Under Armour and University of Cincinnati agree buyout of deal
Under Armour, the US sportswear brand, and the University of Cincinnati have agreed a buyout of their $50 million sponsorship deal, it has been reported.
The agreement between the brand and the university terminates an apparel deal five years before it was set to expire, according to the Baltimore Business Journal.
Under the terms of the buyout, Under Armour is to pay a $9.75 million exit fee to and provide $3.65 million worth of product until June 2021.
The Baltimore-based company has been the official outfitter of Cincinnati athletics since July 2015, when it entered into a 10-year, $50 million partnership, one of the most lucrative deals in college sports.
Under Armour’s decision to end its sponsorship of Cincinnati comes as it is seeking to exit several deals as part of a major cost-cutting strategy after being financially impacted by the coronavirus pandemic.
The sportswear brand has this year already terminated its record $280 million deal with University of California, Los Angeles and also cut ties with the University of California, Berkeley. The company also decided to end plans to open a flagship store in New York.
Under Armour’s split with Cincinnati appears to be more amicable than its termination with UCLA as the California-based school is suing the brand for breach of contract and seeking damages worth more than $200 million.
In a statement, John Cunnngham, University of Cincinnati Athletics director, said: "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 will pay its exit fee in eight instalments due every three months, with the final installment due by 1 April, 2022.
The sportswear firm has endured a difficult year financially due to Covid-19 and in May issued $400 million in bonds, maturing in 2024, in an effort to bolster liquidity during the pandemic.
Under Armour suffered a 23 per cent drop in revenue for the first quarter of 2020 and a 40 per cent decrease in the second quarter related to Covid-19.