For Under Armour, UCLA shoplifting incident marks rocky start to record deal

Under Armour (NYSE:UAA) experienced the wrong sort of brand exposure on Wednesday when its logo was prominently displayed while UCLA basketball players LiAngelo Ball, Cody Riley and Jalen Hill apologized for shoplifting during the university’s trip to China.

Continue Reading Below

The Maryland-based company is paying an unprecedented $280 million over 15 years to secure shoe and apparel sponsorship rights for UCLA’s sports team. While it’s unlikely that the incident will have discernable impact on Under Armour’s sales, brand experts say the incident marks an inauspicious start to the most lucrative apparel partnership in college sports history.

“The brand exposure that Under Armour is receiving as a result of this situation is less than ideal, to say the least, and obviously not the type of visibility a premier brand desires when entering into these types of partnerships,” said Shawn McBride, an executive vice president at Ketchum Sports and Entertainment. “Given the circumstances and focus of that press conference, the wise thing would have been to eliminate the presence of the program’s sponsors from content that will likely be viewed millions of times.”

Ball, Riley and Hill wore Under Armour logos while acknowledging their mistakes, which led to their arrests and detention by Chinese authorities, and thanking President Donald Trump for intervening on their behalf. Under Armour’s logo could also be seen on the press conference stage throughout the event, which was carried live on news networks across the country. All three players have been suspended indefinitely from UCLA’s basketball program.

Under Armour declined to comment on the situation. A representative of UCLA’s athletic department did not immediately respond to FOX Business.

“Brands know there are risks involved in any sponsorship or athlete endorsement agreement, and this situation is no different. I think the damages are mitigated by the fact that these all-school agreements are based on a partnership with the entire athletic program and alumni are always going to be loyal to their alma mater,” said Jonathan Jensen, an expert on college sports sponsorship deals and assistant professor at the University of North Carolina at Chapel Hill. “It’s not a positive, but this helps to lessen any impact to the Under Armour brand.”

The UCLA incident comes at a trying time for Under Armour. After years of strong growth, the company has seen its sales plummet amid stiff competition in the North American marketplace from brands like Adidas and Nike, as well as shifting consumer tastes in sneakers and apparel.

Under Armour CEO Kevin Plank said in July 2016 that the deal with UCLA would give his company an entry point into the West Coast market and access to a large base of alumni shoppers and fans. However, Plank said a few months later that “escalation in the price” and length of college apparel deals was a factor in a decision to cut its long-term projections.