Under Armour is trying to ditch its long-term contracts with two of California’s best-known college sports programs. This appears to be yet another desperate attempt by the fading apparel company to stem its mounting losses.
Under Armour was struggling even before the global pandemic. Since then, things have only gotten worse for the retailer. Last month, the company was working to delay payments to its sponsored athletes. This month, Under Armour is reneging on its contracts with UCLA and Cal.
Schools Disappear from Under Armour Site
Under Armour recently notified UCLA that it’s terminating their contract, 12 years ahead of its expiration date. The company also issued a statement to the Los Angeles Times on Saturday.
“Under Armour has recently made the difficult decision to discontinue our partnership with UCLA, as we have been paying for marketing benefits that we have not received for an extended time period.”
While UA acknowledged the challenging time for athletes and sports programs, it’s granting its NCAA partner little leeway. There appears to be no indication that UA attempted to renegotiate or preserve its UCLA relationship in any way.
Meanwhile, UA hasn’t made a formal statement about its relationship with Cal. But CBS Sports writer Dennis Dodd noticed that Cal’s gear suddenly disappeared from Under Armour’s website.
— Dennis Dodd (@dennisdoddcbs) June 28, 2020
Once Cal read the tea leaves, it issued its own statement.
“While we understand that we are in challenging times, we have been and remain committed to our partnership with Under Armour,” Cal Athletics said. “We are confident that we are fulfilling the terms of our agreement and that Under Armour does not have grounds for termination.”
It’s doubtful UA can terminate either contract without a fight. But considering the sad state of UA’s financial affairs — and the cost of its NCAA contracts — the company may have little choice.
Spending Spree Catches Up with UA
In hindsight, a lot of sports-related contracts seem pricey. Once the global pandemic shut down sporting events, every contract seems overpriced. But Under Armour’s contracts have always been overly generous.
In an attempt to take market share from Nike and Adidas, Under Armour blatantly outbid its competition whenever possible. Under Armour’s contracts with UCLA and Cal are prime examples of that strategy.
When Under Armour signed its deal with UCLA in 2016, it was the largest in NCAA history. The 15-year, $280 million contract has a termination date of 2032. UA’s deal with Cal is slightly more modest, priced at $86 million over 10 years. That agreement expires in 2027.
While Cal and UCLA stand out as some of UA’s pricier contracts, the company has other NCAA deals that could be at risk. Notre Dame, Auburn, Maryland, Utah, South Carolina, and Northwestern all have multi-year contracts with UA. Texas Tech, however, doesn’t need to worry. It just extended its relationships with Under Armour through 2024.