Under Armour Inc (NYSE:UA) sponsors some of the more renowned up-and-coming athletes across several leagues, including Steph Curry, Tom Brady and Jordan Spieth. But today, UA stock is moving on a partnership with Major League Baseball — its largest deal to date.
According to Chief Executive Officer Kevin Plank, the deal is “a massive brand lift” that will yield “a ton of exposure” for the athletic gear company. UA stock holders agree, bidding shares up more than 2% on strong volume in early Monday trading.
How Under Armour and MLB Are Joined Now
Under Amour has worked closely with the MLB, acting as its official shoe provider for the past five years and sponsoring hundreds of pro baseball players. However, this deal marks the company’s largest partnership with any professional sports league.
The 10-year partnership, which begins in 2020, will see UA replace the MLB’s current uniform provider, Majestic Athletic. That ends a soon-to-be 35-year partnership between Majestic and MLB. As such, Under Armour gets to outfit MLB’s finest with on-field jerseys, uniforms, year-round training gear and performance-enhancing fitness tech.
A sweet note for Under Armour: It not only will take the reins from Majestic, but also the base-layer apparel currently handled by Nike Inc (NYSE:NKE). Plus, the UA logo gets a prominent placement on the MLB uniform.
Fanatics Inc., an MLB partner for the past decade and a half, will manufacture MLB products designed by UA, and both companies will create new fan wares prior to the 2020 season.
The terms haven’t been revealed just yet, though, so it’s not clear as to how much UA stock will benefit from its share in the revenue of enthusiast products. But Under Armour CEO Kevin Plank is asking UA stock holders to consider the brand opportunity.
“Think of a Yankees fan who is standing in front of a shoe wall deciding what they want to buy,” Plank said. “They will think about the fact that there is an Under Armour logo on the front of their jersey.”
Plank goes on in the press release:
“Under Armour is proud of our long-standing relationship with MLB and we look forward to this exciting next chapter. This is a watershed moment for the Under Armour brand as this partnership with MLB and Fanatics furthers our collective dedication to bringing passion, energy and innovation to the game of baseball. Under Armour’s goal is to engage and excite MLB’s incredibly diverse fan-base across America and around the world, and grow the game for the next generation of great athletes.”
Fanatics executive chairman Michael Rubin, for his part, thinks the deal signifies a major shift toward a “today’s digital economy.”
The MLB believes UA is key to attracting younger fans.
The deal is a much-needed boon to Under Armour, whose shares have been in the dumps, along with rival Nike. UA shares are off 25% year-to-date, vs. 17% losses for NKE.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
