Welcome to the July 30 top secret, always confidential Monday Business Briefing.
These are biz tips Insider Louisville staff and contributors have collected during the past few days, a few of which are NOT double-verified like Insider Louisville’s daily reporting.
But as always, this is information from insider sources with direct knowledge of events.
Our scoop for this week includes the rest of the story about internal University of Louisville strife.
• Courier-Journal reporter Joe Gerth beat us to the punch with his story yesterday about Jerry Johnson, the Democratic operative who’s now entrenched at U of L as “chief of staff” to Dr. David Dunn, the executive vice president for health affairs, who has his own issues. Johnson was hired in last year at a $200,000 salary as the go-to consultant. He was supposed to have the political clout to get state approval for a merger that would have united University of Louisville Hospital with Denver-based Catholic Health Initiatives and what was left of Jewish Hospital & St. Mary’s HealthCare. Despite Johnson’s influence, the merger failed.
Which earned Johnson a nice raise: He’s now paid $220,000 annually as a top medical school executive for who knows what since Johnson isn’t a physician. Or even a college gad-gee-eight. His salary is for a newly created position at a time with the school is having to raise tuition six percent and cut staff to cover a $483 million budget that is lighter by $10 million due to decreased state funding. From an internal U of L release: “We’ve had 13 cuts (in state funding) in the past 12 years,” said UofL President James Ramsey. He added that the 2012-13 cut is the second largest of the reductions.
But we have more – much more – detail from insiders. Last week was the first time Insider Louisville talked in depth with former Ramsey loyalists who have come to the conclusion Ramsey might want to think about a graceful retirement. Why is this part of the Monday Business Briefing? Because U of L is key to Louisville’s future business success. Think about Boston without Harvard and MIT. Where would Charlotte be without Duke and UNC? Austin without the University of Texas at Austin or San Francisco/Silicon Valley without Stanford University? And where is U of L taking us?
Here are but a few issues raised by our insiders:
- In addition to Johnson, our sources revealed info on a number of executives drawing huge salaries at U of L without actually working. Those include Dr. Larry Cook, who is still on the U of L books for $912,980 even though he retired June 30. Of last year. Cook was forced to resign from Passport Health Plan after a Kentucky Auditor’s report in 2010 found top executives were spending with abandon while they ran their own consulting firm that competed with Passport. Cook also oversaw the questionable transfer of millions of dollars to U of L from Passport, funds U of L officials agreed to return. Cook’s wife, Dr. Christine Cook, also is employed at U of L as a professor of obstetrics and gynecology at an annual salary of $106,098. Those two salaries add up to a Cook household income of slightly more than $1 million. U of L spokesman Mark Hebert said Larry Cook returned to his professor’s salary as of July 1.
- We had lengthy conversations about Nucleus Innovation Center with top executives from local pharma and medical firms. And they called us! The consensus is, despite claims of mystery tenants, Nucleus officials have not signed any significant tenants for its $20 million Haymarket building under construction, nor are they likely to. The ingredients to lure life science companies to Louisville from other research centers “just aren’t there in any meaningful way,” said one source. “Anyone can build a spec building,” said another source. But developing a research center requires firms with national and international contacts. Negotiations ended with Baltimore-based Wexford Science & Technology to develop the project all the way back in 2008. U of L officials issued a request for proposal last September, but have never announced a new development firm. U of L/Nucleus issued a request for proposal for a leasing agent with an April deadline. Somewhere along the line, Nucleus officials announced they’d be their own development firm/leasing agent.
- Brandeis School of Law Dean Jim Chen was fired back in April after writing a law-journal article arguing U of L law school grads will have a difficult time earning enough money to cover their tuition debt. Chen started a national debate about the value of a degree from lower-rated law schools after he concluded the $75,000 tuition debt of a typical Brandeis grad makes it unlikely they could afford even a $100,000 house unless he or she is one of the lucky few to obtain a high-end job. Chen had won promises of increased financial support from several top Louisville law firms toward upgrading Brandeis’ standing nationally, but those agreements are now dead, said a legal source with direct knowledge of the negotiations. And yes, Chen is still on the U of L payroll for $268,204. His interim replacement, Susan Duncan, was paid about $100,000 as a professor.
- A number of top professors and instructors have left including Dr. Jim Schwayder, who defected to the University of Mississippi Medical Center. Shwayder was director of the Division of Gynecology and director of the fellowship in endoscopic surgery at U of L.
- U of L still has a number of dean positions open, including the one vacated by Dean Robert Felner, who ended up in prison after defrauding the university. A number of tenured professors have left the School of Education and Human Development for more successful programs at larger universities. In conversations last week with Insider Louisville, they said 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 at least seven candidates in the four years since Felner went to jail in 2009 for misappropriating more than $2.3 million from a federal research grant and school-system contracts.
- Insiders tell Insider Louisville that U of L officials are back in discussions with CHI execs. Last January, Gov. Steve Beshear stopped a CHI/U of L deal that would have included University of Louisville Hospital because a merger would have imposed ayatollah-like bans on reproductive procedures at publicly funded University Hospital due to Roman Catholic Ethical and Religious Directives.
- U of L got slapped down in May by Kentucky Auditor of Public Accounts Adam Edelen for its inept and opaque management of The Quality Care and Charity Trust, a $32 million indigent care fund.
• You heard it here first: Sources are telling Insider Louisville to expect an announcement within the next 90 days the Courier-Journal building will be sold. We’ve heard this for months. Insider Louisville’s Curtis Morrison even had some fun with this last month, suggesting Louisville-Jefferson County Metro Government should buy the hulking building at Sixth and Broadway for the Louisville Museum, an idea more than few readers took a bit too seriously. Until now. Last Friday, Indianapolis Star executives announced the Star HQ in downtown Indy is for sale as the paper seeks smaller quarters “more suitable for its present staff size.” Translated, they fired about 40 percent of staff during the past four years as have most Gannett newspapers.The Star building’s assessed value is $21.3 million, according to the Indianapolis Business Journal, and McLean, Va.-based parent company Gannett Company Inc. could use some quick cash. According to Gannett Blog, GCI has more than $100 million in real estate for sale across the United States as advertising revenue declines. Real estate listings include The Des Moines Register headquarters. One of the complications in Louisville may be the $80 million press former CJ Publisher Ed Manassah bought back in 2003. From a press release from the proud press manufacturer: “The Courier-Journal management team looked at presses throughout Europe and the United States. We selected the KBA Colora as the press that will fulfill our needs for now and well into the future,” said Edward E. Manassah, publisher of The Courier-Journal. Internet? What’s the Internet?
Our real estate sources say the problem is, the city financial center has shifted north to Main Street, and the CJ complex, with more than 400,000 square feet, would be difficult to retrofit. CJ insiders tell us the building is deteriorating rapidly.
From Curtis’ post:
“It was built to last, but sadly it has been allowed to decline over the last 25 years. The most recent publisher, Arnie Garson, made an effort to stay on top of all of this, but with the economic downturn and the fiscal problems of the parent company, the decline continued,” says Keith Runyon, the recently retired Courier-Journal Opinion Page editor.
• We knew this last week, but weren’t cleared to write about it. All you real estate brokers after the Avalon restaurant property … you’re too late. Investors already have signed a contract to buy Steve Clements’s property at 1314 Bardstown Rd., what has to be one of the most choice pieces of restaurant property in the city. Clements’s restaurant and catering empire collapsed in three days earlier this month after The Kentucky Derby Museum made allegations that Clements Catering had been cooking the books (we’ve heard all the clever plays on this … “Tastes like fraud legs.”) at the museum, dumping Clements after 25 years. Our sources are telling us the fact that Clements is able to sell the property means that some sort of deal has been worked out.
More as we know more.