Under Armour's Effort to Cancel Expensive Sponsorship Deal Suggests Bigger Trouble

This past weekend, athletic apparel company Under Armour (NYSE: UA) (NYSE: UAA) informed collegiate sports powerhouse UCLA that it wanted out the 15-year, $280 million sponsorship deal it signed in 2016. That agreement put the brand in the spotlight by putting its logo on the school's athletic uniforms. But, as the statement from Under Armour explains, "[W]e have been paying for marketing benefits that we have not received for an extended time period."

Under Armour didn't specify if the "extended period of time" in question was solely due to coronavirus-related cancellations or if it had more to do with UCLA's somewhat diminished reputation of late as a sports powerhouse. Either way, it costs the apparel maker nothing to at least try to back out of an unfruitful arrangement.

It wouldn't be naive of investors to wonder, however, if the proposed end to the largest collegiate athletics sponsorship deal on record actually points to a much bigger fiscal problem for the company.

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Source Fool.com