Why did UofL and its foundation pay Denny Crum $5.7 million in the last seven years?
By JOE SONKA | June 14, 2017 12:00 pm
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Former UofL men’s basketball coach Denny Crum | Screenshot via interview on “UofL Today with Mark Hebert”
The audit report on the University of Louisville Foundation released last week revealed that Denny Crum — the Hall of Fame former UofL men’s basketball coach who retired from that position in 2001 — received compensation of nearly $5.7 million from the university and foundation from 2010 to 2016.
Crum’s compensation was one of many eye-catching findings in the audit in which the UofL Athletic Association and the foundation were intertwined, as the report by Chicago-based firm Alvarez & Marsal discovered numerous instances of the foundation liquidating university endowment funds to pay for unbudgeted or unauthorized expenses. This included the liquidation of $3.8 million to buy a golf course, roughly $1 million annually of basketball and football tickets for the president’s office, and paying former football coach Steve Kragthorpe $4 million after he had been fired.
Describing the audit results, WDRB sports columnist Eric Crawford wrote that the audit painted a picture of an athletics department “that leaned heavily on the university’s fund-raising arm for some salary and facilities needs so that it could continue to spend more each year on its own operations, even as the university itself struggled to cope with shrinking state appropriations.”
While it is known that part of Crum’s exit agreement with the university in 2001 involved creating a lucrative position for him as a consultant in UofL’s development department — $338,000 per year for 15 years, amounting to just over $5 million — the audit shows he was paid far more than this amount due to extra deferred compensation payments that amounted to over a million more than his total base salary in the last seven years.
Crum’s base salary of $338,000 per year was paid out by the UofL Foundation, though most of his compensation in the seven years made available for review by the audit came from extra payments made by the university, amounting to nearly $3.4 million and averaging $484,000 each year. While the amount of Crum’s extra payments from 2001 through 2009 have not yet been made available, if the annual figure was similar in these years it would have ranged somewhere between $3 to $4 million, giving Crum roughly $7 million in extra payments on top of his $5 million salary over the 15 years of his contract.
An exhibit from the Alvarez & Marsal audit of the UofL Foundation listed the total compensation of Denny Crum from 2010 to 2016
So what exactly was Crum paid for, and where did this money originate? Insider Louisville submitted open records requests to the university and foundation seeking any employment or deferred compensation contracts with Crum, but those requests have not yet been fulfilled.
After the release of the audit report, UofL Athletic Association spokesman Kenny Klein issued a statement to IL indicating that “Denny Crum has not been a ULAA employee since he finished his 30 year-year career as men’s basketball coach. The listed figures represent his payment for his services in development for the university.”
UofL spokesman John Karman tells IL that Crum’s base salary over this 15-year period was specifically for his efforts to raise money for the Denny Crum Scholarship Fund, adding that his extra payments appear to be due to a deferred compensation agreement that Crum made while he was still coaching with Bill Olsen — the athletics director preceding Tom Jurich — who served from 1980 to 1997.
When Crum announced his pending retirement in 2001, he entered into a buyout agreement with the university in which he received $2 million due to a termination clause in his contract, along with a 15-year contract to serve as an assistant to the president in their development department, making $338,000 per year. Karman says that Crum’s duties involved raising money for the university, “specifically his Denny Crum Scholarship Foundation,” but that contract expired last year. He adds that Crum “is no longer doing work on behalf of the university” and no longer has his office in the University Club & Alumni Center.
According to past interviews with Crum and Jonathan Israel — the foundation’s principal fundraiser and the associate director of development for UofL’s Office of University Advancement since July 2015 — the nonprofit gave $1,000 scholarships to 100 students in the Louisville region to attend UofL last year.
Israel told WLKY in February of 2016 that Crum’s foundation had given out $600,000 of scholarship money in total to students over the 15 years of its existence.
In an interview on Mark Hebert’s UofL radio show in May of last year, Crum talked about his scholarship fund and said that while he had planned on retiring from the university, he was asked to “stay as long as I want.”
“This year, when it looked like things were going change for me, in terms of retiring and other things… I actually am not going to retire this year,” said Crum. “I’m going to stay on for at least another year or two, who knows how long. They’ve told me I can stay as long as I want, which is a nice situation to be in, and I certainly appreciate the university for allowing me to do that.”
Karman said he did not know what had changed from the time of that interview to the time that Crum’s employment ended.
A review of Kentucky Secretary of State records show that the Denny Crum Scholarship Foundation Inc. was active from 2001 until the nonprofit’s dissolution in September of 2015. It wasn’t until December of 2016 that The Denny Crum Scholarship Inc. was formed, led by Crum, his wife Susan Sweeney Crum, and Israel.
In the interview last May, Crum said his foundation used to provide scholarship money to students in Louisville and surrounding counties to attend any local college or university, but was now strictly for students attending UofL. On the university’s website, there is a page describing the “Denny Crum Scholarship Fund at UofL,” with a stated mission to keep the community’s best students in town at UofL, provide 100 scholarships annually, and “cement the legacy of Denny Crum.”
The scholarships are available for any student intending to go to UofL who is under age 23 and has a 3.0 cumulative GPA, and “will be based upon the applicant’s demonstrated commitment to leadership and community service, academic achievement, volunteer involvement, personal circumstances and an applicant appraisal.”
A source who worked at the UofL development office in recent years time said Crum had a lavish office at University Club but very rarely came into it, mostly just attending UofL fundraising events and games as a goodwill ambassador for the university.
As for Crum’s extra payments from 2010 to 2016 that easily surpassed his base salary, Karman says that Crum “receives a quarterly payment from his deferred compensation annuity that is paid via an x-pay.” Karman added that he had just found out that the arrangement for these payments was set up sometime during Olsen’s time running the athletics department, which was set up “like an insurance policy or an investment,” though he still lacked any specific details.
Likewise, Kenny Klein of ULAA tells IL that “I did discover that athletics provided some funding many years ago for an annuity while he was coaching. We are not aware of how that was paid to him or any details on it. That could be what is being referenced.”
While the audit of the UofL Foundation goes into great detail about the sometimes seven-figure deferred compensation payments to former President James Ramsey and his top staff, Keith Sherman — the interim director of the foundation — tells IL that the foundation only paid for Crum’s base salary of roughly $338,000 per year, but did not provide any of Crum’s deferred compensation annuity.
Within the A&M audit report is a listing of the foundation’s endowment and non-endowment assets from fiscal years 2014 to 2016, which includes a line item labeled “ULAA Invested Funds for Denny Crum.” The total under this line was just above $2 million in 2014, and was reduced to $1.1 million in 2016. The footnote for this line states these are “Funds held in trust for ULAA designated for payments to Denny Crum, separately invested.”
Sherman tells IL that “funds held in trust for others are one’s we invest and manage for someone, in this case ULAA. They are not subject to the spending policy limits (unless the trust agreement says they are). Nothing else going on here.”
Israel of the Denny Crum Scholarship Foundation told IL that Crum is traveling and is unavailable for comment on this story.
Papa John’s CEO John Schnatter — who became a board member of the university and foundation this year — has been critical of ULAA leadership in recent months, beginning with his comments in an April meeting of the trustees that “until you fix athletics, you cannot fix this university.” Schnatter would resign from the board of the UofL Athletic Association later that month, but two weeks ago he once again brought up questions in a foundation board meeting about why athletics director Tom Jurich was on the foundation’s payroll, and asked the foundation’s chief financial officer during a budget presentation under which line item was “Denny Crum’s $700,000.”
After questioning such payments in that meeting, Schnatter added “I don’t want to micromanage the thing to death, but what I think I’ve learned around here is that you’ve got to follow the money… you just do.” An email to a spokesperson at Papa John’s requesting an interview with Schnatter for this story went unanswered.
By JOE SONKA | June 14, 2017 12:00 pm
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Former UofL men’s basketball coach Denny Crum | Screenshot via interview on “UofL Today with Mark Hebert”
The audit report on the University of Louisville Foundation released last week revealed that Denny Crum — the Hall of Fame former UofL men’s basketball coach who retired from that position in 2001 — received compensation of nearly $5.7 million from the university and foundation from 2010 to 2016.
Crum’s compensation was one of many eye-catching findings in the audit in which the UofL Athletic Association and the foundation were intertwined, as the report by Chicago-based firm Alvarez & Marsal discovered numerous instances of the foundation liquidating university endowment funds to pay for unbudgeted or unauthorized expenses. This included the liquidation of $3.8 million to buy a golf course, roughly $1 million annually of basketball and football tickets for the president’s office, and paying former football coach Steve Kragthorpe $4 million after he had been fired.
Describing the audit results, WDRB sports columnist Eric Crawford wrote that the audit painted a picture of an athletics department “that leaned heavily on the university’s fund-raising arm for some salary and facilities needs so that it could continue to spend more each year on its own operations, even as the university itself struggled to cope with shrinking state appropriations.”
While it is known that part of Crum’s exit agreement with the university in 2001 involved creating a lucrative position for him as a consultant in UofL’s development department — $338,000 per year for 15 years, amounting to just over $5 million — the audit shows he was paid far more than this amount due to extra deferred compensation payments that amounted to over a million more than his total base salary in the last seven years.
Crum’s base salary of $338,000 per year was paid out by the UofL Foundation, though most of his compensation in the seven years made available for review by the audit came from extra payments made by the university, amounting to nearly $3.4 million and averaging $484,000 each year. While the amount of Crum’s extra payments from 2001 through 2009 have not yet been made available, if the annual figure was similar in these years it would have ranged somewhere between $3 to $4 million, giving Crum roughly $7 million in extra payments on top of his $5 million salary over the 15 years of his contract.
An exhibit from the Alvarez & Marsal audit of the UofL Foundation listed the total compensation of Denny Crum from 2010 to 2016
So what exactly was Crum paid for, and where did this money originate? Insider Louisville submitted open records requests to the university and foundation seeking any employment or deferred compensation contracts with Crum, but those requests have not yet been fulfilled.
After the release of the audit report, UofL Athletic Association spokesman Kenny Klein issued a statement to IL indicating that “Denny Crum has not been a ULAA employee since he finished his 30 year-year career as men’s basketball coach. The listed figures represent his payment for his services in development for the university.”
UofL spokesman John Karman tells IL that Crum’s base salary over this 15-year period was specifically for his efforts to raise money for the Denny Crum Scholarship Fund, adding that his extra payments appear to be due to a deferred compensation agreement that Crum made while he was still coaching with Bill Olsen — the athletics director preceding Tom Jurich — who served from 1980 to 1997.
When Crum announced his pending retirement in 2001, he entered into a buyout agreement with the university in which he received $2 million due to a termination clause in his contract, along with a 15-year contract to serve as an assistant to the president in their development department, making $338,000 per year. Karman says that Crum’s duties involved raising money for the university, “specifically his Denny Crum Scholarship Foundation,” but that contract expired last year. He adds that Crum “is no longer doing work on behalf of the university” and no longer has his office in the University Club & Alumni Center.
According to past interviews with Crum and Jonathan Israel — the foundation’s principal fundraiser and the associate director of development for UofL’s Office of University Advancement since July 2015 — the nonprofit gave $1,000 scholarships to 100 students in the Louisville region to attend UofL last year.
Israel told WLKY in February of 2016 that Crum’s foundation had given out $600,000 of scholarship money in total to students over the 15 years of its existence.
In an interview on Mark Hebert’s UofL radio show in May of last year, Crum talked about his scholarship fund and said that while he had planned on retiring from the university, he was asked to “stay as long as I want.”
“This year, when it looked like things were going change for me, in terms of retiring and other things… I actually am not going to retire this year,” said Crum. “I’m going to stay on for at least another year or two, who knows how long. They’ve told me I can stay as long as I want, which is a nice situation to be in, and I certainly appreciate the university for allowing me to do that.”
Karman said he did not know what had changed from the time of that interview to the time that Crum’s employment ended.
A review of Kentucky Secretary of State records show that the Denny Crum Scholarship Foundation Inc. was active from 2001 until the nonprofit’s dissolution in September of 2015. It wasn’t until December of 2016 that The Denny Crum Scholarship Inc. was formed, led by Crum, his wife Susan Sweeney Crum, and Israel.
In the interview last May, Crum said his foundation used to provide scholarship money to students in Louisville and surrounding counties to attend any local college or university, but was now strictly for students attending UofL. On the university’s website, there is a page describing the “Denny Crum Scholarship Fund at UofL,” with a stated mission to keep the community’s best students in town at UofL, provide 100 scholarships annually, and “cement the legacy of Denny Crum.”
The scholarships are available for any student intending to go to UofL who is under age 23 and has a 3.0 cumulative GPA, and “will be based upon the applicant’s demonstrated commitment to leadership and community service, academic achievement, volunteer involvement, personal circumstances and an applicant appraisal.”
A source who worked at the UofL development office in recent years time said Crum had a lavish office at University Club but very rarely came into it, mostly just attending UofL fundraising events and games as a goodwill ambassador for the university.
As for Crum’s extra payments from 2010 to 2016 that easily surpassed his base salary, Karman says that Crum “receives a quarterly payment from his deferred compensation annuity that is paid via an x-pay.” Karman added that he had just found out that the arrangement for these payments was set up sometime during Olsen’s time running the athletics department, which was set up “like an insurance policy or an investment,” though he still lacked any specific details.
Likewise, Kenny Klein of ULAA tells IL that “I did discover that athletics provided some funding many years ago for an annuity while he was coaching. We are not aware of how that was paid to him or any details on it. That could be what is being referenced.”
While the audit of the UofL Foundation goes into great detail about the sometimes seven-figure deferred compensation payments to former President James Ramsey and his top staff, Keith Sherman — the interim director of the foundation — tells IL that the foundation only paid for Crum’s base salary of roughly $338,000 per year, but did not provide any of Crum’s deferred compensation annuity.
Within the A&M audit report is a listing of the foundation’s endowment and non-endowment assets from fiscal years 2014 to 2016, which includes a line item labeled “ULAA Invested Funds for Denny Crum.” The total under this line was just above $2 million in 2014, and was reduced to $1.1 million in 2016. The footnote for this line states these are “Funds held in trust for ULAA designated for payments to Denny Crum, separately invested.”
Sherman tells IL that “funds held in trust for others are one’s we invest and manage for someone, in this case ULAA. They are not subject to the spending policy limits (unless the trust agreement says they are). Nothing else going on here.”
Israel of the Denny Crum Scholarship Foundation told IL that Crum is traveling and is unavailable for comment on this story.
Papa John’s CEO John Schnatter — who became a board member of the university and foundation this year — has been critical of ULAA leadership in recent months, beginning with his comments in an April meeting of the trustees that “until you fix athletics, you cannot fix this university.” Schnatter would resign from the board of the UofL Athletic Association later that month, but two weeks ago he once again brought up questions in a foundation board meeting about why athletics director Tom Jurich was on the foundation’s payroll, and asked the foundation’s chief financial officer during a budget presentation under which line item was “Denny Crum’s $700,000.”
After questioning such payments in that meeting, Schnatter added “I don’t want to micromanage the thing to death, but what I think I’ve learned around here is that you’ve got to follow the money… you just do.” An email to a spokesperson at Papa John’s requesting an interview with Schnatter for this story went unanswered.
