation -- two years' tournament sanction -- for recruiting violations but did not name names.