John Schnatter publicly criticized the leadership of the University of Louisville's athletic department last month. But the powerful pizza magnate was speaking with his checkbook long before then.
Last year, Schnatter quietly pulled $1.5 million from a longstanding pledge to the athletic association for the expansion of the namesake Papa John’s Cardinal Stadium.
Schnatter chose instead to earmark the money for academics, according to a March 2016 agreement signed by Schnatter and former university president James Ramsey.
The athletics department banked on the money to help fund the now-completed, $72 million renovation that added 13,000 seats to the stadium.
But apparently, nobody told athletics $1.5 million wasn’t coming.
The department was unaware Schnatter pulled his donation until the Kentucky Center for Investigative Reporting requested records last week. The big-dollar loss for sports adds a new layer to the very public back-and-forth playing out among the university, its sports department and its wealthy booster.
In a university trustees meeting last month, the Papa John’s CEO and founder called athletic leadership “invisible” and raised questions about stadium expansion costs. The criticism caused a media firestorm.
Athletics department spokesman Kenny Klein said Wednesday he’s unaware of any rift. Calls to spokesmen at Papa John’s and Schnatter’s real estate company were not returned.
“We’ve had a great relationship with John and we’ve been very appreciative of his contributions and support of our athletic department over the years,” Klein said. “I'm sure whatever issues are out there, they’ll be addressed and we’ll continue to move forward.”
How could such a big-money move be a secret? Klein said he didn’t know. He said he had no reason to believe Schnatter or former president Ramsey deliberately kept the new agreement from athletics.
“Dr. Ramsey was the president of our university, but he was also the chairman of the athletic association board of directors,” Klein said. “So he certainly would have been in position to make that agreement.”
Ramsey, who led the university, its nonprofit foundation and the athletic association for more than 15 years, was ousted last year. His attorney, Steve Pence, declined comment.
Schnatter has been a power broker at the university for decades. He was appointed to the U of L board of trustees, the U of L Foundation board and the U of L Athletic Association board this year.
Papa John’s Cardinal Stadium has carried Schnatter’s company’s name since it first opened in 1998. Schnatter holds naming rights until 2041. (Read " The Details On That Papa John's Cardinal Stadium Deal")
Schnatter and Ramsey amended that agreement in March 2016 to reflect the new terms of his donation to academics.
“The Contributor desires, and the University agrees, that the remaining future contributions… be designated for academic programs at the University rather than applied toward the construction of the sports facility,” the March 2016 document said.
A month later, the athletic association board approved plans for the next expansion of Papa John’s Cardinal Stadium. Schnatter blasted the project’s cost last month.
“We’re getting ready to put $60 million in a stadium. By the way, it’s my stadium,” he said at the trustees meeting. “We need to be more prudent with our dollars. By the way, I win on the stadium. But it’s not healthy for the university and it’s just wrong.”
Schnatter stepped down from the athletics oversight board later that month.
Keith Sherman, executive director of the university’s nonprofit fundraising arm, said the foundation has received nearly $1 million of Schnatter’s redirected pledge since March 2016. Schnatter has not yet designated how he’d like it spent, Sherman said, so the foundation invested it in government securities at Schnatter’s direction.
Records show the agreement has been amended three times: the first two amendments incorporated new gifts from Schnatter to athletics ($4 million in 2000 and $6 million in 2007).
With $1.8 million remaining on Schnatter’s $6 million pledge, Schnatter amended it again in March 2016. He sent $300,000 to athletics as planned, but assigned the rest to an unspecified academic purpose.
KyCIR asked U of L three times for the 2016 amendment, which Schnatter listed on his conflict of interest disclosures. The university’s records custodian twice denied that such a record existed. When pressed a third time, the school released the document on Monday.
In earlier revisions, the athletics department simultaneously updated its separate agreement with Schnatter’s company, which dictates marketing and other perks tied to U of L athletic facilities. Each time, the corporation also kicked in extra funding along with Schnatter.
But in March 2016, there was no parallel update, according to Klein. The corporation’s agreement hasn’t been revised since 2007.
That year, the university called a $10 million gift from Papa John’s, Schnatter and his wife Annette the largest single gift in athletics history.
Even after the Schnatters shifted some of their pledge to academics, it still remains the Cardinals’ biggest donation.
Kate Howard can be reached at khoward@kycir.org and (502) 814.6546.
Disclosures: In 2015, the University of Louisville, which for years has donated to Louisville Public Media, earmarked $3,000 to KyCIR as part of a larger LPM donation. University board member Sandra Frazier and former member Stephen Campbell have donated.
https://www.documentcloud.org/documents/3723457-Amendment-3-Schnatter-3-4-16.html
