The University of California, Los Angeles and Under Armour have finally ended a two-year, tit-for-tat legal battle that started out as the largest-ever deal between an apparel company and college and ended in UCLA leaving the PAC-12 conference and joining the Big 10.
The sports apparel company and school agreed to the settlement back on May 26, which required Under Armour to pay UCLA $67,491,275 if UCLA dropped its lawsuit. The deal also absolves both parties of any liability and has a mutual non-disparagement clause.
The blockbuster deal fell apart when the Baltimore-based Under Armour informed UCLA that it intended to terminate their record-breaking, 15-year, $280 million athletic apparel sponsorship deal, citing “marketing benefits” that UCLA had not provided “for an extended time period.” Under Armour even went so far as to to invoke the force majeure clause in the agreement after UCLA stopped all athletic events, under the order of the PAC-12 commissioner, for the remainder of that calendar year, due to the COVID-19 pandemic.
Shortly after the company terminated their agreement, UCLA sued Under Armour for more than $200 million for breach of contract. About a year later, Under Armour countersued UCLA, claiming the school violated a separate agreement by covering Under Armour logos with social justice patches on the uniforms of its football and basketball teams.“Nothing about COVID-19 made it ‘impossible or impracticable’ for Under Armour to meet its obligations under the agreement,” UCLA said in the lawsuit. “Nor did COVID-19 make it impossible or impracticable for UCLA to meet its material obligations under the agreement.”
Under Armour, UCLA alleged in the lawsuit, not only failed to perform its obligations but also simply wanted to get out of the contract because it was “financially struggling and has been for quite some time.”
The company reportedly paid the school $15 million up front and agreed to pay about $11 million each year in rights and marketing fees while also providing $7.4 million in clothing, shoes and equipment per year, with about $2 million each year added for facility upgrades.
Under Armour continues to outfit several major college sports programs, including Notre Dame, Auburn, Wisconsin and Utah. In December 2020, UCLA announced a six-year partnership with Nike and the Jordan Brand that will pay the school $46.45 million.
This all seemed as preparation for UCLA to announce, earlier this year, that it, along with cross-town rival University of Southern California, were leaving the Pac-12 conference to join the Big Ten in 2024, citing financial struggles as a reason for the conference shift. Both UCLA and USC joined the conference in the 1920s. The Los Angeles Times reported UCLA’s athletic department has a debt of more than $100 million and added that a lion’s share stems from the loss of the Under Armour agreement.
“I inherited a deficit with UCLA athletics,” athletic director Martin Jarmond told ESPN last month after the transition was announced, shocking the college sports landscape, and remaining in the headlines on the heels of the beginning of the 2022 season this month. “So when you have a significant financial challenge, it’s difficult to just maintain, never mind to invest. This move [to the Big Ten] not only preserves the programs we have now but also allows us to invest in them in levels that can lead to more competitive success.”
The Big Ten move should help with that significantly, especially with the conference’s next media rights deal reportedly set to fetch more than $1 billion.
The case was The Regents of the University of California v. Under Armour Inc., 20SMCV01205, California Superior Court, Los Angeles County.