Cal received $2 million in product and $150,000 in cash from Nike in 2016-17, the final year of the Golden Bears’ long relationship with the world’s largest footwear manufacturer. One year later, Cal received a $3-million signing bonus, $4.76 million in product and $3.5 million in cash from Under Armour in the first year of a 10-year, $86-million apparel deal…that was never signed.
In late June, it was reported Under Armour wanted to end their deals with Cal and UCLA, who signed signed a 15-year, $280-million deal in 2016, and their case rests on a few key pieces, among them a third-party apparel sale of $591.68, according to Jon Wilner, who obtained a copy of Under Armour’s notice of termination sent in June:
“The first [claim] 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. 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.”
The claims are in regards to a contract that was never signed, Darren Rovell reported on June 30. The two parties have been working off a term sheet signed in February 2016, two months before the deal was announced and 18 months before it went into effect in July 2017. If the deal is terminated, Cal could be thrust further into financial issues that have plagued the athletics department and university for years.
When the deal was announced in April 2016, the university was carrying $445 million in debt, a large chunk of which came from $321 million in upgrades to Memorial Stadium from 2011-12. It’s unclear how much of that debt has been paid but the athletic department reported a $19.2 million budget shortfall last year…and that was before losing money from the 2020 NCAA Men’s Basketball Tournament and the 2020 college football season.
Cal is already in financial ruin. And it could get worse if they lose a legal argument over a $591.68 sale.