UCLA sues Under Armour, seeking in excess of $200 million

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UCLA filed a lawsuit against Under Armour on Wednesday in U.S. District Court in Los Angeles for breach of contract, seeking damages in excess of $200 million.

Under Armour announced in late June that it was ending its deal with the university. The two sides were four years into a 15-year deal worth $280 million, which remains the highest in college athletics.

The Baltimore-based company paid $11 million per year in rights and marketing fees as well as contributing $2 million per year to aid in facility improvements. Under terms of the contract, the company is supposed to supply $6.85 million in athletic apparel, footwear and uniforms.

“It is unfortunate that Under Armour is opportunistically using the global pandemic to try to walk away from a binding agreement it made in 2016 but no longer likes,” UCLA vice chancellor of strategic communications Mary Osako said in a statement. “UCLA has met the terms of the agreement, which does not require that games in any sport be played on a particular schedule. We filed this lawsuit in order to support our student-athletes and the broader UCLA community, including the athletic department that has brought 118 national championships to Westwood.”

UCLA also alleged that Under Armour misled the school about its struggling finances before the signing of the agreement in 2016.

Last month, Under Armour disclosed that the U.S. Securities and Exchange Commission had notified the company that it and two executives – including founder Kevin Plank – faced enforcement actions for deceptive accounting practices. Under Armour has denied any improprieties.

In terminating the deal with UCLA, Under Armour cited “force majeure” – an unforeseen circumstance under its control — due to the coronavirus pandemic as one of the reasons for its actions.

Another was UCLA’s struggles in its flagship sports. The football program has had a losing record four straight seasons, including a 7-17 mark in Chip Kelly’s first two seasons, which has led to declining attendance at the Rose Bowl. Men’s basketball struggled the first half of last season but won nine of its last 11 in Mick Cronin’s first season.

Under Armour said in a statement Wednesday that it is confident in its position and would defend it.

“We sought and remain open to working out a reasonable and appropriate transition for the university, and most importantly for the student-athletes,” the statement continues. “In fact, at UCLA’s request after the termination of the agreement, Under Armour continued to deliver athletic products for the 2020-2021 school year because we support athletes, even as it remains uncertain when sports will resume.”

Under Armour, as have other major sports apparel and footwear makers, has moved aggressively in recent years to sign contracts with college and professional sports teams to provide their gear.

But recent poor financial results and the economic downturn caused by the pandemic has put a crimp in that strategy.

Last month, Under Armour executives said they were encouraged by the company’s performance in June and July after reopening many of closed stores closed at the outset of the pandemic. Still, they acknowledged that sales for the second half of the year could fall by up to 25%.