Under Armour Terminates Contract with UCLA and Possibly Cal

There’s some stuff happening.

Under Armour has ended (or maybe has attempted to end) their 15 year and $280 million deal with UCLA on Saturday, releasing a statement that said that UCLA has failed to provide marketing benefits:

“We have been paying for marketing benefits that we have not received for an extended time period,” the company said in a statement. “The agreement allows us to terminate in such an event and we are exercising that right.”

The company went on to recognize how difficult the timing is for such a decision, given the global pandemic brought on by the coronavirus.

“We know that this has been a challenging time for athletes, sports programs and performance apparel brands alike,” Under Armour’s statement said. “Under Armour will continue to preserve our strength in this challenging environment, while maintaining a strong network of partnerships with individuals, organizations and leagues that make us the on-field authority for focused performers.”

And UCLA is going to fight this because that money is added into the budget (I’m guessing) and that’s a problem.

And guess what! Write For California’s Rick Chen is speculating that Under Armour may be seekking to end their contract with California:

Under Armour furloughed 6,600 workers at its retail stores and distribution centers in the U.S. in April in response to the outbreak, representing 40% of the more than 16,000 people it employed before its reduction in workforce. The global sports apparel manufacturer also turned to debt last month, seeking to raise $440 million to ride out the current crisis.

The University of California’s partnership with Under Armour began in the 2017-2018 academic year and represented a large upgrade from its previous deal with Nike. As a part of the 10-year sponsorship, Under Armour paid Cal a $3 million signing bonus in 2016, $3.5 million in cash every year, and an allowance for branded clothing, equipment and shoes that averaged $4.8 million a year. Previously, Nike paid the Golden Bears athletic program $150,000 in cash and $2 million in products in 2016, the last year of its sponsorship agreement.

Texas Tech just signed a new deal with Under Armour that was announced on Thursday. Of all things, a Red Raider grad, Baltimore Business Journal’s Holden Wilen is attempting to obtain a copy of the contract. As Wilen notes, the prior contrat paid $2.6 million per year, while the current contract pays $3.225 million:

Neither Under Armour nor Texas Tech provided a copy of the deal. According to the Board of Regents agenda item, the university will receive financial consideration in excess of $3.225 million each contract year “plus royalty rates and performance bonuses for postseason appearances.” The extension runs through June 30, 2024.

Texas Tech Athletic Director Kirby Hocutt said last fall the sides had agreed verbally to a new deal, but no further announcement was made. In the months since, the world has changed due to the novel coronavirus.

Is it wrong to assume that the Texas Tech contract is a bit more realistic, while the UCLA and Cal contracts were perhaps more than Under Armour could really ever afford.

My guess is that there is no ability for Under Armour to get out of the contract with Texas Tech considering the relatively low amounts . . . except if Under Armour goes bankrupt, in which case, everyone just gets in line.


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