Papa John's Cardinal Stadium at the University of Louisville is being renamed after a racial slur used by the pizza chain's founder came to light.
John Schnatter, the founder and former chairman of pizza chain Papa John’s, now says that he was not informed of the University of Louisville’s decision to remove “Papa John’s” from its football stadium and that he never agreed to the name change.
University President Neeli Bendapudi said at a news conference July 13 in Louisville that she had informed Schnatter of her decision late last week and that he was “contrite, apologetic and supported the move because he didn't want to be a distraction.”
Schnatter was critical of the university's leadership and how they handled the controversy during an interview with Louisville radio station WLKY the same day as Bendapudi’s announcement. Whether Schnatter was in agreement with the decision may ultimately wind up in court. Attempts by VenuesNow to reach Schnatter were unsuccessful.
“I didn’t know anything about the university dropping 'Papa John' from the stadium until Friday's announcement," said Schnatter in the interview. "I didn't get, really, notice that they were going to take it down until after the fact.”
Unlike most other venue naming-rights deals involving the name of a corporate brand, the initial deal and its addendums were made between Schnatter, as an individual, and the school, and not as a deal between the university and the Papa John’s pizza chain. Schnatter, as the chain’s founder, is nicknamed Papa John and has appeared in many advertising spots for the brand.
In the contract that Schnatter signed with the university, a copy of which was obtained by VenuesNow, there were no clauses designed to allow changes in the deal because of comments like the one Schnatter made. The 11-page document comprises an initial agreement from 1996, the year construction began on the 20-year-old stadium, plus addendums written in 2000 and 2007.
The terms of the contracts state that Schnatter can claim naming rights to the stadium through 2040. Schnatter’s commitment to the school is hovering around $14 million, all of which was paid by common stock in the pizza empire. Schnatter paid the school $3.1 million in stock the year the deal was struck. The 2000 addendum called for $4 million more. The subsequent 2007 codicil added another $6 million.
The Papa John's founder acknowledged using a racial slur in a conference call with a marketing agency last week and apologized through a statement. He later said he was "pushed" by the agency to make the apology.
Once Schnatter’s conference call comments became public knowledge late last week, Bendapudi made the call to remove all Papa John's signage from the stadium, as well as the university’s Center for Free Enterprise, and called for Schnatter to resign from the board of trustees.
Kenny Klein, University of Louisville senior associate athletic director, said that when Bendapudi made the call “she was not taking the contract into account; she was making the decision for the good of the university. I’m sure there are elements of the agreement with Mr. Schnatter that still need to be determined at this point. The president spoke to him in advance of things and we let the company know as well.”
As of today, Papa John’s signs are still up. “It will take some time to get it all down,” Klein said. “We’re in early stages of that process. There’s a significant amount of external and internal signage that will need to be changed. It’s going to take a lot of effort to get it all removed.”
Klein anticipates all the signs will have been removed by the season opener in September and replaced by new, permanent signs bearing the venue’s new name, Cardinal Stadium.
The cost of new signs is still undetermined. Klein said the university will foot the bill. “The athletic association is absorbing the cost,” he said.
“There is significant support for the name change,” Klein said. “We took the action quickly and in advance of any backlash. We’ve got to work through the specifics of the result of the decision with Mr. Schnatter, and not wanting to speak for him, I don’t know if this is the end of it or not.”
What is clear is that the contract as written has no provision to remove Schannter’s name from the venues.
“The funds that were provided from Mr. Schnatter have already been received, so moving forward we’re not sure of the status of where we will be,” said Klein about the fate of those shares.
"I worked on this board for two years," Schnatter said in the WLKY interview. "I said, 'Hey, let's play it straight. Let's put the cards on the table. Let's be transparent. Clean business is good business.' They're already caving. They're already not being honest. That's been disappointing."
Eric Smallwood, president of naming rights consultants Apex Marketing Group, said that his interpretation of the contract was that a legal battle may be in the works. “It looks like the original contract had covenants that acknowledged only that Schnatter had the right to request the name be changed every five years,” he said.
“Nowhere does it say that the university can unilaterally change the name by itself, regardless of Schnatter’s inappropriate comments.”