By Holden Wilen | Baltimore Business Journal
Under Armour Inc. has reached a deal to get out of a $50 million sponsorship with the University of Cincinnati, according to documents obtained by the Baltimore Business Journal.
A “buyout agreement” between Baltimore-based Under Armour and Cincinnati terminates a prior apparel deal five years before it was set to expire. The agreement, effective this past summer, requires Under Armour to pay a $9.75 million exit fee to Cincinnati and provide $3.65 million worth of product through June 2021.
Under Armour has been the official outfitter of Cincinnati athletics since July 2015, when both sides entered into a 10-year, $50 million partnership. The arrangement had been among the 20 most lucrative deals in college sports.
For Under Armour, the decision to end its sponsorship of Cincinnati comes as the sportswear maker is exiting several deals as part of a major cost-cutting overhaul. Under Armour this year terminated its record-breaking $280 million partnership with UCLA and cut ties with the University of California, Berkeley. The company also decided to end plans for a flagship store on Fifth Avenue in New York City.
A spokesperson for Under Armour declined to comment.
University of Cincinnati provided a statement from athletic director John Cunningham: “We are still an Under Armour school, powered by innovation with a great partner. We adjusted the terms of our partnership in a manner that was best for both parties given the changes that have occurred in our industry over the past six months.”
Under Armour’s exit fee will be paid in eight installments due every three months. The first installment of $1,437,500 was due within 30 days of full execution of the buyout agreement, which University of Cincinnati president Neville G. Pinto signed Aug. 10. Scott Sekella, Under Armour’s vice president of corporate financial planning of analysis, signed the deal for the company Aug. 13.
A second payment of $1,187,500 was due Oct. 1. The final installment will be due by April 1, 2022.
The Bearcats have continued to wear the Under Armour logo during the current football season. That’s because the buyout agreement allows the university to continue wearing product it has already received. As of July 8, Cincinnati had ordered $2.8 million of its product allotment under the agreement. The university will be permitted to order the remainder of its balance by June 30, 2021.
The Bearcats will likely continue to wear Under Armour products for the next three years. A separate “product supply agreement” gives the university the right to purchase Under Armour products from BSN Sports, a distributor of team sports apparel and equipment through which Under Armour offers its products at wholesale prices.
Photo Credit: Courtesy of Under Armour