Falcons, Atlanta United suspend affiliation with Papa John's

ATLANTA - More bad news for Papa John's after reports founder John Schnatter used a racial slur. The franchise’s affiliation with the Atlanta Falcons and Atlanta United has been suspended.

The decision came Thursday morning by AMB Sports & Entertainment which owns the teams and oversees the operations at Mercedes-Benz Stadium.

In a statement, the group wrote:

"Effective today, AMB Sports & Entertainment has indefinitely suspended its affiliation with Papa John's. The divisive comments made and acknowledged by the company's founder are reprehensible and do not align with our core values. While we have enjoyed a positive relationship with the local franchisee and staff, we will be evaluating the overall relationship between Papa John's and our sports properties over the coming weeks."

Schnatter has long been the face of the pizza brand, and the company has acknowledged in regulatory filings its business could be harmed if Schnatter's reputation was damaged. Papa John's got a taste of that last year, when Schnatter stepped down as CEO after blaming disappointing pizza sales on the outcry surrounding football players kneeling during the national anthem.

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This week, Papa John's was already trying to further publicly distance itself from Schnatter after Forbes reported he used the N-word during a conference call in May. Schnatter apologized and said he would resign as chairman. That prompted the company's stock to recover some of the losses it suffered after the report, though the shares were down slightly Friday morning.

Keith Hollingsworth, a professor at Morehouse College's business department, said keeping Schnatter on marketing would be a signal to people that the company does not have a problem with his comments, or that it didn't think they were a big deal.

"Five years from now, they might be able to start bringing him back. But at the moment, you have to be very decisive and show you take this very seriously," Hollingsworth said.

Schnatter had used the slur during a media training exercise in May, Forbes reported this week. When asked how he would distance himself from racist groups, Schnatter reportedly complained that Colonel Sanders never faced a backlash for using the word.

Schnatter subsequently issued a statement acknowledging the use of "inappropriate and hurtful" language.

"Regardless of the context, I apologize," the statement said.

Fallout has already included Major League Baseball indefinitely suspending a promotion with Papa John's that offered people discounts at the pizza chain after a player hit a grand slam. The University of Louisville also said Schnatter resigned from its board of trustees, and that the school will evaluate the naming arrangement for Papa John's Cardinal Stadium, according to the Louisville Courier-Journal.

Papa John's, based in Louisville, Kentucky, began operations in 1984 and had more than 5,200 locations globally. For the first three months of this year, the chain said a key sales figure fell 5.3 percent in North America.

RELATED: Papa John’s says founder resigns as chairman of the board

The Associated Press contributed to this report