Under Armour cited UCLA’s inability to provide marketing benefits as required by contractGETTY IMAGES
The Univ. of California stated that it was "'confident' Under Armour did not have grounds for termination of its apparel and shoe contract” after the company this weekend moved to end its deal with UCLA, according to Garrett Stepien of 247SPORTS.com. Cal in a statement said, “While we understand that we are in challenging times, we have been and remain committed to our partnership with Under Armour.” Cal and UA in '16 signed a 10-year deal worth around $86M (247SPORTS.com, 6/28). However, Sports Business Journal's Michael Smith reported UA is "looking for [an] escape" from its deal with Cal, which like UCLA was "another head-scratching UA deal" (TWITTER.com, 6/27). CBSSports.com's Dennis Dodd noted Cal apparel "has been removed" from UA's online store (TWITTER.com, 6/28).
TRYING TO END UCLA DEAL: In L.A., Ben Bolch reported UA "wants to terminate" the record 15-year, $280M deal it signed with UCLA in '16, a "potential financial blow that the Bruins intend to fight." The company cited UCLA’s "inability to provide unspecified marketing benefits as required by the contract." Outgoing UCLA AD Dan Guerrero in a letter to constituents "appeared to contest Under Armour’s ability to unilaterally dissolve its agreement." Guerrero: “We are exploring all of our options to resist Under Armour’s actions and will share more information as we can." Bolch wrote any loss of revenue "would be doubly devastating to a UCLA athletic department already facing a massive budget deficit." The contract with UCLA was the "richest shoe and apparel sponsorship in college sports history, replacing a deal the Bruins previously held with Adidas" that expired in summer '17. The deal gave UA a "flagship program on the West Coast while providing UCLA with a massive infusion of cash and athletic apparel." But the company "hasn’t received the expected return on investment given UCLA’s recent struggles in its marquee sports." New UCLA AD Martin Jarmond is "familiar with Under Armour, having worked with the apparel company as part of its sponsorship of Boston College" (L.A TIMES, 6/28).
ISSUES ARE NOT NEW: In Baltimore, Jessica Anderson wrote not long after reaching the deal with UCLA, UA’s sales "faltered and the company has been retrenching in the past few years, only to see sales plummet again amid the coronavirus-related economic slowdown." The company in May said that it "would seek to renegotiate endorsement contracts amid the latest slump in sales and demand" (BALTIMORE SUN, 6/28). Also in Baltimore, Holden Wilen wrote the UCLA deal "includes a ... 'force majeure clause,' which frees both parties from liability due to extraordinary events or circumstances." Neither party "would be liable for any breach of its obligations if it 'promptly notifie(d) the other party the nature and cause of the Force Majeure event' and how it is mitigating losses." The parties also "had to 'take all reasonable steps to work around reduce, or mitigate the effects' of the force majeure event" (BIZJOURNALS.com, 6/27).
