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$1.50/AUGUST 16 - 22, 2010
Vol. 31, No. 32
INSIDE A SCHOOL’S FALL FROM GRACE
For-profit Chancellor in hot water Accrediting body watching closely amid questions over leadership, recruiting practices By SHANNON MORTLAND smortland@crain.com
“(Losing accreditation) ... might make problems for investors because (Chancellor) couldn’t attract students.”
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– Robert Appleson, vice president of accreditation relations, Higher Learning Commission
hancellor University has existed quietly at Chester Avenue and East 40th Street since it transformed from financially downtrodden Myers University two years ago. But behind the blue and silver façade, the for-profit school has been plagued by a revolving door of executives, has resorted to unconventional recruiting practices such as hitting up homeless shelters to build enrollment and is fighting to maintain its accreditation. It’s a far cry from the high hopes once touted by Chancellor’s new owners. Significant Partners LLC of Solana Beach,
Calif., bought Chancellor in September 2008 for $5.25 million. The purchase followed years of financial struggles for Myers University, which had failed to close deals with multiple buyers. Initially, Significant Partners, headed by Michael Clifford, had grand plans to build Chancellor into a sizable school that offered classes in person and online. And, by all measures, Chancellor seemed to be off to a good start. Significant Partners reduced undergraduate tuition by 30% and lowered graduate tuition by
14%, increased full-time faculty to 26 from 16 and created 30 online courses. Mr. Clifford also convinced former General Electric Co. CEO Jack Welch to invest $2 million into what is now the Jack Welch Management Institute, the online MBA program launched this year at Chancellor. Shaun Redgate, Chancellor’s chief operating officer, told Crain’s for a story that ran in May 2009 that the goal was to reach 1,050 students by fall 2010, which would allow Chancellor to break even.
Foundation gift allows Rock Hall to establish its first endowment
See CHANCELLOR Page 16
By DAN SHINGLER dshingler@crain.com
New York private equity firm American Securities Capital Partners has taken control of Chardon-based Fairmount Minerals in a leveraged buyout financed largely with $700 million in debt that likely could not have been raised last year. “Fairmount was at a point in our history where, for several reasons, we thought it was time to bring an investor into the company,” Fairmount chief financial officer Jenniffer Deckard said. “We started talking to Am Securities last year. … We felt they were a great cultural fit.”
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Mr. Clifford declined to speak to Crain’s for this story, as did several other Chancellor employees. Mr. Clifford’s public relations representative, Holt Hackney, confirmed that “Michael is no longer on the board” at Chancellor, “opting instead to focus on some of his philanthropic ventures.”
Buyout of Chardon outfit made possible by loosened credit market
By SCOTT SUTTELL ssuttell@crain.com
See ENDOWMENT Page 17
Who’s at the helm?
Private equity firm takes control of Fairmount Minerals
$5M from N.Y. anniversary concerts helps solidify future in Cleveland ere’s something you probably didn’t get for your birthday: $5 million. And your party almost certainly didn’t feature music legends such as U2, Mick Jagger and Bruce Springsteen. But the Rock and Roll Hall of Fame and Museum Inc., which on Sept. 2 celebrates 15 years in business along Cleveland’s lakefront, finds itself in something of a privileged position as a teenager. The New York-based Rock and Roll Hall of Fame Foundation, formed 10 years prior to the museum’s opening, is making a $5 million gift to the Rock Hall to establish the institution’s first significant endowment. The money comes from proceeds from the Rock Hall’s 25th anniversary
Instead, Chancellor reported only 422 students as of April 2010, prior to spring commencement, according to the Higher Learning Commission in Chicago, which accredits Chancellor. Catherine Nita, Chancellor’s executive director of human resources, would not disclose current enrollment.
See FAIRMOUNT Page 17
INSIDE Colleges unveil posh new athletic digs KEVIN MAZUR/WIREIMAGE.COM
Last fall’s concerts at Madison Square Garden (featuring Aretha Franklin and Annie Lennox) will help establish a new endowment for the Rock and Roll Hall of Fame and Museum.
The facilities, including at Akron and Kent State (right), help schools generate excitement among alumni — and help recruiting. Page 3
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