Despite recent news that its accounting practices are the subject of a federal investigation and that founder Kevin Plank will step down as chief executive officer at the end of the year, Under Armour said Wednesday that it is sticking with its relationship with the University of Maryland.
“Under Armour remains as committed as ever to the University of Maryland as a trusted partner and longtime steward of the brand,” Diane Pelkey, a spokeswoman for the Baltimore-based athletic brand, said in a statement. “The University of Maryland is a true partner and we work closely together to help drive innovation and provide student-athletes with a competitive edge.”
Terps athletic director Damon Evans returned the favor in a statement to The Baltimore Sun.
“Under Armour and Kevin Plank have been valued partners with Maryland Athletics for over fifteen years,” he said. “They have been unwavering supporters and champions of our program and our student athletes and we are proud to count Kevin and Under Armour as part of our family.”
The athletic apparel maker’s ties to the state’s flagship public university run deep. Plank is a graduate who walked onto the football team and has not been shy about supporting the school’s athletic programs.
He has donated $25 million to a $210 million renovation of Cole Field House, which will feature the football team’s offices, locker rooms, weight rooms, meeting space, dining areas and two Bermuda-grass practice fields.
In 2014, Maryland and Under Armour agreed to a 10-year contract that guaranteed nearly $33 million in rights fees and athletic apparel to the school. Maryland stood to benefit from Under Armour rights fees ranging from $1.6 million in the first year to $1.8 million in the fiscal year that ends June 30, 2024. The contract also said that the school would receive $1.3 million to $1.8 million in Under Armour products — from polo shirts and T-shirts for coaches and staff to specialty gear.
“The company began responding in July 2017 to requests for documents and information relating primarily to its accounting practices and related disclosures, and the company firmly believes that its accounting practices and disclosures were appropriate,” the spokeswoman’s statement said.
Many SEC investigations take two to three years to complete, but the response on Wall Street was immediate. The day after The Wall Street Journal’s article, Under Armour’s shares slid almost 19% to close at $17.14 each. The stock had risen to $18.31 by Wednesday afternoon.
Valued at $5.2 billion and represented by Olympic swimmer Michael Phelps, Golden State Warriors guard Stephen Curry and New England Patriots quarterback Tom Brady, among others, Under Armour has sought to turn back dipping sales in the United States.
On Monday, the company acknowledged that its North American sales had fallen 4% to $1 billion and that global sales had slipped 1% to $1.43 billion in the three months that ended Sept. 30. Although profitability had improved as Under Armour earned 23 cents per share, the apparel maker projected that its sales growth this year will be about 2% rather than the 3 to 4% the company had earlier told analysts to expect.
On Oct. 22, the company’s board announced that Plank, 47, would step down Jan. 1 after 23 years. President and chief operating officer Patrik Frisk, 56, will succeed Plank.