Schools and apparel companies are getting ever more creative when it comes to sorting out their latest mega-dollar deals but sometimes that can come back to bite both in the backside if things don’t turn out perfectly.
Case in point comes at Auburn, where AL.com reports that the school’s stock package that they received as part of an apparel deal with Under Armour is significantly under water at the moment. How much? A shocking 75 percent drop according to the site:
“At the time of the deal announced in Oct. 2015, Under Armour shares were trading for more than $100 a share. After another disastrous earnings report released on Oct. 31, Under Armour shares took another big tumble. Even factoring in Under Armour’s stock split in April 2016, that’s a significant loss of value for Auburn. The value of Auburn’s UA stock is down to a little less than $2.3 million, according to AL.com estimates, after the initial $10 million in shares it received in 2015.”
While the numbers are eye-raising on a number of levels, the Tigers are still in good shape as part of the original $78.1 million deal that runs through 2025. Embattled athletic director Jay Jacobs said he’s not worried about things because of the length of the deal and the fact that the options are somewhat of a cherry on top of the entire thing when it comes to cashing out years from now. Plus, let’s face it, the stock could certainly rebound quite a bit between the current low to a decade from now.
That said, it seems like a pretty clear indication that the granting of stock will likely not be part of any next nine-figure apparel deal going forward after schools learn their lesson from what happened with Auburn and Under Armour.