UCLA ‘Lost’ $99.2M in Under Armour Fight as Big Ten Offers Cushion

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UCLA lost about $99.2 million in contract dollars as a result of its prolonged fight with Under Armour and its subsequent Nike deal, but the school can reduce that loss with its next apparel contract.

In June 2020, Under Armour informed the school it was terminating their relationship just three years into a massive 15-year, $280 million contract. It set off a legal fight that finally ended earlier this year, when the two sides agreed to a $67.5 million settlement. In the interim, UCLA signed a new six-year deal with Nike’s Jordan Brand for $46.5 million.

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UCLA was owed about $213 million on its Under Armour deal when the Baltimore company (NYSE: UAA) moved to terminate the agreement. Between the settlement and the new Nike (NYSE: NKE) deal, UCLA has lost $99.2 million of contractually obligated cash and product, according to Sportico’s reading of the two contracts and the settlement document.

That “loss” will eventually be much smaller. The Nike deal expires before the 2027 football season, five years before the Under Armour deal was set to end. UCLA will then hit the market for a new apparel sponsor as a member of the Big Ten. A contract that pays the school about $19.8 million per year, a 6% jump from the Under Armour annual value, would make UCLA whole.

“We are gratified to have resolved this matter in a way that benefits our student-athletes and the entire Bruin community,” a university representative said in a statement. Both Under Armour and the school declined to comment on Sportico’s reading of the contracts.

The numbers are likely being closely watched in athletic departments across the county. Amid a shift in its sponsorship strategy, Under Armour is in the process of ending many of its high-profile college partnerships. Around the same time it sent its letter to UCLA to terminate that deal, it moved to terminate its 10-year, $86 million with the Cal-Berkeley. It also ended its 10-year, $49.7 million contract with Cincinnati, a complex transaction that Sportico detailed last year. (Under Armour said in a statement that it “remains committed to all student athletes.”)

Under Armour’s retrenchment isn’t just affecting its partners—it also fundamentally reset the market for college apparel deals. Under Armour’s spending spree from 2015-2017 forced Nike and Adidas to also pay up for partners, and without Under Armour as a competitor, prices have since come down. UCLA is a perfect example: In May 2016 it signed a 15-year deal worth $18.7 million per year. Last year it signed a six-year deal worth $7.7 million per year.

While that trend doesn’t imply a big payday for UCLA’s next contract, there’s likely another market shift coming. In two years UCLA is leaving the Pac-12 for the Big Ten, part of a major reshuffling of power in college sports. The Big Ten and SEC appear headed for a future where they are in a different financial strata than any other NCAA conference, and that could mean much higher numbers in commercial deals like sponsorships and apparel partnerships.

UCLA’s split with Under Armour came at an especially rough time for the school. In addition to the financial uncertainty of the pandemic, which was just a few months old when the termination letter was sent, UCLA’s athletic department has struggled under hefty losses. That includes deficits of $18.9 million and $21.7 million in the two years before the pandemic, according to Sportico’s college finance database. In that span, no public FBS school reported larger losses.

The Under Armour deal, one of the largest in the country, was considered a reliable revenue stream that would help limit losses. During the legal fallout, Bruins teams kept wearing Under Armour uniforms, but some covered up the logo.

Nike has a two-year option to extend the UCLA-Jordan deal when it’s up after the 2026-27 school year. That option is worth $15.4 million total over those two years, well below the rate UCLA would need to come out ahead over the full length of the Under Armour deal, but Nike executing those options would inherently imply that the school would be worth more than that in the open market, potentially a good sign for whatever comes next.

Sportico’s calculations included the cash, product and marketing commitments in both the Under Armour and Nike deals. It did not take into account differences in the performance bonuses that the school could have made for on-field achievements and records. Those bonuses are significantly smaller in the Nike deal than in the Under Armour one.

For example, in the Under Armour deal, UCLA was set to receive $500,000 for winning a national title in football, and $200,000 for doing the same in men’s basketball. The Nike contract offers $100,000 and $50,000 for those same achievements.

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