When Under Armour (UA) CEO Kevin Plank first envisioned a performance based t-shirt to wear under his University of Maryland football pads, he couldn’t have anticipated how revolutionary such an item could be. Now that vision has turned into an S&P 500 company among one of the leaders in sports performance merchandisers.
Plank, who was a public supporter of Donald J. Trump’s election campaign, admired the president’s pro-business mindset for the U.S. Despite his previous admiration, he and two other CEOs left Trump’s manufacturing council late Monday evening, which resulted in the president ending the council altogether. The president’s inability to condemn the racist attacks in Charlottesville over the weekend reportedly impacted the businesses' decisions. But in retrospect, Plank’s company has needed internal changes anyway.
The Maryland native and Terps alum has grown UA into a multi-billion dollar corporation, after installing a shirt in the mid to late 90’s that wiped perspiration from one's skin. The third musketeer of the ‘Big 3’ sports apparel brands has been struggling over the last 12 months though. In fact, it was the lowest performing stock in the S&P 500 at the beginning of August. With its stock trending downward during this fiscal year, at nearly 49%, consumers are worried about UA. The company is now cutting 2% of its jobs, and half of these cuts are coming directly from its headquarters in Baltimore, according to a spokeswoman with UA.
First off, UA’s partnership with Kohl’s hasn’t helped to revitalize the stock. Plus top competitor Adidas recently made history with Major League Soccer (MLS), too. The real reason behind this decline and shift in the brand’s focus comes from a meeting in April that not only left UA out to dry, but also Nike and Adidas. The sports apparel franchises missed out on the type of player who would be a sponsorship steal. It wasn’t Stephen Curry, Kyrie Irving or even Russell Westbrook, but Lonzo Anderson Ball.
The Los Angeles Lakers #2 overall pick in the NBA Draft was the most-coveted professional hoops prospect this year. The Lakers franchise not only received a once in a generation talent, but it also captured the family brand that came with it. Lonzo’s brand was started by his father Lavar who is undoubtedly more ‘Hollywood’ than his 19-year-old son with a lauded skillset.
The Big Baller Brand (BBB) was Lavar’s plan to crush the NCAA, which categorizes its players as amateurs unable to use his/her name or picture to endorse a commercial product. The Ball family brand is fully stocked with t-shirts, sweats, caps, and also the once highly-anticipated signature shoe. The strategy behind the company’s movement is to accomplish a feat neither basketball greats Lebron James or Kobe Bryant ever did before turning pro: rock his own pair of sneakers.
As the BBB’s shoe drew headlines for its price tag, sports manufacturers surely took notice. All three mega-companies (Adidas, Nike, and UA) offered Lonzo $10 Million to have his own shoe deal, yet the elder Ball declined due to his desire for a co-brander and not an endorsement deal. With UA’s most recent 2% decrease in shoe sales, the insufferable genius displayed once again by Lavar is contributing directly to its losses in the stock market. It missed the opportunity to partner with the player some are comparing to Magic Johnson, and his soon to be competitive brand.
In 1996, someone took a chance on Kevin Plank’s battle-proof undershirts making he/she look like an expert investor. Now Plank is attempting to redeem his company's reputation with its recent move.
If sports apparel companies like UA were really smart, they’d get their head in the game and become a ‘big baller.’