Welcome to the April 28 Monday Business Briefing.

This is your private business intelligence briefing with Insider Louisville staff and contributors vetting tips collected during the past few days, hours and minutes before we post.

A reminder: This afternoon we’ll host IdeaFestival founder Kris Kimel from 4:30 p.m. to 6 p.m. at Bourbons Bistro.

Kris will give us a preview of the upcoming IdeaFestival, scheduled for Sept. 30 through Oct. 3. The event is free, and you can get your tickets here.

Carolyn Callahan
Carolyn Callahan

• Aside from sports, no university effort generates more revenue than graduate schools, especially when students are willing to pay whatever it takes to get into top medical, legal, engineering and business programs.

Last month, the University of Louisville’s School of Medicine was put on probation by its accrediting agency after myriad problems, including literally not having enough seats in lecture halls. (This at the same time the University of Louisville Foundation has raised $1 billion and built about $100 million worth of spec buildings.)

Friday, U of L’s College of Business dean stepped down abruptly following a contentious faculty meeting. In turn, she’s being made assistant provost. Carolyn M. Callahan, a former CPA who previously served as director of the University of Memphis School of Accountancy, was hailed last year as the first female and African-American to be dean of the business school.

U of L officials are representing Callahan’s departure as a move related only to “personal matters.” (See her internal email below in full.)

Mark Hebert, U of L spokesman, said in an email that Callahan was not removed, but rather is stepping down to take personal leave. Multiple sources dispute that, telling IL Callahan had alienated the majority of the business school staff.

Callahan replaced Charles Moyer, who had changed the college’s focus to entrepreneurship, establishing the Forcht Center for Entrepreneurship.

The business school had been a bright spot at the university, at least from our perspective. Earlier this month, for example, U of L students picked up $100,000 at a Rice University business plan competition. But lately, when we asked our sources about issues at the business school, they started staring at their shoes. Then, at 4 p.m. Friday, an internal email went out announcing Callahan had stepped down … and our phones lit up with text messages.

We’re not clear why Callahan is out so soon, but insiders tell us the consensus is that “it is a very positive development,” as one source put it.

In isolation, the Callahan exit is not atypical at universities. But in aggregate, it’s just another in an endless series of issues that has more and more people questioning President James Ramsey’s leadership.

Earlier this year, Perry Vaughn was charged with theft and money laundering for allegedly stealing about $3 million. Vaughn, executive director of the Department of Family and Geriatric Medicine at the U of L Health Sciences Center, had a flamboyant penchant for the Good Life, including luxury cars and homes, and trips to Vegas, all on a less-than-opulent salary of $100,000. And no one in the administration noticed for seven years until a colleague stepped forward.

Before Vaughn, Robert Felner stole $2.3 million as dean of the School of Education and Human Development. Felner ended up in prison. A number of tenured professors have left the School of Education and Human Development for more successful programs. They left because of frustrations with U of L’s inability to replace Felner, as well as disagreements related to the lack of academic direction at U of L.

Ramsey and Provost Shirley Willihnganz nixed more than a dozen candidates in the five years since Felner went to jail in 2009 until they finally selected a dean this month … not a world-class researcher but a U of L professor.

In fact, since 2009, U of L has had a string of problems related to mismanagement. The University of Louisville Cardinal, the campus newspaper, has done a surprising job documenting the rash of embezzlements or misappropriations, revealing Vaughn had been promoted into his position despite being unqualified for the job.

Finally, The Courier-Journal has documented a series of irregular payouts – complete with non-disparagement clauses – to former U of L top executives, including most recently to retiring lead counsel Angela Koshewa, who received $347,000 in February.

The higher U of L rises into the top ranks of NCAA sports, our sources point out, the lower it falls in academic ranking. Said one professor we spoke with, “(Ramsey’s administration) runs U of L as a sports program.”

That said, if sports at U of L were as dysfunctional and mediocre as academics, Athletic Director Tom Jurich and all the varsity coaches would have been fired long ago.

To be clear, IL has nothing against sports. We want to see all U of L programs do well. And frankly, we are sympathetic, because in 2014, it’s more difficult than ever to be competitive with the Wharton Schools, the Michigans and even the business schools at regional powers such as Indiana University.

As we have posted countless times, there are no successful cities in the 21st century without successful universities … and no top-tier American city that flourishes solely through college sports. U of L has largely avoided scrutiny by owning the press both through its advertising muscle, and through access to the sports programs.

Who in Louisville has the political capital and courage to stand up and say, “U of L is broken, and we need to fix it?”

In the coming weeks, Insider Louisville will examine U of L’s graduate schools in more depth, as well as other issues. Stand by.

• Here is a copy of Dean Callahan’s resignation email courtesy of U of L.

Dear Faculty and Staff-

I am writing to inform you that I have requested a leave of absence from the University for personal and family reasons.  I have also asked the Provost to relieve me of my duties as Dean of the College of Business effective June 1 when my leave begins.  The Provost has accepted both requests. I will remain in my position as Brown-Forman Endowed Chair and Professor of Accounting.  Upon my return from leave, I will accept the Provost’s offer of a position as an Associate Provost at the University of Louisville.

In accordance with my granted requests, the Provost will be naming an acting COB dean shortly.  Over the next month, we will work with the named interim individual to effect a smooth administrative transition.

Thank you all for your prayers and good wishes for my family.  I want each of you to know that it has been my distinct honor and privilege to serve as your dean.

Sincerely,

Carolyn M. Callahan
Brown-Forman Endowed Chair and
Dean, College of Business

Picture 2• A far more positive university-related item: Spalding University purchased seven and a half acres between Eighth and Ninth streets on Kentucky Street, west of Spalding’s Fourth Street campus. The parcels are now vacant lots. Rick Barney, chief marketing officer, confirmed the purchase and said university administrators are determining what would be the best use for the parcels. Right now, it looks like Spalding likely will redevelop the parcels into sports facilities for track and field and/or soccer. The property may be used to add field hockey and lacrosse, sports the university doesn’t offer now, Barney said.

“We’re playing with various options on how to use that space,” Barney said. “So we’re currently fundraising.”

• Barney took issue with one MBB item from April 14. Kentucky School of Art is not leaving Spalding, at least not anytime soon. We reported that with a growing enrollment and powerful patrons, The Kentucky School of Art is looking for its own campus.  But Barney said without Spalding, the school wouldn’t be accredited. “The bachelor’s of fine arts they offer is a Spalding degree,” he said. “They are here for at least the short-term.”

• Is a new locus of Louisville retail forming in far eastern Jefferson County. Way east? Last December, we found out San Antonio, Texas-based Academy Sports would anchor GBT Realty Corp.’s new Middletown Commons. This week, a source told us Springfield, Mo.-based Bass Pro Shop might be going in at Snyder and Shelbyville Road.

Middletown Commons
Middletown Commons

At MBB, we got to lengths to double-verify tips. So, off to North English Station and Shelbyville Road we went, where we spoke with contractors and utility workers. We went over the schematics, and there doesn’t seem to be anyplace at Middletown Commons large enough for a Bass Pro Shop, which tends to be more than 100,000 square feet. We called developer GBT HQ in Nashville, but they didn’t return calls. We also called Pro Bass Shop media people in Springfield, Mo. They also didn’t return calls. The silence was deafening.

What we know is, Hobby Lobby, Liquor Barn, Boombozz Pizza, Rack Room Shoes, Ross and Texas Roadhouse are just some of the tenants for the $50 million development, scheduled to open next year. But there also are undeveloped and developed parcels nearby that could accommodate a big big-box on the Bass Pro Shop scale.

The Clarksville store is the largest in the chain at 280,000 square feet. In fact, it’s an entire mall – formerly the River Falls Mall – reconstructed into a power center, with Bass Pro Shop as the main tenant.

Last February, an insider tipped off MBB that Academy Sports + Outdoors was coming, and maybe that’s the source of confusion. But seeing the scale of the development, along with all the new apartments and other construction near Middletown Commons — including Meridian on Shelbyville apartments and DealerCar Search’s very cool new building — certainly suggests development of the area into another satellite urban city on the scale of Norton Commons/Old Brownsboro Crossings area. Or much bigger.

DealerCar Search• By the way, the DealerCar Search builds responsive websites for auto dealers, which apparently is a very lucrative business as you can see from the rendering of their new building. From the website, it appears they have clients all across the United States.

• We’ve written a lot about Bill Weyland’s Hilton Garden Inn under construction at Fourth and Chestnut streets. But we’d never seen the renderings … and the hotel is halfway complete.

So, we asked, and Bill sent us an image of what the hotel will look like when finished later this year.

1107 Hilton Garden Inn c1 t1 copyWeyland emphasized his strategy is to connect his new hotel to event spaces in his historic Henry Clay next door, creating a boutique convention/events and wedding center wrapping around a parking structure.

And of course, right next door is the new Mercury Ballroom.

• Look for a name to move into Portland. MBB met with Shine Contracting partner/Portland investor Matt Gilles last week, and there is an amazing amount of new and pending investment on the east side of Portland. Too much to put in a Monday Business Briefing blurb.

Two tidbits: Other sources told us a well-known name in Louisville’s food scene is circling one of the Shine/Gill Holland buildings, specifically the former firehouse where Gelato Gilberto is going. (Matt wouldn’t divulge, but he also didn’t deny it. The second tease is that Gilles, Holland and Friends have bought ANOTHER huge building on Rowan Street. More this week.

• Later this morning, IL will tell you which Louisville firm is moving into the retail space on the first floor of the Fleur de Lis condos at Preston and Main streets, taking 8,000 square feet of virgin space ….

• Kentucky made an interesting list on the MarketWatch website … for the wrong reasons. MarketWatch has Kentucky at No. 10 on its list of the 10 states “where taxpayers get the worst bang for their buck.

10. Kentucky
Average annual state and local taxes: $7,472
The Bluegrass State ranks 42nd in the nation when it comes to the return on investment that residents get from their tax dollars. Kentucky’s taxes are higher than average (it ranks 30th in the nation in terms of tax burden, as residents must shell out an average of nearly $7,500 each year in state and local taxes) and it ranks in the bottom half of states when it comes to education, health, safety, pollution and the economy. The only area where it scores relatively highly (22nd in the nation) is with respect to its infrastructure.

• As if to underscore the importance of the business school, a group of University of Louisville students won Alltech’s 2014 Alltech Innovation Competition in Lexington Saturday against seven other state universities.

At the competition, four graduate students won $10,000 pitching FuturFry, a next-gen deep fryer that will save restaurants 40 percent on annual cooking oil costs.

From the Alltech release:

Because its patented design heats the oil externally, Trifecta’s FuturFry mitigates the effects of temperature degradation, which extends the life of the oil thereby increasing energy and labor efficiencies. FuturFry’s frying method also lends itself to the use of alternative oil, giving it the potential to be a healthier fryer.

The release notes that with about 8 million restaurants globally, the market for FuturFry is “expansive.” No kidding.

The U of L team receives $10,000 in seed money for the continued development of Trifecta’s FuturFry, the top prize. (The amount is somewhat symbolic. It’s the amount of capital Dr. Pearse Lyons had to start Alltech, which is now a billion-dollar business, selling everything from animal nutrient supplements to bourbon.)

“It’s wasn’t about the oil or less energy. It’s the possibility of us producing 8 million fryers,” Lyons said in the release. “It’s a mechanical business that would be honing in on one of Kentucky’s assets, which is food.”

The U of L team was selected by a panel of nine judges ranging from entrepreneurs and investors, to chairmen and CEOs, additional winners at the Alltech Innovation Competition included:

Second Place – $6,000 – Morehead State University’s Better Pork Co. Morehead State’s team of four undergraduate students presented a plan for enriching pork with omega-3 to meet consumer demand for functional foods.

Third Place – $4,000 – The University of Kentucky’s Arymza Technologies. Arymza Technologies, presented by a team of three graduate students from the University of Kentucky, uses enzymes that accelerate the processing of starch, reducing energy costs and the need for hazardous chemicals. Once broken down, the simple sugars from the starch can be used as a food ingredient or as feedstock for microbes in the production of bioethanol.

With 29 students representing eight universities from across the state in presenting their innovative ideas, the 2014 Alltech Innovation Competition drew a field nearly triple the size of its inaugural event in January 2013.

• Verizon is launching a new system(s) at Churchill Downs to cope with broadband demand during the Kentucky Derby.

The Derby may generate some of the highest volume of tweets as well as Facebook and Pinterest posts. To cope, Verizon Wireless is deploying a Cell on Wheels, or COW, and a Cell on Light Truck, or COLT, according to a news release.

“When it comes to their wireless network, smartphone and tablet users want to get on it, stay on it and be able to do what they want on it, whether it’s sharing a photograph or streaming live video, and they don’t care if they’re in a crowd of 20, 20,000, or 200,000 people,” stated John Granby, president of Verizon’s Michigan/Indiana/Kentucky Region, in the release. 

Verizon is bringing to the Derby the same technology as Super Bowl XLVI at Lucas Oil Stadium, according to local Verizon spokeswoman Bonnie Hackbarth. Verizon will launch a second band of high-speed network spectrum across Louisville (one of 50 markets nationwide during the first half of 2014) in time for Derby to increase network capacity.

Verizon customers will be able to share pics and videos, tweet, email and call all day long from all around the track, even though an expected 160,000 people will be on site by the time the Derby race goes off.

From Hackbarth:

Even better news? These Verizon Wireless network upgrades at Churchill and around the city will REMAIN IN PLACE AFTER DERBY.

Verizon has invested more than $80 billion in its network since 2000, and was the first wireless carrier to launch 4G LTE in Kentucky. “We flipped the switch in time for Thunder Over Louisville in 2011, and have since covered nearly our entire 3G footprint in Kentucky with 4G LTE,” Granby stated in the release.