Money, Power, Pizza: What Are Papa John's Conflicts With The University of Louisville?
John Schnatter had deep ties to the University of Louisville well before he landed seats on the school’s board of trustees and its foundation.
But just how deep? No one will say.
Schnatter indicated business ties and a loan -- to or from the university -- on his conflict of interest form, a document trustees are required to file annually. But where the pizza mogul should have explained these ties, he left nothing but white space. Despite repeated requests for comment, both Schnatter and U of L are mum on the details.
Schnatter is founder and CEO ofPapa John’s, a publicly traded company that holds naming rights for the school’s football stadium for decades to come. He also is among the most recognizable of the school’s boosters -- nationally and in Louisville, where his influence looms large.
On his conflict of interest form filed with the university, Schnatter marked an ‘X’ in the box indicating at least four possible conflicts -- including a loan to or from U of L.
Schnatter noted that he or a family member:
- conducts business with U of L;
- serves as a partner or shareholder of an entity that conducts business with U of L;
- has a loan to or from U of L;
- serves as a trustee or key employee of an entity that does business with U of L.
On his conflict form, Schnatter neglected to indicate whether he wanted to report any “excess benefits transactions,” which occur when a nonprofit provides an economic benefit greater than the actual value.
Some of Schnatter’s conflicts may rest with his company and financial support for U of L. Papa John’s Cardinal Stadium -- where U of L plays football -- has carried the name of Schnatter’s company since it opened in 1998. In a recent trustees meeting, Schnatter called it “my stadium.”
Schnatter’s name also adorns the John H. Schnatter Center for Free Enterprise in the College of Business, established in 2015 with a donation from Schnatter's foundation and the Koch family.
U of L spokesman John Karman declined to make anyone from the university available for an interview and said he doesn’t know whether the university is indebted to Schnatter, the vice chair of its governing board.
Conflict of interest forms are a mechanism for trustees and key employees at the university to disclose any outside interests, investments or family relationships that could pose a problem for U of L. School bylaws require the conflicts be disclosed, and that a trustee abstains from voting on anything tied to his or her own interests.
For colleges -- especially those under elevated scrutiny like U of L -- a commitment to transparency should be common sense, said Michael Poliakoff, president of the American Council of Trustees and Alumni.
“There seems to be no reason at all for the public not to know that whatever business dealings a trustee may be having with an institution and its foundation are ones that do not constitute a conflict of interest,” Poliakoff said. “The higher the profile, the greater the attention, and it’s in the interest of people with a high profile to be as transparent as possible.”
In an email, Karman said the board’s governance committee recently took over responsibility for conflicts of interest vetting. That committee is busy with changing bylaws and other tasks, Karman noted.
“After it completes that work, the committee plans to review conflict of interest forms,” Karman said.
U of L board chair J. David Grissom didn’t return calls for comment. A Papa John’s spokesman also didn’t return calls or emails.
Schnatter went into greater detail on the form he filed as a director of the U of L Foundation. He shared that he gave nearly $700,000 last December to the nonprofit foundation, and has planned a $400,000 contribution this year under an agreement first signed in 1996.
Schnatter didn’t elaborate on the purpose of the 21-year-old agreement. But that year, Schnatter inked a $5 million gift in support of the new football stadium. At the time, it was called the single biggest gift in university history.
Schnatter’s potential conflicts of interest do not necessarily highlight a major dilemma; of 12 university trustees, seven noted at least one conflict, which can be as routine as a spouse or family member working for the university. Many of the other trustees appeared to err on the side of caution and reported even the most tenuous of ties, like a spouse’s job at UPS or having a past business relationship with a fellow trustee.
Karman, the U of L spokesman, said the board’s governing committee could ask Schnatter for more information “if the committee feels it is necessary.”
Gov. Matt Bevin appointed Schnatter to U of L’s governing board in January after a year of upheaval at the university. Longtime president James Ramsey was ousted last summer and, after numerous changes and a court battle, the legislature replaced the entire board in January.
Schnatter has dominated news at U of L in the last few weeks. At an April board meeting, he criticized the athletics department and its “invisible” leadership, widely assumed to be a poke at athletic director Tom Jurich. He later resigned from the U of L Athletic Association board.
“We’re getting ready to put $60 million in a stadium. By the way, it’s my stadium,” he said with a chuckle. “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.”
Kate Howard can be reached at email@example.com 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.