Under Armour Inc. Just Nipped This Controversy in the Bud

Under Armour just extended its U.S. speedskating sponsorship deal through 2022. Here's what fans and investors need to know.

Feb 21, 2014 at 2:30PM

In athletics, there's arguably no better way to test character and competitive spirit than to see how someone reacts in the face of adversity.

And if Under Armour (NYSE:UA) were an athlete, I think it's safe to say it would have passed that test with flying colors today.

Shares of Under Armour have risen more than 4% so far today after the company announced an extension of its U.S. speedskating sponsorship for another two Olympics through 2022.

The announcement came as the U.S. long-track speedskating team failed to win an Olympic medal for the first time since 1984 after the men's and women's teams made their shutouts official this morning by losing their respective quarterfinal team-pursuit events. Tomorrow, the U.S. men will take on France for seventh place, while the women will race Canada for fifth. 

Unfortunately for Under Armour, this also happens to be the the team's first Winter Olympics donning the highly technical speed suits made by the performance-apparel specialist, which has sponsored them since Nike's contract expired in 2011. Unsurprisingly, Under Armour came under fire last week when some of the skaters reportedly claimed they were battling the suit to maintain proper form.

But the skaters failed to improve their results even after switching back to an older Under Armour suit, in which they previously enjoyed considerable success at the World Cup. 


Under Armour CEO Kevin Plank. Source: Under Armour.

Everybody loves an underdog
Commenting on the curious timing of the extension in a CNBC interview, Under Armour CEO Kevin Plank replied:

We didn't want the story going any longer. ... We want to make sure that our message is there -- that this isn't just a one and done. I think there was some speculation on how we were going to react to it, and I want people to be clear that we will stand up and we will come back. And there's nothing more American than that story. 

Going even further, when asked if he felt vindicated when the old suits didn't result in better performance, Plank insisted, "No. We're patriots first. ... If you ever found yourself rooting against an athlete, you're in the wrong business."

Now I'll admit I've always liked Kevin Plank, but this is delightfully impressive.

In short -- and even after some athletes wrongfully blamed the suit -- not only did Under Armour not run for the hills, but instead it sprinted directly at the problem to pledge its support for the athletes over the long term.

Then again, perhaps this is simply perfect execution of crisis management 101, but it's also exactly the kind of attitude both investors and sponsored athletes want to see. If one thing's for sure in the end, Under Armour just proved beyond a shadow of a doubt it's here to stay.

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Steve Symington owns shares of Under Armour. The Motley Fool recommends and owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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