COLLEGE PARK – Inside the Stamp Student Union at the University of Maryland, the racks of clothes in front of the University Book Center are covered and dedicated to Under Armour clothing and apparel.
While the store also features Champion, another clothing outfitter, the Baltimore-based company’s clothes are prominently displayed at the forefront of its main entrance.
Following the announcement of alumnus Kevin Plank’s resignation as Under Armour’s CEO on Oct. 22, university and company officials attempt to reaffirm support for each other as four years remain on the current sponsorship deal.
However, the symbiotic relationship between the two parties stretches outside the athletic department, complicating any possible future partnerships in the eyes of many on campus.
Plank, a Kensington native who created the company during his time as a Maryland student, announced his decision to step down from as the CEO starting Jan. 1, 2020. The announcement came after Under Armour officials confirmed the company was the subject of a federal investigation by the Justice Department and Securities and Exchange Commission (SEC) over its accounting practices.
Chief Operating Officer Patrick Frisk will become the CEO next year while Plank will stay on as the executive chairman and brand chief while continuing to lead the company’s board of directors.
“As I envision our future, I look forward to further partnering with Patrik to continue our pursuit of becoming the best athletic brand in the world. I am confident that we are just getting started,” Plank said in a statement.
Currently, Maryland and Under Armour are on year six of a 10-year sponsorship deal, valued at $33 million. After the agreement was renewed in 2014, Under Armour became the official outfitter of the university’s varsity athletic programs and also “includes integration into the brand’s marketing, social media, in-store and grassroots activations.”
“Under Armour remains as committed as ever to the University of Maryland as a trusted partner and longtime steward of the brand,” Diane Pelkey, an Under Armour spokeswoman, said in a statement. “Under Armour started on the very gridiron that the Terrapins football team calls home, and that legacy and the spirit of community at College Park still drives the brand today.”
On the field, Maryland athletes are seen playing in the newest gear provided by the company while also being featured in campaigns online or in-store as Under Armour is prominently displayed all over campus, especially in the University’s bookstore.
The large Under Armour displays grabbed the attention of graduate student Victoria Ferrari. Despite being tempted to purchase clothes for the cold weather months, the 26-year-old said she did not feel comfortable giving money to a clothing company that is under investigation.
“I would have to think twice buying something that brand,” Ferrari said. “You do not want to be affiliated with anything under investigation, and maybe, Maryland should think about not having any collaboration until all the problems are cleared up.”
Concerns about the company’s future following the announcement of its third-quarter revenue was down 1% worldwide, with Under Armour’s updated Fiscal 2019 Outlook expecting a 2% increase in revenue instead of their predicted 3-4%. Its lack of finances and the federal investigation forced Maryland and company’s officials to declare support for each other.
“Under Armour and Kevin Plank have been valued partners with Maryland Athletics for over fifteen years,” Maryland Athletic Director Damon Evans said in a statement. “They have been unwavering supporters and champions of our program and our student-athletes. We are proud to count Kevin and Under Armour as part of our family.”
Maryland and Under Armour coming together as a sign of unity is nothing new in business relationships, Roland Rust, distinguished university professor and chair in marketing at the Robert H. Smith School of Business, said. He consulted for several companies and currently is an International Research Fellow for Oxford University’s Centre for Corporate Reputation, which studies issues with business partnerships.
“There can be situations that make an organization toxic to a university,” Rust said, citing donations accepted by universities from the Sackler family in the middle of several lawsuits in its role of OxyContin distribution during the opioid epidemic.
For friction to occur in the relationship, “the clear thing would be the company has demonstrated that it simply does not have the same values as the university,” Rust added.
Since Under Armour’s growth as a company, Plank’s influence is seen throughout the College Park campus. He donated $25 million to the construction of the new Cole Fieldhouse and Performance Center, which will house indoor and outdoor training areas for the university’s football team and a separate three-story building for sports medicine.
In 2007, Plank joined Carly Fiorina, former president and chief executive of Hewlett-Packard, to set up a $175,000 alumni donor endowment fund for the Robert H. Smith School of Business’ Dingman Center for Entrepreneurship to invest in student and alumni-run companies.
Losing Plank and Under Armour’s influence could hurt the school financially as athletic department officials begin looking for donors for a proposed basketball performance center facility.
During the introductory press conference on Oct. 8, Evans declined to comment on Under Armour’s involvement in the facility and did not mention Plank’s name when saying, “we will be soliciting any and everybody and would love to have their support.”
According to Rust, with the federal investigation focused on accounting issues on the business, it is “very unlikely” that the two break off their agreement before its 2024 expiration date. Something catastrophic and large-scale would have to be reveal ed for Maryland to think twice before separating itself from Plank and Under Armour.
“Under Armour is more than Kevin,” Rust said. “Even if there was something really bad or bad behavior in Kevin’s part and he was forced to leave the company, I do not think that would destroy the university’s relationship with Under Armour. We have yet to see anything up to that magnitude at this point, so I do not anticipate any damages to the relationship between the university and Under Armour.”
However, that is a risk that Maryland must watch out for, alumnus Taofik Williams, 26, said. If anything along the side of illegal hiring practices or fraud is uncovered, university officials must evaluated the partnership before continuing, Williams said.
“I do not think it should be terminated right away, but the school should wait and see for what the investigation unfolds,” Williams said. “Depending on the type of wrongdoing that was committed and if it is something really, really bad then…they should reconsider it.”