UCLA and Under Armour Settle Lawsuit Over $280 Million Sponsorship Deal Print PDF
After nearly six years of contentious litigation, canceled bowl games and a social justice movement that rocked the sports world, the UCLA and Under Armour legal battle has finally come to an end. On May 26, 2022, both sides agreed to a settlement under which Under Armour agreed to pay UCLA over $67 million to resolve the school’s lawsuit against the apparel company for its early termination of a record breaking apparel sponsorship deal. The settlement agreement absolves both parties of any liability and includes a mutual non-disparagement clause.
The legal battle royale began in June of 2020, after Under Armour informed UCLA that it intended to terminate a 15-year, $280 million exclusive apparel sponsorship deal just four years into the term.
The deal, which was signed in 2016, was the largest sponsorship agreement in college sports history at the time. Under Armour attempted to invoke the force majeure clause in the agreement after UCLA stopped all athletic events after the COVID pandemic began, claiming that the school did not provide the marketing benefits it had agreed to provide under the contract. In addition, it claimed that the college sports admission scandal, which included the resignation of men’s soccer coach Jorge Salcedo, “shamed” both UCLA and Under Armour, thereby giving Under Armour the right to terminate the agreement pursuant to its terms.
Shortly after such termination, UCLA sued Under Armour for breach of contract, claiming more than $200 million in damages. In UCLA’s complaint, the university alleged that Under Armour improperly terminated their agreement and made false representations to the university regarding their financial situation to procure the business.
Interestingly, in May 2021, Under Armour entered into a $9 million settlement with the U.S. Securities and Exchange Commission based on allegations that it was engaging in practices to make its financial condition look healthier than it actually was. These alleged practices covered the period Under Armour was negotiating and finalizing its agreement to become UCLA’s apparel sponsor.
In September 2021, Under Armour countersued UCLA, claiming the school violated the agreement by covering Under Armour logos with social justice patches on the uniforms of its football and basketball teams. Under Armour called UCLA’s actions “petty and vindictive,” while UCLA slammed Under Armour for attacking its student-athletes’ commitment to social justice. Both sides look to move on after the settlement. Under Armour is seeking to add to the 16 schools it now sponsors, and UCLA signed a new six-year, $46.45 million apparel contract with Nike and the Jordan Brand in December 2020. UCLA is also moving from the Pac-12 to the Big Ten in 2024.
The settlement ends one of the higher-profile cases invoking a force majeure clause in the wake of COVID. Companies should continue to pay attention to the specific force majeure clauses in their agreements, as the ability to successfully invoke a force majeure clause will depend on the language in the agreement and its application to the circumstances.