Monday, June 29, 2020

Michigan Monday: Thank Goodness Michigan Didn't Pick Under Armour

When Michigan left adidas a few years ago they had a choice between Under Armour and Nike/Jordan brands.  UA had been over paying for a few schools like ND and UCLA as their products are not seen on the same level as adidas or Nike mostly when it comes to basketball.  The UA Steph Curry line has seen a dramatic decline in the market after its initial strong release.   It was a bit of an upset when Curry resigned with UA recently. 

Under Armour is now struggling in other areas as its stock is down 75% from 5 years ago.  In November, founder Kevin Plank stepped aside as CEO to become Executive Chairman and Brand Officer.   In that same month last year, the Wall Street Journal reported the SEC and Justice Department are investigating UA's accounting practices and moving around sales to make top line revenue look better then it truly was.    Throw in a Pandemic, the future is not bright for this Baltimore based sporting goods manufacture. 

Now reports are that UA is looking to terminate UCLA's 15 year 280 million dollar contract due to a contractual marketing benefit that UA is saying they are not receiving.  UA also has deals with CAL and Utah in the PAC 12.  In the Big Ten, Maryland, Northwestern, and Wisconsin are with Under Armour. 

UCLA has struggled recently with its 2 highest profile sports and UA has clearly not seen the sales they expected.  If you take that into account, with the other UA issues, it was only a matter of time before they tried to pull the plug on this partnership.   I wouldn't be surprised if this was the first of many contracts UA tries to get out of.  Better take notice The Rock, Cam Newton, Jordan Spieth, and other Universities with huge payments coming. 

If I were ND, Wisconsin, NW, and Maryland (Kevin Plank's Alma Mater) I would be concerned with the stability of the company they're in partnership with. 

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