Under Armour is looking to bow out of its $280 million partnership with the University of California, Los Angeles, the biggest deal in American collegiate sports history as both the athleticwear brand and university athletic department face financial problems exacerbated by the Covid-19 pandemic.
Under Armour announced their intention to end the deal Saturday, claiming they had not received unnamed marketing benefits from UCLA that the company had paid for over “an extended time period,” Under Armour told the Los Angeles Times, adding that a stipulation in the contract allows for such a move.
The Bruins said they intend to fight the call, with athletic director Dan Guerrero—who will retire this week after leading the athletic department for 18 years—saying his team is “exploring all of our options to resist Under Armour’s actions,” in a statement.
Under Armour has seen a massive revenue drop during the Covid-19 pandemic, with American Banking and Market News reporting that analysts predict the company’s sales this fiscal period will be down nearly 54% compared to the previous year.
UCLA Athletics was already up against an $18.9 million budget deficit reported in January, even before the Covid-19 pandemic hit and forced their hand into cancelling spring sporting events.
Under Armour stock plummeted 20% in February after reports emerged that the pandemic could hurt sales by up to $60 million the following quarter.
The Bruins football and men’s basketball teams have had less than stellar seasons over the past few years, though the gymnastics and softball teams have won national championships since the Under Armour deal was signed.
When Under Armour inked the $280 million, 15-year contract with UCLA in 2016, it was the biggest deal in college sports history. It also included a $15 million signing bonus for UCLA, plus Under Armour paying about $11 million per year for rights and marketing fees. Under Armour also provided the university with about $7.4 million worth of apparel and athletic equipment per year since 2016, and also pledged to pour $8 million into facility upgrades, according to the Los Angeles Times. This wouldn’t be the first time Under Armour has retreated from a sponsorship deal. In 2016, the sportswear company was slated to supply Major League Baseball’s field jerseys before it backed out, causing the league to go with Nike instead.
Under Armour Stock Falls 20% Amid News That Coronavirus Will Lower Sales By Up To $60 Million (Forbes)
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SOURCE: Carlie Porterfield
VIA: FORBES
