Jumping into the new arms race in college sports – schools battling for massive sponsorships – UCLA has landed what is believed to be the biggest shoe and apparel deal in NCAA history.
The 15-year, $280-million contract with Under Armour was scheduled to be announced at noon Tuesday, university officials told the Los Angeles Times.
The marketplace has exploded in recent months as Michigan, Texas and Ohio State have signed lucrative agreements with Nike. UCLA entered the picture with its Adidas contract set to expire next year.
“We knew that we were well-positioned to cut a deal,” said Dan Guerrero, the UCLA athletic director. “Under Armour came at us hard.”
The upstart Baltimore company was looking to add a major West Coast program to a stable that includes Notre Dame, Auburn and Wisconsin.
“This deal was about geography,” said Kevin Plank, who founded Under Armour in 1996. “It was important for us to plant our flag in L.A.”
UCLA will receive $15 million in cash up front, according a person with knowledge of the agreement who was not authorized to speak publicly. The school will subsequently be paid approximately $11 million annually in rights and marketing fees.
Under Armour has agreed to supply about $7.4 million worth of clothing, shoes and equipment each school year and contribute an additional $2 million over the next eight years for upgrades at facilities such as the Morgan Center and the Acosta Athletic Complex.
“When you’ve got big players with deep pockets and a willingness to spend, the ante keeps getting raised,” said George Belch, a marketing professor at San Diego State University, speaking in general about sponsorship trends. “Nike has dominated the market for many years and you also have Adidas…. Now Under Armour clearly has become a major player.”
Though shoes and uniforms account for less than half of the company’s payout to UCLA, the agreement raises questions about whether the Bruins might look radically different after the deal takes effect in July 2017.
Under Armour made a big splash with Maryland, outfitting the Terrapins football team in a variety of unconventional colors, combinations and designs. The uniforms met with equal approval and derision.
That school wanted to shake things up, said Plank, who was a special teams captain for Maryland in the mid-1990s. He points out that Under Armour has been more restrained with Notre Dame, which it signed to a 10-year, $90-million deal in 2014.
“Different strokes for different folks,” he said. “There’s something incredibly iconic about UCLA and the last thing we want to do is disrupt that tradition.”
UCLA has expressed interest in seeing new ideas, particularly when it comes to hoodies, T-shirts and hats sold to fans. There might also be room for alternative uniforms worn in a limited number of games.
The university has retained final say on any creative changes.
“There’s a fine line between what is innovative and what a university has always been accustomed to,” Guerrero said.
Off the field, the new deal’s timing could not have been better.
The Pac-12 Networks still has no agreement with DirecTV, so conference schools have seen television revenue fall millions short of initial projections.
UCLA bridged some of that gap by agreeing to a 10-year, $145-million extension with WME/IMG for its multimedia rights. Entering this school year, shoe money figured to be more significant.
Nike had already ignited a spending frenzy with three massive, 15-year contracts starting last summer. First came Michigan at a then-record $169-million. Texas was next at $250 million and finally Ohio State at $252 million.
“There’s growth in shoes and apparel,” Belch said. “That’s why they are spending so much.”
High-profile athletic programs on the West Coast are especially attractive if only because they are in short supply.
With Nike co-founder Phil Knight as an alumnus, Oregon is not likely to switch. USC is in the midst of a combination deal with uniforms made by Nike and merchandise coming from Nike, an in-house brand and a Texas company called Silver Star Merchandising.
The private school has not disclosed the terms of its multiple contracts.
As UCLA’s current sponsorship drew nearer to an end, administrators figured they had leverage. They began talks with Adidas and Nike but were increasingly drawn toward the new kid on the block.
Plank launched the brand from his grandmother’s basement with an initial investment of about $40,000. After selling shirts from the trunk of his car, he eventually forged a deal with Georgia Tech.
Sales jumped by $750,000 in 1999, when Oliver Stone dressed his actors in Under Armour for the football movie “Any Given Sunday.” By 2015, the company had grown to nearly $4 billion in revenues and attracted star endorsers such as Clayton Kershaw, Stephen Curry, Cam Newton and Jordan Spieth.
UCLA seriously considered Under Armour the last time it went shopping for a sponsorship deal in 2011. This winter, Plank came back with a better offer.
“They’re still in their infancy, really, but look at the explosive growth they’ve had,” Guerrero said. “They’re aggressive, they’re motivated and we liked that.”
