Arizona State University today (Dec. 19) said it has completed its acquisition of the financially struggling Thunderbird School of Global Management and plans to abandon the school’s long declining flagship MBA program.
The deal, which is expected to close by year end, ends one of the most highly acrimonious higher education fights in recent history. Initially, Thunderbird had reached agreement to be acquired by for-profit education provider Laureate Education Inc., but highly vocal Thunderbird alumni managed to scuttle the deal in March of this year.
This new agreement calls for Arizona State to assume $22 million of Thunderbird debt. In exchange, Arizona State gains access to the school’s real estate, estimated to be worth more than $20 million, while Thunderbird will contribute another $20 million of its own funds to cover ongoing operating losses.
THUNDERBIRD WILL PUT MORE FOCUS ON EXECUTIVE EDUCATION
But the Glendale, Ariz., business school will no longer offer MBA degrees once the current school year is over. Instead, it plans to put more focus on executive education and online learning. Arizona State said degree programs offered by the Thunderbird at ASU will initially include a Master of Global Management, a one-year, three-semester degree program and a Master of Art in global affairs and management, a two-year degree. In addition, Graduate Certificates requiring the completion of five courses will be offered in global management, global affairs and global development.
Thunderbird lost $8.7 million in fiscal 2013, more than twice as much as it had lost a year earlier. An early pioneer in creating a truly global MBA education, the school’s distinctiveness has been greatly diminished as other business schools have become more international. Applications to the school’s flagship MBA program have plunged by nearly 75% in the past 15 years.
Out is Larry Penley, who has been CEO of Thunderbird for almost three years. It was Penny who insisted that the school could no longer remain independent and who initially pursued negotiations with other schools and partners that caused several board members to resign and an uproar by alumni.
THUNDERBIRD’S NEW CEO IS A PROFESSOR FROM IMD IN SWITZERLAND
At one point in the dispute, Robert A. Theleen, a highly regarded board member of Thunderbird, said that Penny’s partnership with Laureate would make the school “a laughing stock among its peers in the higher echelons of international business education.” The collapse of that deal—held up when an accreditation agency refused to bless it—was a signature defeat for Penny and Thunderbird.
Little more than four months later, Thunderbird announced it was in discussions with ASU, negotiations that ultimately led to today’s announcement. The new deal already has won approval from the Arizona Board of Regents and the Higher Learning Commission, the accreditation agency which had earlier declined to extend Thunderbird’s accreditation to its proposed joint venture with Laureate.
ASU said that Allen Morrison, who had formerly taught at Thunderbird and is now a leadership professor at IMD in Lausanne, Switzerland, has taken Penny’s place. In a video released with the news announcement, Morrison sought to assure students and alumni that the deal was a good one for Thunderbird.
‘SOME STUDENTS HAVE BEEN CONCERNED ABOUT THE FUTURE…THOSE CONCERNS ARE RESOLVED’
“This is clearly a win-win for both institutions,” said Morrison. “Some of the students have been concerned about the future of the institution. As it merges with ASU, those concerns are over. Those concerns are resolved.”
ASU President Michael M. Crow also was predictably upbeat. “The integration of Thunderbird with ASU will benefit both institutions,” he said in a statement. “This will create new opportunities for our students, and it will provide a platform for showcasing ASU’s strengths to a new set of partners around the world. Thunderbird students will have access to a much broader range of courses, as well as the advantages that come with being part of a major research university.”