Companies and Brands

Does Under Armour's Deal with MLB Change Anything?

Paul Ausick

Published: December 5, 2016 11:15 am

Last Updated: January 12, 2020 5:07 pm

Athletic gear maker Under Armour Inc. (NYSE: UA) announced Monday morning that it has signed a 10-year agreement with Major League Baseball (MLB) to be the league’s official uniform provider. The deal, Under Armour’s first-ever of its kind, begins with the 2020 MLB season.

The third party to the deal is internet retailer Fanatics, which has been granted broad consumer product licensing rights to manage the manufacturing and distribution of Under Armour and Fanatics fan gear, which include jerseys at retail, name and number products and postseason apparel. Under Armour and Fanatics expect to offer new fan gear apparel and accessories at retail prior to the 2020 season. Rights for hats and other headwear are not included and remain with long-time MLB supplier New Era.

The Under Armour/Fanatics deal replaces MLB’s current agreement with Nike Inc. (NYSE: NKE) and distributor Majestic Athletic, a division of VF Corp. (NYSE: VFC). In its announcement, Under Armour said it would be the exclusive MLB provider of all on-field uniform components for all 30 MLB clubs.

In its own Monday announcement, VF said that it is in “ongoing, productive” talks with MLB to retain the rights to on-field uniforms for major league teams. The company’s Easton, Pennsylvania, facility employs about 600 people and currently produces the uniforms under the Majestic brand. Earlier this year VF said it was exploring strategic alternatives for its Licensed Sports Group business that includes the Majestic brand.

While we may infer that Fanatics or Under Armour may be interested in buying the Majestic business, a Fanatics spokesperson told the Sporting News in October that the company was not buying Majestic. But both Under Armour and VF can’t be exclusive providers for on-field uniforms, at least it would not seem so. Baseball is, indeed, a game of inches.

Although this is Under Armour’s first major U.S. professional league deal, the company already provides uniforms for several colleges and top professional players, like Carolina Panthers quarterback Cam Newton, Golden State Warriors guard Stephen Curry and MLB players Bryce Harper and Clayton Kershaw.

On the plus side of the ledger for Under Armour is a recent tentative agreement between the players and MLB. The five-year deal would run through the 2021 season

Under Armour’s stock traded up about 2.7% this morning, at $30.85 in a 52-week range of $29.60 to $47.95. The 12-month consensus price target on the stock is $37.90.

Nike shares traded up about 2.9%, at $51.91 in a 52-week range of $49.01 to $68.19. The consensus price target on Nike stock is $63.05.

VF shares traded up about 1.9% to $56.82, in a 52-week range of $51.76 to $67.10. The consensus price target on the stock is $60.39.