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University of Louisville removes Papa John's name from football stadium

Sarah Whitten
The University of Louisville's decision came after the company's founder admitted he used the N-word during a conference call with marketing executives in May.

The University of Louisville announced Friday that it will change the name of its football stadium from Papa John's Cardinal Stadium to just Cardinal Stadium after the company's founder admitted he used the N-word during a conference call with marketing executives in May.

"In moments of crisis, the best communities find a way to come together," Neeli Bendapudi, president of the university, said in a statement. "Over the last 24 hours our community has been fractured by the comments made by former UofL trustee John Schnatter."

The incident came to light after Forbes magazine detailed it in an article Wednesday. Schnatter later confirmed he was on a call with marketing agency Laundry Service when he tried to downplay comments he had made about the National Football League last fall. He said, “Colonel Sanders called blacks n-----s" and never faced any public backlash at KFC.

In the wake of this report, Schnatter resigned as chairman from Papa John's board and stepped down from the University of Louisville board of trustees. His name name was also removed from a signpost of a gymnasium in his hometown of Jeffersonville, according to the Louisville Courier-Journal.

Schnatter, who owns a 24 percent stake in Papa John's, remains on the company's board.

"While Schnatter’s resignation as chairman of the board was a first step forward, Papa John’s needs to do more to show that that its corporate values are not aligned with its founder’s behavior," Michael Gordon, chief executive of Group Gordon, a strategic communications, told CNBC via email. "With Schnatter remaining on the board, he also will remain a liability for Papa John’s. It doesn’t matter how much of a stake Schnatter has in the company or that the company is named after him – he needs to be extricated from the brand for Papa John’s to truly move on from this and other ugly episodes."

Papa John's has suffered backlash after Schnatter's comment became public. Major League Baseball indefinitely suspended its Papa Slam promotion — a campaign that both sides have collaborated on since 2016. The Miami Marlins announced Thursday that the team was suspending its relationship and all promotions with the brand and Olson Engage, the public relations agency that was hired by the company in February, dropped them as a client.

"The Papa John brand image is strong, so I suspect while there might be a dip in sales [until] the story loses front-page potency. Overall, this is not a brand or business killer," Christopher Gilbert, a business ethics consultant at NobleEdge Consulting, told CNBC via email.

Earlier on Friday, the pizza chain said it was removing Schnatter's image from its marketing.

"This reaction and backlash shows that customers play a much larger role than ever before, and people are only going to continue to cite how they feel publicly and become vocal about it," said Nat Sutton, a partner and head of Buffkin/Baker, an executive recruiting agency. "This reaction shows that the community will come together and that this has more power than a large corporation."