So Straw, what do you think that UA is thinking then? And what sort of out come do they realistically believe they are going to get based on these actions? I totally get that UA doesn't like either of the UC deals but is terminating the agreement and unilaterally firing the customer really going to get them where they want to go?StrawberryCanyon said:Lomiton said:
This is not a situation in which the company is run by professional managers who don't have skin in the game. Founder Kevin Plank is still the chairman of the board and has super-voting stock, so he effectively still controls the company even though he is no longer CEO. Plank's annual salary is $26,000 and he receives no cash bonus. He has always taken virtually all of his compensation in stock. Plank, who's only about 47 years old, owns hundreds of millions of dollars of UA stock and would not risk a bankruptcy. UA still has a market cap of $4 billion and has been able to borrow at interest rates under 4% recently. I've seen companies in far worse shape than UA issue bonds in the last three months. Money is ridiculously cheap right now.
Plank, as most people probably know, played football at Maryland. He's a frat boy-type, and his style has caused problems. He stepped down as CEO in place of Patrik Frisk, who's an experience apparel company exec. I think Plank is giving Frisk the freedom to run the company differently than he did. That said, I think it's stupid for UA to pull away from college sports since high school/youth/college is its key market. Time and time again, UA has told Wall St. that it wants to be a performance sports brand, not a casual brand like Champion, for example. It's not clear to me how UA improves its position by backing away from taking on Nike and Adidas for sponsorships, especially in college football, which is UA's most visible sport.
It doesn't sound to me (non-attorney) that UA has any real leverage, unless they were ready to go DEFCON 1 to reorg/BK. So why would they be doing this?
Thanks, and I'll hang up and listen to your answer.