As Under Armour looks to terminate deals with UCLA and Cal, Utah’s contract appears safe

The University of Utah has a longstanding relationship with Under Armour.

Kyle Whittingham’s football program has worn UA since 2008, when the latter was still a relative lightweight in the athletic sneaker industry. The rest of the school’s athletic teams came aboard in 2011 and in October 2016, Utah and UA agreed to a 10-year, $65 million extension. The extension began July 1, 2017, and runs through June 30, 2027.

There has been no indication from anyone that either side wants out of that agreement, but given Under Armour is reportedly attempting to terminate enormous deals with Pac-12 neighbors UCLA and Cal, getting into the specifics of Utah’s own shoe and apparel deal with UA has become more relevant of late.

According to the contract, obtained by The Salt Lake Tribune via GRAMA request, Utah is to receive $1.01 million annually in rights fees, totaling $10.1 million over the life of the deal. Additionally, the agreement calls for Utah to receive an average of $4.93 million annually in product allowance for teams, coaches and staff. With an annual average of $4.93 million for product, the allowance began at $4 million in fiscal 2018 and will peak at $5.84 million in fiscal 2027, which is when the deal is scheduled to expire.

“We have been a proud partner with Under Armour since 2008 and look forward to the future with them,” Utes athletic director Mark Harlan said in a statement to The Salt Lake Tribune on Thursday morning. “This is a challenging time for all, as we know, but we are tethered as we head into 2020.”

When Utah announced its 10-year Under Armour extension in 2016, the trajectory of its athletic department, then under the direction of athletic director Chris Hill, was up. The men’s basketball team was coming off back-to-back NCAA Tournament appearances, including the Sweet 16 in 2015. Football won 10 games for the first time as a Pac-12 member in 2015, while baseball and softball both advanced to the NCAA Tournament five months before the deal was announced.

The fourth year of the 10-year agreement began on Wednesday. Over the first three years, the deal has stood up as a clear win for both sides. Utah’s $1.01 million in rights and $4.93 million annual average in product dwarfs its previous deal, which gave it $600,000 in rights fees and just $1.8 million in apparel during fiscal 2017.

For Under Armour, paying Utah $1.01 million in rights fees pales in comparison to what it agreed to pay UCLA and Cal.

Even in the best of non-pandemic economic conditions, the Bruins’ landscape-shifting 15-year, $280 million deal with Under Armour was viewed as an aggressive play by the burgeoning sneaker company in trying to move its brand further west.

Signed by all parties on May 24, 2016, the richest shoe and apparel sponsorship in college sports history called for UA to pay UCLA $15 million up front, approximately $11 million per year in rights and marketing fees, and an average of $7.4 million in clothing, shoes and equipment each school year.

On June 27, the Los Angeles Times reported Under Armour was moving to end its deal with UCLA, citing the school’s “inability to provide unspecified marketing benefits as required by the contract between the parties.”

Right behind that news, rumblings began that Under Armour was looking to terminate its deal with Cal. While not at the level of UCLA’s deal, the Cal agreement is locked in at $86 million over 10 years. ESPN reported in April 2016 that Cal’s UA deal included a $3 million signing bonus, $3.5 million in cash per year and an average annual product allowance of $4.76 million.

It should be noted that the athletic departments in Westwood and Berkeley have reportedly dealt with dire budget deficits in excess of $18 million for fiscal 2019. Both departments, according to The Mercury News, were staring at budget shortfalls in fiscal 2020, even before the COVID-19 pandemic hit, so hanging on to lucrative shoe contracts has become even more vital.

Whether or not UA has grounds to terminate the UCLA and Cal deals has been bandied about by any number of business reporters and sports business experts. What is clear is that Under Armour’s first-quarter sales in 2020 were down 23% in the first quarter of 2020, and shares of Under Armour closed Thursday afternoon at $8.68, well below its 12-month high of $27.72. The sales and stock figures indicate that UA would like to save some money, and getting out of high-priced, long-term college apparel deals would be a good place to start.

Whether or not Under Armour is looking to shed additional agreements and, by extension, money owed, is unknown, but of the 10-richest apparel deals in the country belonging to public institutions, UA has three of them.

Aside from the Bruins, Auburn’s nine-year deal is worth roughly $78 million, while Wisconsin’s 10-year deal is valued at approximately $96 million.