(An earlier version incorrectly reported that the University of Phoenix would have been folded into the UA System.)
In early 2021, with college classrooms still sporadically shuttered by the COVID-19 pandemic, observers of higher education were already warning of the next catastrophe-level threat to enrollment numbers.
An upcoming “enrollment cliff” was on its way. Declining birth rates during the nation’s recession more than a decade earlier meant fewer young adults enrolling in college as soon as 2025.
The University of Phoenix — one of the nation’s largest for-profit and online universities — was also struggling, enrollment having dropped from about 470,000 students in 2010 to about 79,000 in 2023. In 2019, financial and regulatory problems led to Phoenix’s agreeing to a $191 million settlement with the Federal Trade Commission, severely damaging the school’s reputation.
And its owner, Apollo Education Group Inc., began actively searching for a buyer, someone to take the primarily online college off its hands.
A clandestine plan for a nonprofit entity affiliated with the University of Arkansas System to acquire the University of Phoenix began to take shape. The deal has since gone south, and the University of Phoenix is in talks with other potential buyers.
But the secret plot to acquire a struggling for-profit college for the university’s arsenal hints at the system’s struggles to stay afloat as student bodies shrink and anti-intellectualism at the state Capitol threatens campus budget numbers.
Sinking Phoenix
In the aftermath of the University of Phoenix’s embarrassing legal troubles, alumni — veterans, civil rights advocates and others who felt wronged by the university — united to warn potential buyers of the dangers that would come with purchasing Phoenix.
By early March 2021, someone at the University of Phoenix had reached out to Donald Bobbitt, president of the University of Arkansas System since November 2011 and an educator already known for his fascination with online education. In 2014, the UA System created the ill-fated eVersity, an online-only venture aimed at enrolling working adults. And in September 2021, the university system paid $1 to buy the online Grantham University, which has since become part of the UA umbrella.
So, perhaps it shouldn’t have been surprising that someone at the University of Phoenix contacted Bobbitt to see if the system or a nonprofit affiliate might be interested in buying.
Bobbitt was interested. He envisioned the UA System affiliating with a nonprofit entity that would buy Phoenix with private, not public, funds. In his view, the purchase would benefit both the UA System and Phoenix through a licensing agreement that would pay the system an estimated $20 million annually.
For almost two years, Bobbitt wooed Phoenix, enshrouding the pursuit in a secrecy seldom seen in public universities. Not until January of this year, after someone overheard trustees arguing during an executive, or closed, session, presumably allowed only for personnel matters, did word get out about Bobbitt’s own phoenix-like crusade.
Not for three more months would Bobbitt bring his proposal to the UA System’s board during a public meeting, where a few trustees lavished it with praise while a couple of others were angered by the amount of financial and legal details involving the $500 million to $700 million transaction they were expected to absorb in a single meeting.
“Fairly or unfairly, Phoenix brought significant reputational damage with it,” said Skip Rutherford, dean emeritus of the University of Arkansas Clinton School of Public Service. “With few exceptions, most people in Arkansas higher education that I talked to were against [the proposal]. For some it was more than just mission creep; it was mission leap. Without 10-0 or 9-1 support, a divided board made the correct decision not to move forward.”
The actual vote was four for the plan, five against it and one abstention or recusal.
“Critics have also noted the secrecy surrounding the deal followed by a quick board vote,” Rutherford said. “That may be a good ‘deal making’ strategy but it is not a good ‘deal selling’ one.’
Secrets brewing
On March 9, 2021, Bobbitt signed a nondisclosure, or confidentiality, agreement with the University of Phoenix, according to now-former UA System board chairman Cliff Gibson III, who was shown a cover sheet with Bobbitt’s dated signature and was asked to sign it as well in February of this year.
Gibson said he declined to sign the document, which system spokesman Nate Hinkel said he could not find. Gibson subsequently emailed it to Hinkel, who then shared it with the Arkansas Times. Hinkel said he also could not find similar documents signed by any other trustees but did find one signed in June 2021 by Michael Moore, the system’s vice president for academic affairs.
Secrecy and Phoenix’s tarnished reputation weren’t the only problems Bobbitt faced in selling his Phoenix dream. There also were serious concerns, though not spoken aloud during the UA System board’s public meeting, about Arkansas-based Stephens Inc.’s role in the game.
Stephens, a financial services firm and the UA System’s mergers and acquisition partner, stood to make millions if the deal went through. The bigger the price tag, the more Stephens would have made.
Another problem for Bobbitt was that one of the board votes he needed was that of trustee Kelly Eichler. A deputy chief of staff to Gov. Sarah Huckabee Sanders, Eichler is married to Brad Eichler, Stephens’ chief operating officer. Though Kelly Eichler voiced her support for the plan at an April 19 meeting, she recused herself from the April 23 board vote after publicity arose surrounding her conflict of interest.
“Conflicts of interest or the perceptions of them are also not helpful,” Rutherford said.
Still, Rutherford believes Bobbitt “was sincerely trying to address the projected enrollment cliff and revenue impact” with the Phoenix proposal.
“But like with the University of Arkansas chancellor’s search, communications were fumbled early. When the Phoenix proposal was publicly unveiled, the board was already split, and Dr. Bobbitt and UA-Phoenix were paddling upstream,” Rutherford said.
Bobbitt’s debacles
Indeed, the Phoenix debacle was the second major defeat Bobbitt has suffered before the board in the past six months. In mid-November, the board unanimously voted to name Charles Robinson as the new chancellor of the system’s flagship campus, the University of Arkansas at Fayetteville, despite efforts by Bobbitt to get Robinson to withdraw his application. Bobbitt had even offered Robinson a half-million dollars to drop out of the selection process and remain provost. He had favored Daniel Reed, an Arkansas native and computer science professor, who also had the support of Walmart heir Steuart Walton. Robinson had served as interim chancellor for more than a year, paving the way for him to become the university’s first Black leader.
Even after the board rejected the resolution supporting a Phoenix purchase, Bobbitt never would say publicly that the effort was over, despite emails asking about the status of it. Nor did Phoenix spokeswoman Andrea Smiley respond to emails.
Before the vote, some had feared Bobbitt might try to make the acquisition on his own without seeking board approval — something he apparently could have legally done under board policy, though not easily. So, might he still try to move ahead?
“Dr. Bobbitt has said it is difficult to move forward on the project without the support of the Board,” Hinkel said. “That remains the case and I don’t have anything to add at this time.”
Days later, when the news broke of the University of Idaho’s similar effort to create a nonprofit to buy Phoenix, Hinkel issued a statement that came the closest yet to an indication that the UA System was out of the game.
“Based on the amount of due diligence we have done on this project, we are not surprised that another university also saw the value in pursuing an affiliation with University of Phoenix,” Hinkel said. “We wish all parties involved much success as they move forward.”
Further, the federal Higher Learning Commission said on May 17 that it had not received anything from the UA System despite an attorney’s statement during a recent UA System board meeting that a document relating to the Phoenix proposal was due at the commission May 2. Unlike the UA System Board, the Idaho State Board of Education unanimously approved the University of Idaho president’s proposal, meaning it can move forward but still isn’t a done deal. UA System trustee Ed Fryar, who supported Bobbitt’s plan, said recently that at least two other institutions were talking with Phoenix. He did not name them. Further, a chart shared with Idaho’s board members in May indicated that a pending closing condition was the ability to finance the huge transaction.
Some have speculated privately that Bobbitt’s job may be in danger. His contract is due to expire Dec. 31 unless it’s extended. Neither Bobbitt nor Hinkel answered a question about whether Bobbitt plans to seek an extension.
A former chemistry professor who appears quite self-confident though clearly disappointed in the board’s rejection of his Phoenix vision, Bobbitt, 66, could opt to retire. He also could still get a contract extension. Or he could move to another institution and there pursue his vision of embracing “technology and innovation.” Along the way, he just might rise like the immortal phoenix itself did in Greek mythology and come up with yet another grand plan.
