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Under Armour fiscal issues could affect apparel deal with Navy athletics, AD says

Over the past six years, Under Armour has devoted much time and resources to developing specialty uniforms for the Army-Navy football game. In 2014, Under Armour unveiled the "dress whites" look for the Midshipmen.
Over the past six years, Under Armour has devoted much time and resources to developing specialty uniforms for the Army-Navy football game. In 2014, Under Armour unveiled the "dress whites" look for the Midshipmen.

Navy athletics could feel the pain of Under Armour’s decision to scale back its multi-million dollar endorsement contracts because of the coronavirus pandemic.

Athletic director Chet Gladchuk confirmed to The Capital on Wednesday morning that Under Armour officials have requested a meeting to discuss the apparel company’s contract for Naval Academy teams.

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“I’ve got a teleconference with the Under Armour folks tomorrow [Thursday] to go over some things,” Gladchuk said. “We’re going to review all the tenets of the contract. Under Armour has asked the Naval Academy Athletic Association to keep an open mind with regard to the big picture.”

Under Armour recently confirmed the company is suspending its record $280 million contract to outfit UCLA athletes over the course of 15 years. UCLA has countered that it will explore all options to prevent that from happening.

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Under Armour also is seeking to end its 10-year, $86 million deal to outfit players at the University of California-Berkeley, which is contesting the move as well, the Financial Times reported Tuesday. Boston College revealed Tuesday it is also in talks with Under Armour about its contract, which expires in 2024.

Under Armour and the Naval Academy Athletic Association jointly announced a multi-year partnership agreement in January 2014. Beginning with the 2014-15 school year, Under Armour replaced Nike as the academy’s apparel company for varsity sports.

Terms of the deal were not disclosed, but included marketing and promotional opportunities, according to a statement from Under Armour. All 33 men’s and women’s varsity athletic teams at the Naval Academy now wear uniforms manufactured by Under Armour.

At the time, Navy became the 12th Division I institution to have all its sports programs outfitted by Under Armour. According to sources, the NAAA contract with Under Armour is due to expire in 2024.

Under Armour is under contract to pay $679 million, at a minimum, over at least the next five years in total in sponsorships with professional teams and leagues, colleges and universities, athletes, athletic events and other marketing commitments, the company said in its 2019 annual report. Of that, $131 million is due by the end of this year.

Under Armour did not respond to questions from The Baltimore Sun this week about whether it expects to discontinue team outfitting deals with other universities’ athletic programs or whether it has renegotiated athlete endorsement deals.

With the economy in desperate straits, the once high-flying Baltimore-based company could save millions of dollars immediately by scuttling or renegotiating its deals.

Under Armour’s athletic apparel brand has been struggling for several years with faltering sales in its key North American market and has been attempting to engineer a turnaround only to see the pandemic decimate the economy and consumer demand along with it.

Gladchuk is well aware of Under Armour’s current fiscal outlook and was not surprised company officials want to address the Navy sponsorship deal as well.

“Under Armour is going through the process of revisiting all deals with their various collegiate programs. I’m sure their intention is to readjust all their contracts,” he said. “I think in the current climate, it’s to be expected. Every business must address the realities of market conditions.”

Gladchuk noted there are provisions in the Under Armour contract that speak to institutions being required to field teams and complete a season. All of Navy’s spring sports programs — notably men’s and women’s lacrosse and baseball — were shut down in mid-March when the Patriot League canceled the remainder of the 2020 campaign.

Gladchuk emphasized the NAAA has been pleased with Under Armour across the board and had no intention of ending the contract prematurely. For the past six years, Under Armour has devoted considerable time and resources to creating specialty uniforms for the Midshipmen to wear in the annual Army-Navy game.

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“Speaking on behalf of Navy athletics, I’m really grateful because we are one of the premier partners for Under Armour. I’ve been assured that Navy is part of the family,” Gladchuk said. “We represent the brand with great pride, and I have the utmost confidence we’ll continue to do so for many years to come.”

Baltimore Sun business reporter Lorraine Mirabella contributed to this article.

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