According to news sources, Cal athletics and Under Armour are locked in a bizarre legal dispute that features two next-level twists, one global pandemic and what an independent legal analyst called an “ill-advised” and “strong-arm approach” by the fallen apparel giant. At stake is $58 million in cash and product remaining on the 10-year contract that was signed in 2016.
But actually, that deal was NEVER really signed. According to Cal, the parties never signed a formal contract and have instead been working off a term sheet agreed to — and signed — in Feb. 2016. The lack of a formal contract is a central piece of the legal sparring but not the only unusual aspect of the dispute.
In a notice of termination issued by Under Armour in June, the company makes two breach-of-contract claims against the Bears:
* The first invokes force majeure (i.e, the ‘act of God’ clause) and asserts that Cal failed to fulfill contractual obligations to Under Armour because of the cessation of college sports during the coronavirus pandemic. Ok…
* The second claim focuses on the sale, by a third-party operator, of $591.68 of apparel from Cal’s long-gone days as a Nike client.
That’s right: About six hundred dollars worth of out-of-date swag is, according to Under Armour, grounds to terminate a $58 million partnership.
“Given the length of the deal, Under Armour’s strategy comes across as disingenuous,” Joshua Gordon, a sports law professor and arbitrator for the Court of Arbitration for Sport in Switzerland, wrote in an email.
“Under Armour is overreaching here and taking a strong-arm approach that seems ill-advised even if their goal is to try to negotiate an end to an agreement they now regret,’’ explained Gordon, a Woodward Family Foundation Fellow Senior Instructor of Sports Business and Law at Oregon’s Lundquist College of Business. “Their better approach would be to try to maximize value on the agreement or work collaboratively for a buy-out.”
That the partnership has descended into litigation and acrimony in a mere four-and-a-half years is just one more stunning aspect of the situation.
In the early months of 2016, the two sides were all smiles as they reached agreement on a 10-year deal valued at $85.6 million — a massive increase for the Bears over their previous apparel partnership (with Nike).
But Under Armour could lose even if it wins, according to Gordon.
“College athletics is a word-of-mouth business,” he said, “and this does little to help position UA as a supplier of choice in the eyes of most athletic departments if this heads towards a messy and costly separation.”
So one minute, you’re high fiving in a luxury box watching football and the next you’re fighting in court. Disputes are EVERYWHERE. And when those nasty things get legal including landlord/tenant matters, contract issues, nuisance ADA claims and even collections, call in the good guy business litigator, Dean Sperling who will work to resolve YOUR matter with YOUR best interests in mind!
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