Financial distress Currently, Under Armour made a tough decision.
On May 25th, the US media "Sports Business Daily" reported that the American brand decided to abandon the jersey sponsorship contract of the Major League Baseball MLB. The agreement was originally scheduled to begin in 2020 for a period of 10 years.
At the same time, Nike will replace Under Armour and take over the sponsorship contract. It is reported that the transaction process between MLB and Nike has been completed 80% and is expected to be announced at the All-Star Game in July this year.
After exiting the deal, Under Armour will save about $50 million, and the financially distressed company will cut some of its expenses. At present, the US brand still refuses to comment on this matter.
A source told the Sports Business Daily that "they were initially in a different company when they made the deal, but they are not able to afford it now."
In 2015, Under Armour was once in a great position, not only stealing the second position of Adidas in the North American market, but also achieving the performance myth that the growth of more than 20% in 21 consecutive quarters.
With the rising sales, the ambitions of American brands have expanded.
The shirt sponsorship rights of the four major professional leagues in North America are considered to be the battleground for major sports brands. Although lost to Nike in the NBA market competition, in October 2016, Under Armour finally ushered in a cooperation project with the American Professional Sports League.
Under Armour has been the official shirt sponsor of the MLB Alliance since 2020. This is the brand* sponsorship contract for the four major sports leagues in North America. The 10-year contract is not known. In addition to the hats still provided by New Era, all on-court clothing will be covered by Under Armour.American professional baseball jerseys
The new contract originally stipulated that the logo of the sports brand sponsor would be transferred from the sleeve of the jersey to the front of the chest, and the exposure would be greatly improved.
In September 2017, the MLB was coordinated and decided that the Under Armour jersey will be implemented from 2020 to 2019. However, in April of this year, the MLB declared that the plan has changed, and the start of cooperation between the two parties will be postponed until 2020. Now it seems that the two were not just time adjustments, but intended to terminate cooperation.
Under Armour had hoped to fight the baseball stadium to reverse the decline in North American performance.
New quarterly earnings report shows that Under Armour's sales in the North American home market fell 4% year-on-year, and this core market accounted for 77% of total sales. Entering the core areas of the North American Career Alliance is undoubtedly an important marketing tool for brand self-help.
However, Under Armour* finally chose to abandon this cooperation, showing the extent of the US brand's financial difficulties. As of now, neither MLB nor the US brand has commented on this matter.
But the capital market acknowledged its approach, and some analysts said, “Under Armour gave up the deal, which is a signal that makes shareholders happy.” To this end, American brands have saved a lot of money.
After the news spread, local time on May 24, the company's share price rose 2.5% to 20.58 US dollars per share, reaching a high level since July 2017.
If there is no accident, when the 2020 season begins, Nike's logo will appear prominently on the jerseys of the MLB teams. As a result, in the four major leagues in North America, the sports giant controls the NBA, NFL and MLB jersey
contracts, and Adidas has the NHL jersey sponsorship rights.