Baltimore-based Under Armour has announced that it will be the official uniform provider for Major League Baseball for a decade starting in 2020. Under Armour's logo will be prominently displayed on the professional gear for all 30 franchises and official fan merchandise too. It's a big win for the company, and the first time it's made this kind of deal with a professional league.
Even though the financial terms weren't revealed, there's no doubt that Under Armour will rake in some serious cash thanks to the MLB, even relative to the approximately $4 billion in revenue the company currently brings in a year. For a company built on the idea that undershirts shouldn't have to be sweaty cotton, that's pretty amazing. But, it may be only an important step to a much bigger goal for CEO Kevin Plank.
Early this year, the news came out about the approximately $1 billion that Under Armour has invested into digital health tech. The creation of a digital health user base with 150 million people may have been expensive, but Plank's vision of beating Nike—the unconquered king of sportswear with $30 billion a year in revenue—promised far greater riches. That investment, in the form of just a few mobile app acquisitions worried some investors, who didn't like the idea of Under Armour going beyond it's proven field of play. Even getting multiple times the number of people to use Under Armour's Connected Fitness as opposed to Nike+ didn't convince everyone.
The fitness wearables and mobile app world is a long-term investment, even from this point, so clearly Plank doesn't plan on ignoring the parts of Under Armour that are already making money. If nothing else, that's what gives him the platform to focus on the longer term projects like digital tech. The MLB deal may have been in the works for a while now, but the official signing of the deal secures that platform in a way that will likely reassure even skittish investors. Plank now has the room to play around with the Connected Fitness program. At less than five percent of Under Armour's revenue, it can't be what Under Armour relies on to keep going, but it can potentially enhance what's already there and put the company on solid footing moving into the future.
