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Sports equipment maker Under Armor cuts sponsorship commitments in half



Under Armor cut its sponsorship commitments by about half in 2020, as the sports equipment company terminated expensive outfitting contracts amid the coronavirus pandemic.

The company’s total sports sponsorship obligations fell 47% to $ 362 million in 2020, from $ 679 million in 2019, according to a regulatory filing released Wednesday.

Details on reducing those commitments – which include marketing contracts for the current year and beyond with professional sports teams and leagues, major university departments and star athletes – illustrate how Under Armor has come together. far from its ambitions as a provider on the field in elite sport.

Last summer, the company became one of the most prominent consumer brands to invoke a force majeure clause due to the pandemic, end his outfitting business with the sports departments of the University of California at Los Angeles and the University of California at Berkeley – two of the most expensive in all of American college sport, totaling more than $ 360 million.

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The company was trying to cut back and “get out of some of the longer-term contracts that we don’t get much of.” [from]Under Armor CFO David Bergman said during a call for results this month.

ā€œIt allows us to have some kind of bigger war chest, to be nimble on the marketing front and to make sure that we deploy that marketing in the most profitable areas,ā€ he added.

This month, the company confirmed it will end its field licensing agreement with the National Football League, a symbolic move that will prevent athletes in America’s most popular professional sport from wearing clothing bearing the Under logo. Armor during matches.

It was not immediately clear whether the value of that contract was reflected in the reduction in sponsorship obligations included in Wednesday’s dossier. A spokeswoman for Under Armor did not comment immediately.

Under Armor recorded $ 473 million in restructuring and impairment charges during the year ended Dec. 31. About $ 79 million of that was earmarked for “contract exit costs,” according to the filing.

While specific sponsorship obligations have fallen sharply, Under Armor’s overall marketing costs as a percentage of sales have increased slightly from 11% in 2019 to 12.3% in 2020.

Nike, the sportswear industry leader in terms of total revenue, has yet to release comparable financial performance figures through the end of calendar year 2020. At the end of its fiscal year in May 2020, Nike owes $ 9.3 billion in total future endorsement obligations, down 8 percent from the previous year.

Under Armor has taken a new direction since Patrik Frisk took over as chief executive in early 2020. Since taking the reins, he has sought to get the Baltimore-based company out of a multi-year restructuring, cutting other expensive investments such as fitness apps connected and focusing more on the development of performance equipment.



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