But since Plank announced the massive project and secured $660 million in public financing for it, the fortunes of the Baltimore-based company have dipped. It’s posting losses amid slowing sales growth, and cutting two percent of its global workforce as part of a corporate “reset.” Its stock price is less than half what it was a year ago, making Plank’s deep pockets significantly more shallow.
City officials and others see Under Armour’s stumble — its second consecutive quarter of losses after nearly seven years of double-digit gains — as corporate growing pains that won’t derail what promises to be a decades-long project. But they say it does raise questions about the rate at which the company might create the thousands of jobs that would drive demand for new offices, housing, shops and restaurants.
“We always approached this as a multi-decade project,” said William Cole IV, president of the Baltimore Development Corp., the city's economic development agency. “It’s a very long-term, complex development project. … It’s 100 acres of raw land in an urban environment, and it takes time.
“We’re still very confident the project is on track.”
Economists said Under Armour’s current problems aren’t likely to hurt the project.
“The long-term projection is they they will grow,” said Stephen J.K. Walters, an economics professor at Loyola University Maryland. “They’re going to have to get bigger to compete globally like they want... They will need facilities to expand.”
Officials at Plank’s Sagamore Development Co. say work on the $5.5 billion project remains on schedule, and that it already has begun to transform the once-industrial peninsula in South Baltimore, even before it has tapped city financing.
Under Armour said it still plans to expand in Port Covington because it has outgrown its Locust Point headquarters. The company unveiled plans last year for a sprawling waterfront campus with three skyscrapers and a small stadium at the heart of the new community on 260 acres south of Interstate 95.
Neil Jurgens, Under Armour’s senior vice president of corporate real estate, said last week that the company’s expansion in Port Covington will be tied to the pace of the company’s growth, not a specific timeline.
“Under Armour remains committed to Baltimore and the future expansion in Port Covington,” Jurgens wrote in an email. “The project will continue to progress to meet the needs of the business.”
Daraius Irani, director of the Regional Economic Studies Institute at Towson University, said it’s not surprising that Under Armour would move cautiously.
“There have been some challenges for Under Armour as they figure out who they are in the market,” he said, so it makes sense that the company take time to assess long-term growth.
But if the project stalls for a lengthy period, he said, that could indicate a larger problem.
Marc Weller, co-founder and president of Sagamore, said the construction timeline remains on schedule and regulatory approvals from the city are on track. The city planning commission approved the first subdivision for the first phase of development earlier this summer, and Weller said Sagamore is working to obtain private equity financing to start that phase.
“Under Armour, with its ownership of 50 acres of land in Port Covington and a 170,000-square-foot UA corporate office building already there, continues to be a major part of the master plan for this mixed-use development,” Weller said.
The company has converted a former Sam’s Club on that waterfront land south of Cromwell Street into “Building 37,” where more than 500 employees work in legal, real estate, Information technology, logistics, accounting and finances. Plans call for that building to be torn down eventually as new buildings sprout over the next 25 years.
The Under Armour campus and the rest of the project could grow to 18 million square feet of development, by far the city’s largest single new project.
That land includes The Baltimore Sun’s printing plant, which was sold to Sagamore in 2014 by Chicago-based Tribune Media. Tribune Media spun off its newspapers, including The Sun, earlier that year, but kept their properties. The Sun has a long-term lease on the building.
Even if the sports brand grows more slowly than expected, city officials said, the company’s presence should help the project deliver, eventually, on promises of thousands of new jobs and economic growth along the waterfront and beyond.
The Port Covington campus has been designed to accommodate as many as 10,000 employees, nearly five times the 2,100 at its current base.
City Councilman Eric T. Costello, whose district includes Port Covington, has little doubt Under Armour will remain an economic engine, community contributor and major employer of city residents, even with the sudden end of its nearly seven-year string of quarterly sales gains of 20 percent of more.
“When anyone grows at an astronomical rate like that, eventually gravity is going to catch up,” Costello said. “They need to reorganize and retool and I think that’s what they’re doing. I’m very confident they’re going to continue to grow.”
It’s not unusual for relatively new companies to see growth slow as they mature, said Dennis Coates, a professor of economics at the University of Maryland, Baltimore County.
“The growth of Under Armour has been very good for the city. It was basically a business that didn’t exist,” Coates said. “Whether it will continue to be as dynamic, that’s a tough forecast to make. Companies go through life cycles after a period of very rapid growth. That can’t continue forever.”
But some have raised questions about the project’s future and its role as a catalyst for the rest of the city.
Scott Klinger. a researcher for Washington-based Good Jobs First and a Baltimore resident who testified during public hearings on city financing for the project, has long worried about “the city putting much of its future development eggs in one basket.”
He said he has become increasingly concerned in light of Under Armour’s cutbacks, losses and what he says was a rush to get the tax increment financing package approved.
“It made me wonder if they saw the writing on the wall a year ago,” Klinger said.
“One deal after another with rosy scenarios haven’t panned out,” he said. “The city doesn't seem to be getting better. The harbor is getting more prosperous and poor Baltimore is getting poorer.
“How are we going to rebuild neighborhoods and places people live, not vacant lots? We need to start asking these questions as a community.”
Walters, the Loyola economist, believes the project will succeed, thanks in part to the tax increment financing, in which the city will sell bonds to be repaid by Sagamore in property taxes. But he also questions how much impact it will have on the wider city.
“You’ve created what is 260 acres with a competitive property tax rate via the TIF, but it’s only 260 acres,” Walters said. “You’ve still got many, many square miles in surrounding areas where that competitive disadvantage is still in place. For me that’s the big impediment for Port Covington being transformative for the whole city.”
The City Council approved the public financing, the largest of its kind in city history, last September after months of controversy. Supporters spoke of the potential job creation and the value of retaining the $4.8 billion company; critics called it corporate welfare. Former Mayor Stephanie Rawlings-Blake signed legislation authorizing five rounds of bond issues over the next 40 years.
The bulk of the bond proceeds is to be spent on infrastructure, such as roads, parks, and sewer and water lines.
Sagamore officials said part of the planned $64.3 million first bond issue was to go toward building a waterfront park. Developers haven’t approached the city’s Board of Finance yet to seek bond proceeds, Cole said.
“We’ve never had any firm dates, and part of that is because they continue to tweak and revise their overall development plan,” he said. “When they’re ready, we’ll be ready. The city isn’t going to commit the bond dollars until the developer can demonstrate it has not only the intent but the hard dollars to build on top of that.
“Sagamore continues to actively work toward activating those funds.”
Sagamore said that it has been able to proceed with some construction in advance of the bond sale, knowing it will be reimbursed once bonds are issued.
Sagamore has redeveloped several properties in Port Covington, including City Garage, a former city bus depot on West Dickman Street, which now houses 16 tenants including UA Lighthouse, an Under Armour design and manufacturing center; Betamore, a co-working space and business incubator; The Foundery makerspace; and Main Street, a mixed-used event space.
Sagamore also has completed a 1.4-mile bike path through the development site, and plans to start construction of a park that will offer access between Plank’s Sagamore Spirit Distillery and the riverbank.
The distillery complex, which opened in April, has drawn thousands of visitors. A restaurant, Rye Street Tavern, is set to open shortly after Labor Day.
Andrew Carmellini, a James Beard Award-winning chef and partner in NoHo Hospitality Group, said he was contacted by Sagamore two years ago to open the restaurant. He said it will employ about 180 people and serve American fare.
“It’s very exciting and also very scary at the same time,” Carmellini said. “There’s some risk involved, but I see the kind of vision that Kevin and the Sagamore team has. … We’re confident in what we do and that Sagamore will help to deliver business and the rest of the development.
“It’s a new neighborhood and a new destination, so it’s definitely, we hope to build it and they will come type of situation.”
Bishop Douglas I. Miles, a leader with Baltimoreans United in Leadership Development, said a series of commitments by the developer and the city, including building affordable housing at the site and creating jobs for city residents, were central to his support of the project.
“We’re still very optimistic that Port Covington will prove to be a plus for the City of Baltimore,” Miles said. “It’s our understanding that the project" — including those commitments — "is still on track.”