UCLA Sues Under Armour for breaking contract

[Im_on_dsp]

UCLA sues Under Armour for ending a $280 million sponsorship deal

UCLA is suing sportswear company Under Armour for ending a $280 million sponsorship deal.

www.cnn.com

It's going to be interesting to see what, if any, ripple effect this may have.

 

[KrAzY3]

I think this more than anything will negatively influence other Under Armour sponsored schools, and reduces the leverage of schools trying to negotiate deals. May be Notre Dame and Auburn are affected, but really it was just a horrible, horrible deal. Notre Dame was making something like 9 million a year which was huge at the time, and UCLA gets almost 20 a year?

I think just felt invincible when they signed the deal, their stock price was around 40 when they signed it, now it's around 10 and I imagine they don't feel like they have the luxury of such a horrible deal.

May be it will also prevent other really stupid deals like that. Heck, Alabama's deal with Nike (thanks Bill Battle, great job there) is around 5 million a year, which next to that UCLA deal sounds absurdly low right? So UCLA is overrpaid but the new climate might make it harder for Alabama to realize their real worth in a deal like this (for comparison's sake Texas is making 250 over 15 years, and clearly are worth worth than UCLA but not three times what Alabama is worth).

 

[4Q Basket Case]

If UnderArmour really was in financial trouble before Covid (as UCLA alleges), I’m guessing UA is using this as a way to force a negotiated settlement.

While I know nothing about the contract between UA and UCLA, I am familiar with the distressed debt world. Lots of legalese back and forth, but the layman’s translation would look something like this:

UA — Hey, UCLA....remember that contract we signed a few years ago? Well, things have changed, and we want to pay you less.

UCLA — Well, look at the contract. Pay us.

UA — We can’t.

UCLA — Tough noogies. A contract’s a contract. Pay up.

UA — We just said we can’t.

UCLA — Look, I don’t know how else to say this. Do what you contracted to do.

UA — We can’t, dangit. We don’t have the money. We’ll pay you 10 cents on the dollar ($28M), in a lump sum up front to make this go away.

UCLA — Forget that. Half the contract ($140M), up front today, or see you in court.

UA — Have it your way, but if we file Chapter 11, you’ll get a lot less than our offer of 10 cents.

UCLA — Horse Hockey! You can too pay us! You won’t file. See you in court.

Loud conference calls, big legal bills, lots of yelling, scowls, profanity and middle fingers everywhere.

So now, it’s a game of chicken. Will UCLA blink, and settle before UA files bankruptcy? Or will UA file before UCLA caves?

Buy popcorn. This could get interesting.

 

[NoNC4Tubs]

I think this more than anything will negatively influence other Under Armour sponsored schools, and reduces the leverage of schools trying to negotiate deals. May be Notre Dame and Auburn are affected, but really it was just a horrible, horrible deal. Notre Dame was making something like 9 million a year which was huge at the time, and UCLA gets almost 20 a year?

I thought awbern's deal was with UdderArmor...

 

[crimsonaudio]

I thought awbern's deal was with UdderArmor...

"We must protect these cows!"

 

[cubzwin]

Loud conference calls, big legal bills,
Buy popcorn. This could get interesting.
[/QUOTE]

I agree with you about the big legal bills. As for it being "interesting" and worthy of "popcorn"...not so much. I think you were correct when you said that this sort of "renegotiation" is common in business deals. This isn't a celebrity divorce trial. This a financial dispute between people who wear $3000 suits, went to the same law schools and play squash together.