Under Armour, the American athletic apparel manufacturer, has announced its intent to soon end its deal with UCLA.
The US $ 280 million deal, which was signed 4 years back, was in news for being the largest apparel agreement in the history of US collegiate sports.
And therefore the retailer’s decision to bring an end to the deal has caught the attention of the industry. What’s happened!
In a statement, the apparel manufacturer said that it is now forced to take this decision as it has been paying for marketing benefits that it hasn’t received for an extended time period. There haven’t been any returns!
Reportedly, the deal allows Under Armour to end it in such a scenario and the company seems to be only exercising its rights.
Meanwhile, UCLA has made it clear that it will contest Under Armour’s move.
The deal is equally significant for both Under Armour and UCLA and therefore cancellation can bring more losses. While UCLA athletic department, which took a loan from the University to cover its US $ 18.9 million shortfall for 2019, is already facing huge budget deficit, it’s not much different for Under Armour as well.
Under Armour has invested big in the deal and any cancellation can not only affect the apparel maker financially, but also tarnish its reputation. In fact, according to projections of Wall Street analysts, its sales for the current quarter could go down by almost 54 per cent.
Under Armour is known for products like athletic shoes, T-shirts, jackets, hoodies and pants, among others and has offices across the globe including London, Hong Kong, Paris, New York, Seoul, Amsterdam, etc.
The company generates revenue of US $ 5.2 billion.