Under Armour is attempting to terminate its 15-year, $280 million deal with UCLA. The company cited UCLA’s inability to provide marketing benefits required by the contract. The Under Armour deal was signed in 2016 and was the richest college sports shoe and apparel deal ever at that time, including:
— $15 million upfront.
— $11 million annually in rights and marketing fees.
— $7.4 million clothing, shoes, and equipment each year.
— $2 million annually for facility upgrades.
According to a statement from outgoing athletic director Dan Guerrero, UCLA is “exploring all of our options to resist Under Armour’s actions.” The financial loss would be significant for the school’s athletic department, which took an $18.9 million loan from the university to cover its 2019 budget deficit.
Under Armour is trying to manage its way through its own trying financial times. The company’s last quarter sales were down 53.8% year-over-year, and its stock hit a nine-year low in May. Amid those struggles, Under Armour said it would look to slash annual operating expenses by approximately $325 million, including a shift to digital marketing efforts
Under Armour is reportedly trying to also terminate its deal with the University of California. Cal pushed back like UCLA, saying it did not violate any terms of the agreement. However, the company is continuing to invest – last week it renewed its deal with Texas Tech and will pay the school $12.9 million over four years. It also has deals with Notre Dame, Wisconsin, Auburn, and Utah, among other schools.