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NBA Hall of Famer and perennial pitchman Shaquille O’Neal is joining the Papa John’s board of directors as its first African-American member, a move the pizza chain hopes will boost its faltering brand after racially insensitive remarks from its founder sunk sales.
The three-year deal offers $8 million in cash and stock options to O’Neal, who will serve as brand ambassador and invest in nine Papa John’s restaurants in his hometown of Atlanta, Georgia. In March, the company reached a settlement with former chairman and founder John Schnatter, who resigned in 2018 after using a racial slur in a conference call and blaming a drop in sales on the NFL’s handling of player protests against police brutality and racism. The company scrubbed Schnatter’s image from its merchandising in an effort to distance itself from the comments, but North American sales fell 7.3% last year.
When Papa John’s announced the addition of O’Neal to the board, shares soared by more than 6% that day. But experts said sustained growth depends on a number of factors, including whether the superstar can influence significant, lasting change at the company.
“Let’s be real. Papa John’s is excited right now. They have Shaquille O’Neal as somebody who is willing to jump into the fire with them,” said Stephanie Creary, a Wharton management professor who specializes in identity and diversity issues. “This is just the beginning for Papa John’s. What I’m hoping is that years from now, they’ll still be able to claim this incident as being a catalyst for the work that they’ve done, because what are consumers going to remember? They’re going to remember if Papa John’s tries to sweep [its recent controversy] under the rug.”
Creary joined Joe Holt, teaching professor in the marketing department at the University of Notre Dame’s Mendoza College of Business, and Henry C. Boyd, a clinical professor in the marketing department at the University of Maryland, on the Knowledge@Wharton radio show on SiriusXM to discuss the decision. (Listen to the podcast at the top of this page.)
“While it’s great that Shaq is now on this board, the true test of his effectiveness will be whether his perspective is going to be elicited, valued and integrated into the work that they do.” –Stephanie Creary
According to Creary, companies that want to move the needle on diversity and inclusion must start at the top, and they must give weight to the thoughts and ideas of minority managers.
“While it’s great that Shaq is now on this board, the true test of his effectiveness will be whether his perspective is going to be elicited, valued and integrated into the work that they do,” she noted.
A Game Changer?
Holt thinks that Papa John’s is in Shaq-sized trouble if they hired him only as window dressing. In his post-NBA life, O’Neal has proven himself to be an astute businessman with more than two dozen restaurants, countless endorsement deals and minority ownership in the Sacramento Kings NBA team. He holds a master’s degree in business administration from the University of Phoenix and a doctorate in education from Barry University.
“I think they might be getting more than they bargained for with Shaq, because he has already said that they need to diversify their leadership team, not only their board. So, he clearly doesn’t want to be a token minority on the board,” Holt said.
From a purely marketing perspective, picking O’Neal is a “game changer,” Boyd said. He’s legendary not only for his athletic career but also for his charm, and he’s devoid of scandal or political taint. He was mentored by Magic Johnson, another former basketball player who parlayed his popularity on the court into savvy business dealings.
“When I think of Shaq, I think of the gentle giant,” Boyd said. “Here’s a guy who, over the years, has built this wonderful persona of an avuncular figure. He has definitely one of the more storied careers in the NBA. He’s in the pantheon. And now he has become a pitchman and sort of the king of endorsements…. He can bring something that Papa John’s desperately needs — to say that we’ve made a mistake, we were not inclusive. We now recognize this, and we’re taking a new turn. We’re going in a new direction.”
O’Neal appears to be taking his new role seriously. In an interview with The Associated Press, he said, “If you want to enjoy great pizza and feel loved by the people that serve the pizza, you can come back home now. ‘The Daddy’ is here.”
“[O’Neal] can bring something that Papa John’s desperately needs — to say that we’ve made a mistake … and we’re taking a new turn.” –Henry C. Boyd
Out with the Old
The professors agree that O’Neal has what it takes to succeed as a board member and help Papa John’s make substantive changes. But it will take more than just one larger-than-life personality to do so; the company needs to ensure change happens at the very top of the organization. Former chief operating officer Steve Ritchie was promoted to CEO in January 2018, so the same leadership has been in place through several years of controversy and allegations of inappropriate behavior, Holt noted.
“The addition of Shaq was a great move on the part of Papa John’s, but I think they’ve also got a subtraction problem because they’ve had a reputation for a somewhat toxic culture,” he said. “If they’ve got a CEO who is seen as part and parcel of the old culture, do they also need to make a move there? Schnatter has stepped down, and [chief development officer] Tim O’Hern, who was one of Schnatter’s buddies, has stepped down, but do they need more subtraction?”
The three experts agree that betting on O’Neal to revive the brand is a good gamble. If he can exert as much pressure on the board as he did in the arena, he will help Papa John’s get back on top of the pizza game.
“The addition of Shaq was a great move on the part of Papa John’s, but I think they’ve also got a subtraction problem because they’ve had a reputation for a somewhat toxic culture.” –Joe Holt
“His leadership skills on the court are transferable to his ability to be a successful businessman, and what I predict will be his ability to be a successful board member,” Creary said. “It goes without saying that he does have the skills and expertise to do well in this role.”
In fact, O’Neal has done well in highlighting the skillset he will bring to his new role, “taking the focus away from his image as an NBA player and talking about all the restaurants that he’s owned and invested in since he’s been a player,” Creary noted. “He’s putting skills and expertise front and center, instead of demographics.”