Bad Sport

After ending UCLA contract, Under Armour wants to be 'smarter' with marketing deals 

By Holden Wilen, Baltimore Business Journal, Jul 31, 2020

Under Armour Inc. CEO Patrik Frisk said Friday the sportswear maker will continue to "make [its] presence felt" through marketing despite prematurely pulling out of a record-breaking sponsorship contract with UCLA.

Some observers saw Baltimore-based Under Armour's decision to terminate the 10-year, $280 million deal as a signal the company planned to get out of the college athletics space altogether. Under Armour also ended its 10-year, $86 million deal with the University of California, Berkeley.

At the time, Under Armour (NYSE: UAA) argued it has been paying for marketing benefits it has not received. College sports have been on hiatus since March because of the Covid-19 pandemic. On Friday, as he discussed Under Armour's second quarter financial results, Frisk seemed to hint the brand pulled out of the deals because they weren't working.

"We have talked about that as part of our restructuring we continue to look at things that make sense and might not make sense for us in that journey going forward, and we are making decisions accordingly," Frisk said. "The reality is that if you want to have an asset you've got to be able to activate it."

Under Armour signed the deals with UCLA and Cal in 2016 on the heels of three other major agreements by Nike with the University of Michigan, the University of Texas and Ohio State University. At the time, Under Armour was also in the midst of a streak of 26 consecutive quarters with at least 20% sales growth.

In the years since, Under Armour's sales have slowed and profitability has declined. The Covid-19 pandemic seems to have presented an opportunity for the sportswear maker to get out of deals, some of which experts said it overpaid for. UCLA and Cal could take legal action to try and prevent the terminations.*

Frisk said Under Armour has been becoming "smarter" with its investments and how they can strengthen the brand. Chief Financial Officer David Bergman said the company has prioritized returns on investments...

Full story at https://www.bizjournals.com/baltimore/news/2020/07/31/under-armour-ceo-sheds-light-on-sponsorship-deals.html

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*Our previous post on this matter back in June indicated that despite the coronavirus crisis as a possible rationale for cancellation of the contract, UCLA was "exploring" options - presumably including legal options. See:
http://uclafacultyassociation.blogspot.com/2020/06/disappearing-money.html