There are more bad news for Papa John’s two days after reports emerged that founder and chairman John Schnatter used a racial slur: despite Schnatter’s resignation late on Wednesday night, on Friday afternoon the franchise’s affiliation with the New York Yankees, Atlanta Falcons and Atlanta United has been suspended.
The decision by the Atlanta entities came on Thursday morning by AMB Sports & Entertainment which owns the teams and oversees the operations at Mercedes-Benz Stadium. In a statement, the group wrote:
“Effective today, AMB Sports & Entertainment has indefinitely suspended its affiliation with Papa John’s. The divisive comments made and acknowledged by the company’s founder are reprehensible and do not align with our core values. While we have enjoyed a positive relationship with the local franchisee and staff, we will be evaluating the overall relationship between Papa John’s and our sports properties over the coming weeks.”
Separately, shortly after market close, the New York Yankees tweeted that they are suspending their relationship with Papa John’s.
“In response to the reprehensible remarks made by Papa John’s founder and owner, the New York Yankees are suspending their relationship with the company.”
Statement from the New York Yankees regarding Papa John’s:
“In response to the reprehensible remarks made by Papa John’s founder and owner, the New York Yankees are suspending their relationship with the company.”
— New York Yankees (@Yankees) July 13, 2018
Meanwhile, according to ESPN reported, virtually every other MLB team has also suspended its relationship with Papa John’s including the Marlins, Rays, Nationals, Orioles, Cardinals, Rangers, Twins and Royals
Growing list of teams suspending their relationships with Papa John’s:
Yankees
Marlins
Mariners
Rays
Dodgers
Nationals
Orioles
Cardinals
Rangers
Twins
Royals— Darren Rovell (@darrenrovell) July 13, 2018
Schnatter has long been the face of the pizza brand, and the company acknowledged in regulatory filings its business could be harmed if Schnatter’s reputation was damaged, which is precisely what happened. Papa John’s got a taste of that last year, when Schnatter stepped down as CEO after blaming disappointing pizza sales on the outcry surrounding football players kneeling during the national anthem.
As we reported previously, Papa John’s was already trying to further publicly distance itself from Schnatter after Forbes reported he used the N-word during a conference call in May. Schnatter apologized and said he would resign as chairman. That prompted the company’s stock to recover some of the losses it suffered after the report, though the shares were down slightly Friday morning.
Keith Hollingsworth, a professor at Morehouse College’s business department, said keeping Schnatter on marketing would be a signal to people that the company does not have a problem with his comments, or that it didn’t think they were a big deal.
“Five years from now, they might be able to start bringing him back. But at the moment, you have to be very decisive and show you take this very seriously,” Hollingsworth said. – Fox 5
Schnatter had used the slur during a media training exercise in May, Forbes reported this week. When asked how he would distance himself from racist groups, Schnatter reportedly complained that Colonel Sanders never faced a backlash for using the word. Schnatter subsequently issued a statement acknowledging the use of “inappropriate and hurtful” language.
“Regardless of the context, I apologize,” the statement said.
It was not enough, and after the dramatic backlash which unless halted threatens the existence of the company, moments ago the company’s new CEO Steve Ritchie issued a statement saying that “it has been decided [Schnatter] will no longer be in any of the advertising or marketing materials associated with the brand.”
A MESSAGE FROM PAPA JOHN’S CEO STEVE RITCHIE
LOUISVILLE, Ky.–(BUSINESS WIRE)–Jul. 13, 2018– Papa John’s is not an individual. Papa John’s is a pizza company with 120,000 corporate and franchise team members around the world. Our employees represent all walks of life, and we are committed to fostering an inclusive and equitable workplace for all. Racism and any insensitive language, no matter what the context simply cannot – and will not – be tolerated at any level of our company.
The Board of Directors of Papa John’s accepted Mr. Schnatter’s resignation as Chairman of the Board earlier this week. It has also been decided he will no longer be in any of the advertising or marketing materials associated with the brand.
This decision is the first of several key steps to rebuild trust from the inside-out. We will be engaging a broad set of stakeholders to chart a course forward that demonstrates our commitment to diversity, equity and inclusion.
First, we will identify and retain an independent and outside expert to audit all of our existing processes, policies and systems related to diversity and inclusion, supplier engagement and Papa John’s culture. As part of that process, we will establish a process for communicating progress against transparent goals to everyone in our Papa John’s family.
The entire senior management team will also be visiting key locations across the country and hold listening sessions with employees in our stores to talk about what they are seeing and give them a platform to voice their concerns. To follow-up, we will initiate two-way conversations to invite ongoing feedback from employees and franchisees to ensure that their voices are heard.
I will personally be leading this effort because there is nothing more important for Papa John’s right now. We want to regain trust, though I know we need to earn it. We will demonstrate that a diverse and inclusive culture exists at Papa John’s through our deeds and actions.
Will it be enough to stem the bleeding? Find out when the stock reopens for trading on Monday.
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