Trustees approve Under Armour deal
Fourteen months ago, South Carolina athletic director Eric Hyman told reporters that the school was finalizing a new apparel agreement with Under Armour.
It must be one heck of a contract.
After several months of legal haggling, the deal is finally done. The Board of Trustees approved Friday a comprehensive six-year, $19 million contract with Under Armour that finally brings all of USC's athletic teams within the company umbrella.
The contract runs through June 30, 2016, but can be extended for an additional four years unless either party gives 120 days (four months) notice.
Under Armour will pay an annual rights fee to USC beginning with a $900,000 payment in 2011-12. The amount of the rights fee will escalate yearly until reaching $1.2 million in 2015-16.
The rights fees will rise by $25,000 in any year in which the Gamecocks are ranked in the Top 15 in apparel sales as monitored by Collegiate Licensing Company.
Under Armour is also required to pay unspecified bonuses to USC based on how well the Gamecocks' teams perform. General counsel Terry Parham said, for example, Under Armour would pay the school a different amount based on how far the USC football team advanced during the upcoming season.
The company would pay a larger bonus if USC played in a BCS bowl game, compared to a non-BCS bowl game, or appeared in the SEC Championship Game.
Under Armour is also obligated to spend $125,000 in each of the first three years of the deal - and $150,000 in each year thereafter - "promoting, marketing and advertising" the success of the USC athletic teams.
The new contract also gives USC an annual "product allowance" which gives the athletic department free apparel from Under Armour. In the first year, the Gamecocks are entitled to receive up to $950,000 worth of apparel without cost.
"It's huge," Hyman said. "It's one of the Top 10 (deals) in the country and one of the top four in the SEC."
The lucrative deal makes USC an Under Armour school exclusively. Parham told the Board the terms of the new agreement makes Under Armour the "head to toe" provider of all apparel and equipment for USC's athletic teams.
"The university pledges that its teams will wear and use Under Armour products exclusively at games, practices and various speaking engagements," Parham told the Board. "Under Armour, as they are currently, will continue to be known as the official outfitter for the university."
USC coaches are obligated to make personal appearances on behalf of the apparel company up to two times per year. Under Armour will also receive tickets and parking rights to certain USC sporting events.
"It took a little effort," said Associate Athletic Director Charles Waddell, USC's point man on the deal. "Bringing all the teams together took a lot. But it was something worth looking at. Before, we were spread all around. We had about four or five sport vendors."
Hyman praised Waddell's work on contract throughout the drawn out process.
"Charles Waddell did a phenomenal job," Hyman said. "He spearheaded that thing through. It's a terrific deal for all of our student-athletes and all of our programs."
Waddell said each side was careful to protect their interests in the contract.
"There were a lot of legal things we had to review and make sure they were in place," Waddell said. "It gave us some protection and they wanted protection on their side. We felt that was important for the relationship. It's a good deal for us."
USC's 2010 baseball national championship was the first for Under Armour. Six months later, Auburn won the national championship in football. Then, the Gamecocks secured another baseball title.
The last 13-14 months have been kind to Under Armour, which first entered into an apparel contract with USC in 2007.
"It has been great exposure for both of us," Waddell said.
An ancillary benefit of the new Under Armour deal is the uniforms of all the Gamecock athletic teams will now feature the same shade of Garnet (PMS 202C), promoting consistency in the way the school colors are presented.
"We're going to a new garnet this year, which we think is a major thing," Waddell said. "One of the things our fans talked about when I first got here was we had different shades of garnet. You could tell which team they were supporting based on the shade of garnet. Now, everybody will have the same garnet."
Less than two weeks ago, Under Armour announced that net revenues for the second quarter jumped 42 percent to $291.3 million. Net revenues for the first six months of 2011 amounted to $604 million, an increase of 39.1 percent over the same period in 2010. The company estimates net revenues in 2011 will fall between $1.42-$1.44 billion.
Under Armour seeks to boost annual revenues to over $2.1 billion by 2013, according to a statement from the company.
"The UA Brand has never been stronger and the momentum we are seeing is broad-based across gender and distribution," Under Armour CEO and President Kevin Plank said in a press release. "Our rapid growth is demonstrative of the power of our brand and we're focused on building our operational platform to better align with the long-term opportunity for Under Armour."
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