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UCLA's Rise Is Coming At A Good Time For Under Armour

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UCLA's Rise Is Coming At A Good Time For Under Armour
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Steph Curry is not having his best season. One of the faces of the NBA, the superstar is averaging 20 percent fewer points per game than last season, and he is having the worst shooting season of his career. Curry has played 198 games the last two seasons, including the playoffs. The ongoing slump has led some to wonder whether the eighth-year guard has already reached his apex, or if this is merely a hangover from last season's NBA finals.

Curry's slump is notable for Under Armour Inc (NYSE: UAA), for whom Curry has been the undoubted star of its basketball segment — especially considering his Nike Inc (NYSE: NKE) teammate Kevin Durant, who has playing at his usual all-star level. But, as one star has taken a step back for the apparel company, another has stepped forward.

Enter UCLA, the No. 2-ranked college basketball team in the nation, and one of the most captivating teams in the NCAA. A perfect 13–0 start has given the Bruins national championship aspirations and, for the first time in a decade, made their games a hot ticket in a town full of hot tickets — just look at the secondary ticket market.

ucla_3.png

(data from TicketIQ)

Back in May, Under Armour signed a 15-year, $280 million deal with UCLA. It is the most lucrative shoe and apparel sponsorship in NCAA history, eclipsing the 15-year, $252 million endorsement Ohio State and Nike agreed on last January. The $18.7 million-per-year deal is a massive bump up from UCLA’s currently $7.5 million annual partnership with adidas AG (ADR) (OTC: ADDYY), which expires in the summer of 2017.

"UCLA has a very good shot at getting to the final four and definitely has a shot to win it," said Brian Hershman of indihoops.com, a grassroots basketball organization that works with many high school basketball players, including some at UCLA. "While their recruiting class next year is still Adidas based - they are going to keep the ball rolling on this momentum. UA will need to release exclusive UCLA gear for the team next year similar to what Oregon does with Nike." (ed. note: Hershman is the writer's brother)

The landmark deal is a key venture for Under Armour. Although the company has added teams like Notre Dame and Auburn to its growing roster of affiliated schools in recent years, the addition of UCLA gives the Baltimore-based company a much-needed foothold on the west coast and puts them practically in the backyard of Oregon-based Nike.

As the UCLA seed continues to grow for Under Armour, look for Kevin Plank and company to try and expand their footprint in what has traditionally been Nike territory.

"UA has a good opportunity on the national stage in the west to build their pipeline, but they can't have many design missteps right now," added Hershman. "They need good athletes but also need shoes that the kids are going to want to wear, and they need another signature shoe line beyond Curry."

Posted-In: Kevin Durant Kevin Plank Steph Curry UCLASports Trading Ideas General Best of Benzinga

 

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