Cal would lose $24.5M in outstanding payments and $33.6M in product if UA wins the disputeGETTY IMAGES
Cal and Under Armour are "locked in a bizarre legal dispute," and at stake is $58M in cash and product remaining on their 10-year contract, according to Jon Wilner of the San Jose MERCURY NEWS. According to Cal, the parties "never signed a formal contract" and have instead been "working off a term sheet agreed to -- and signed -- in Feb. 2016." In a notice of termination issued by UA in June, the company "makes two breach-of-contract claims" against the school. The first "invokes force majeure and asserts that Cal failed to fulfill contractual obligations to Under Armour because of the cessation of college sports during the coronavirus pandemic." The second claim "focuses on the sale, by a third-party operator, of $591.68 of apparel from Cal’s long-gone days as a Nike client." Wilner: "That’s right: Hundred dollars worth of out-of-date swag is, according to Under Armour, grounds to terminate a $58 million partnership." Sports law professor Joshua Gordon said, "Under Armour is overreaching here and taking a strong-arm approach that seems ill-advised." According to the term sheet, if UA "successfully extricates itself from the deal without a settlement," Cal would lose $24.5M in outstanding cash payments and $33.6M in product over the final seven years of the deal (San Jose MERCURY NEWS, 8/19). In Baltimore, Holden Wilen noted Cal AD Jim Knowlton and Under Armour Senior VP/Global Sports Marketing Sean Eggert "planned to have a virtual meeting on July 24," but neither side "would provide any details" about what was discussed (BIZJOURNALS.com, 8/18).
