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UNIVERSITY OF WISCONSIN MEDIA CONFERENCEOctober 9, 2015Barry AlvarezKevin PlankMadison, Wisconsin THE MODERATOR: I want to just welcome everyone to our very exciting announcement here this afternoon. I'd certainly like to recognize our chancellor who's up front here. Appreciate her support for being here. I'd recognize our staff and coaches that are in the room, as well, and obviously our new friends from Under Armour. I'm going to turn it over to Coach Alvarez now. He's got some thoughts to share and we'll take it from there. BARRY ALVAREZ: Thank you all for coming out this afternoon. This is a great day for the University of Wisconsin and in particular the athletic department. I want to thank Kevin and the terrific team that he's put together at Under Armour. We're thrilled to partner with an energetic, hard-working brand whose story mirrors our own. I've followed Under Armour and the Under Armour story for many years. I'm impressed with their creativity, their technological advances, and their presence in the market. Under Armour is a modern success story. We think this will be a fantastic long-term relationship that will both benefit the University of Wisconsin as well as Under Armour. I know our student-athletes, staff and fans will enjoy and appreciate the top-shelf offerings from Under Armour. I'd be remiss if I didn't thank Adidas for the 15 years of partnership that they gave us, and I also want to remind everyone that we are still under contract with Adidas until June 30th of next year. I would also like to clarify the retail value of our new Under Armour partnership, which is 10 years at $96 million. Once again, we couldn't be happier with this new relationship. I want to thank Kevin and his team again. We're looking forward to a long relationship with them. It's now my pleasure to introduce the CEO and founder of Under Armour, Kevin Plank. KEVIN PLANK: First of all, thank you. Thank you, Justin; thank you, Coach. Thank you, Chancellor Blank, as well, for this amazing opportunity. The board of regents I know had a vote this morning, as well, and especially I want to thank the alumni and the entire Wisconsin community, this Badger Nation that we are so proud to now be so closely affiliated with. To many, we're probably just meeting you for the first time, so we want you to know that we're going to be patient with that relationship. As Coach said, we've got another nine months or so to really get to know one another, but for ourselves, we've had a relationship with this great state for a long time, beginning with, for me personally, my first -- the attorney who incorporated Under Armour was a family friend, a guy named Tom Sippel, and he was from a little town called St. Cloud, Wisconsin, population 497 (laughter), so there's not a day that goes by with a meeting with Tom that it somehow incorporates something to do with this great state or something about a brat. (Laughter.) Tom was my first board member. He's been as loyal and deep a friend as anyone I could major hope for, and I'm incredibly, incredibly appreciative to him for what he's done. I also have a relationship that goes back to our first retail customer that we had. It was known as the East Bay catalog, a division of Foot Locker, and their president at the time when I started the first account we sold, it was 1998, and we took a little one-eighth of a quarter page in their catalog, and we ended up being the fastest selling soft good they ever had, and we began to break records, and we got to know a guy named Dick Johnson, who was their divisional president at the time and today is the CEO and chairman of Foot Locker and about to take over for Ken Hicks, who's another dear partner and friend. And if you've spent time going to Wausau, Wisconsin, I mean, you talk about the places which is the heart of this country and the things that make you proud, it begins when you get off in -- there's nothing like going through airport security in Wausau, Wisconsin, where these little ladies are helping you and making sure there's nothing going on that airplane no matter what, and a few dinners at the Wagon Wheel later, which is their local steak joint in town, the things that we have learned. The third thing that really ties me to this great state is Coach Alvarez sitting to my left. You know, his vision, I think, meeting him, the relationship, the personality, and Coach is one of those people that's larger than life, and I can tell you there's nothing bigger or more important, though, to him than representing this state and this institution and doing it at the highest level with the highest integrity at every turn. Between Coach Alvarez and you know who really calls the shots, which is Cindy, who I started working on with this a long time ago, the right way, but we did things -- I think she mentioned some flowers that were sent at one point on Coach's behalf that hopefully made a difference in this relationship. (Laughter.) Look, today is another chapter, I think, in our company's story and one that's a story we're incredibly proud of, from starting in a row house basement in Georgetown in Washington, D.C., with $16,000 in cash and nothing more than one good product idea and some friends that I wanted to get my products to, and from that all the way to evolving to being a public company, today encroaching on revenues of just under $4 billion in revenue, it's a story that I'm incredibly proud of, number one, for my company, for my teammates, for our customers, our consumers, our shareholders, and especially our community. We recognize that with that growth comes great responsibility, and we love being a symbol of what's possible, that you can, with grit and hard work, do great things. So today is another one of those times that's a pinch-me moment to be honest with you. Looking out at this press conference and having the ability to speak on behalf of now the more than 11,000 teammates that we have at Under Armour and the 66-some odd countries that we're doing business in today and growing quickly, we are not slowing down. We recently gave outlook at our recent investor day that in just the next three years, we expect to come close to doubling our top-lin and bottom-line revenues. That would come close to matching the 10-year mark in anniversary we've had as a public company since 2005, growing 30 percent on a compounded annual rate, both top- and bottom-line there, as well. Today I think that story of growth for Under Armour, it speaks to many really important things. Chancellor Blank talks about what is the Wisconsin idea, and you know, this quote of "Research conducted at the university should be applied to solve problems, improve health, quality of life, the environment, and agriculture for all citizens of this state," you know, we take that very seriously. Our own mission statement quite simply says, "to make athletes better," and as we say, through passion, design, the relentless pursuit of innovation. Chancellor Blank also says that there's two core responsibilities of this institution, that we understand our obligation with athletics, but we also understand there's no such thing as a tactical relationship with just one aspect of any university, and the idea about, first of all, innovation and research, it's at the heart and soul of what our company does each and every day, one of which is now developing having the world's largest digital connected health and fitness community with more than 150 million people that are registered to the Under Armour community, so making this one of the most digitally connected universities in the entire world is one of the ambitions we have here. And the second mission you talked about is preparing your students for the world's changing economy, which none of us can anticipate, and just a brief story on that is I've got the theme that we used at that investor day a few weeks ago and laying that story out for our shareholders is what we called the map versus the terrain. One of my directors on my board, a guy named Admiral Eric Olson, who was the first four-star admiral Navy Seal, and he held the distinction of being the Bullfrog, which is the longest-serving Navy Seal. I remember one time I was asking him his opinion on a certain topic, and I said, Admiral, I'm trying to make a choice, do we go left, do we go right, what do you think, and is there something that we haven't anticipated. And he just said, leaned back, didn't give me a direct answer, but he said, Kev, he said, I always tell my men that when the map differs from the terrain, they should go with the terrain (laughter). So I've got a feeling that this relationship with the University of Wisconsin is going to have many different ins and outs where the map and the terrain will not be as perfect as we want, but I want you to know that you have a team of people that is completely committed to doing everything we can to empower our student-athletes with the best advantages to help them win on the field, and most importantly win later in life. We are eternally grateful for this opportunity, and I just want to say from the bottom of our hearts that we're thrilled. We're impressed. We're humbled, and we absolutely are privileged to be here and to be your partners. Thank you for this great opportunity, and we're going to run hard and we're going to do a great job for the Wisconsin Badgers. (Applause.) THE MODERATOR: Thank you, Coach. Thank you, Kevin. Q. Barry, I was just wondering, when did this conversation with Under Armour start, the discussion of bringing them on board? BARRY ALVAREZ: I really can't tell you. I think Kevin and I first met in the late '90s when they had just started the company, so I have followed this company closely for a long time. I think we probably had our first serious conversations prior to us playing at Maryland. We met, we had some discussions prior to that, and then I took a team back to Baltimore to visit their operations and go through their operations then, and that's when we really got serious. Q. Have you received any indication what we can expect for alternate uniforms for either the football or basketball team? BARRY ALVAREZ: Alternate uniforms? I think the thing that you'll find, Under Armour takes great pride in this. We are very impressed with the research they did on the university. They sent a team here unbeknownst to us. They spent, I think, a day or two studying campus, taking pictures. They took us in their room which was covered from floor to ceiling with pictures that they took on our campus. They studied what we were all about. They showed us how inconsistent we were with our uniforms and with our logos. And what their plans were, everything that they do tells a story. I think Kevin and his team are smart enough to know that we've built a very good brand here, and we don't want to lose our brand, so you keep the brand within the structure of what they designed for us. We have a plan. They have a plan. Under Armour has a plan for our coaches, for the uniforms. We will not be a change-uniforms-every-week outfit. That's not us. That's not our brand. But we will probably once a year do something different as we've done in the past, whether it be retro, whatever it might be. We'll work with Under Armour and our coaches to do that. But they have a very good plan that we'll present to our coaches next week when we have an all-staff meeting and visit with our coaches. Q. The deals with Adidas have always been for five years. What went into the decision to make a 10-year deal with Under Armour? BARRY ALVAREZ: That was what was offered. I felt very good about Under Armour. Our entire team felt good about Under Armour. We feel like this is a decision we wanted to make, and 10 years sounded fair to us. Q. Barry, what financial reasons or benefits did Under Armour present that maybe you didn't get in the previous deal with Adidas? BARRY ALVAREZ: Well, the finances speak for themselves. I think you can -- it's well-documented what our last contract was. I told you what our current contract is. But it's not just the financial reasons that we made this decision. We made this decision because of the quality of the apparel and footwear that we will receive, the service that we believe we will get. As I talked to the other teams that are represented -- that are Under Armour schools, they speak in glowing terms of the service that they get, how they're provided, the innovation, the attention to detail. It was the whole package. It wasn't a decision made just for financial reasons. KEVIN PLANK: Coach doesn't negotiate like that, by the way. It was very deliberate what the options were. Let me just jump on. We were a part of this, meeting Coach, last time this deal was up six or seven years ago, before that last term came up, and so we've been trying to get to outfit the school for a very long time. I think through that process we really learned a lot of understanding, and then, of course, being respectful to the contractual obligations, but finding opportunities socially to have a dialogue, and I think just tell a little more of our story, and as we've evolved as a company, I believe that all the decisions were made the right -- for the right reasons in the past, and I think that today is really one of those moments that we've been preparing for throughout our 19-year history as a company to be ready to outfit all the member teams of the University of Wisconsin. We're ready for this day, that's for sure. Q. How much has been revealed to the players as far as what they can expect for uniforms with this deal? BARRY ALVAREZ: Nothing. You know, I think it was during the basketball tournament last year, and I think I showed up at practice with an Under Armour shirt, and I didn't think anything of it, but all our basketball team did. And I had to answer a lot of questions to the basketball team, and a couple of them even made appointments to come and visit with me because the equipment is very important to our student-athletes, and the feedback at that I've had -- because word kind of trickles out that we were talking and that that might be a possibility, and I do have an open door, and the athletes are not afraid to come in and express themselves, and I will say this: They're all extremely excited. Q. When you speak of innovation, what are some of the areas that you look at when you're looking to innovate in the various sports? KEVIN PLANK: Well, number one, you know, I had the ability to be here, and when I do address the student-athletes, it's that there's something we believe that we understand with our products is listen -- I think any brand can march in, and I'm the first one to be able to march in a dozen scientists and tell you why our product is technically better with the apparel and the footwear, but it's not about doing one product and being innovative about it, but it's really the commitment of your brand. Every time we put our logo on our product, it must make an athlete better. That mission statement that I said before is incredibly important. And with that, there's a saying that I like that says, Trust is something that built in drops and it's lost in buckets. You know, every time we put a logo on a shirt, a logo on a shoe, it's typically the last thing that happens. Our product begins with the fit, the form, the function, the fabrics, all these other things, but it really begins with the point of view. Why did we make that particular product? How is it going to make an athlete truly better? And that we know -- and there's a cool story that I relayed to Coach when he came to our campus, and it was of -- someone once challenged me on what sort of a purpose of a brand was. Are you just charging more because your logo is hot or you make nice commercials? And I said, you know, it's so much more than that, and there was a time I was watching -- I was in a retail store and I was watching people shop. This is what you do when you're in my industry. So you stand in the corner of a store and you watch people walk through the store. And all of a sudden, this mom walks in and she's got two little boys with her, one maybe eight and the other one maybe 10 years old, and the little eight-year-old boy looks at the Under Armour section, and says, Mom, look, look, look, Under Armour, Under Armour, Under Armour, starts lighting up like that, and the mom has this look that says, don't look at that stuff, it's expensive, and we didn't come here to get that. And I'm watching and I'm kind of like, go, go, go, go. So sure enough, the mom gets distracted, and the little eight-year-old boy breaks away, he goes over to the Under Armour racks, and it's like 4:00 in the afternoon, just after school, and he pulls an Under Armour compression shirt off of the rack, and he sticks his head through it and he's still wearing his school shirt, and he shoves his arms through and his collar is all jacked up, and he kind of walks out in the middle of the aisle and he looks at his mom, and he just goes, "Hey, Mom, look at me; I'm wearing Under Armour; I can do anything!" Like this. And I'm watching this happen, and I'm thinking about this in terms of like, what is it that we do every day. We just make a shirt or make a shoe? And the fact is that little boy might have been intimidated to go out for the team; he might have been scared to try out for another group. He might have just been intimidated standing in the lunchroom with his tray in his hand and saying, I'm not good enough to sit at the cool kid table. But today he's got something special on. Today he's wearing Under Armour, and that gives him a little bit of a super power. It makes him a little bit faster, a little bit stronger, and that's something that we can never compromise on, so when I talk about that trust, that's something that goes into every product that we make. So innovation, I'll tell you that from our Highlight Cleat to our Coal Black apparel, innovation is something; that's the easy part. Maintaining the integrity to include that in everything you do and never taking advantage of that brand, that's the difficult part, and that's probably the thing I'm most proud of what we've been able to do at Under Armour. We remember that little boy and we'll never let him down, and so that goes into every time we put our logo on our product, that it better be the best and it better deliver super power in some way, shape or form. Q. Are there sports that won't be outfitted initially? If so, how will that gap will filled and how long will there be before it'll be 100 percent coverage? BARRY ALVAREZ: I think track and volleyball are two sports that Under Armour currently does not make shoes for them. We will purchase shoes for those teams. KEVIN PLANK: We were really clear with that, just to be clear with everyone. We can make anything, so whether we are deep in a category or not is a different story, but there's a specific shoe for volleyball, for instance, as Coach says, and our encouragement there is we want you to buy the best, and we're not going to try to force you into something through an R&D process with our company. So first and foremost everything we do is to advantage the Badgers in every way, shape or form. So if not, then you know, we'll encourage them to purchase product. You know, from the right companies, too, but we'll be mindful of that. But yeah. Q. Speaking of innovation then, will you try and innovate to try and bring those shoes to a market? KEVIN PLANK: We'll be in every category, so you know, this is a 10-year partnership, and again, I think that it's incredibly important that you're expert in things that you do, and there's things we want to be really great at. We're a company that when we began making shoes in 2006, a year after we went public, the way we've evolved, we were a $285 million company 10 years ago, the year we went public, and today, again, encroaching on $4 billion, a lot of things have changed. We weren't in the footwear business then. In 2006 we launched a football cleat, in 2007 a baseball cleat, in 2008 a training shoe, in 2009 a running shoe, in 2010 a basketball shoe. And then frankly we stopped launching new products, and we said, we're going to become excellent in subject matter, experts in the places where we're already doing business, and so we'll continue to make those decisions to enter categories that make sense for our business where we can see, of course, a business return for it and a real need from the athlete. So without question our ambition and our expectation is to be in every category and to be deep in bringing deep research and innovation to each one of those. So without question we'll be there. So I don't like the idea of anybody else outfitting our Badgers to be honest with you, so we're going to fix that. Q. Is there going to be any change in the amount of royalties the school gets from fan gear? Like anything sold in the gift shops? Is there going to be any change? BARRY ALVAREZ: No. Q. Just to clarify, I think I heard something earlier that these are just prototype uniforms. Will there be different uniforms that we see on the field when the contract starts? BARRY ALVAREZ: We haven't designed the uniforms yet. In looking at some of the uniforms now, Under Armour has presented us a selection where we'll sit -- the coaches will sit down and take a look at them, and they'll fulfill the qualities that they've set, whether it be the logo, the font, et cetera, and we're just looking at those right now, so yes, those are prototypes. KEVIN PLANK: Coach, let me take a stab at that, too. I think we've built this reputation of we want to make wild uniforms for everybody. I just want to settle everybody to know that we're going to play the right song for the right situation, and that means that whether it's the school and that there's an incredible history here at the University of Wisconsin that doesn't frankly require a lot of flash and a lot of pop beyond the flash and pop that has already been established. So number one, we're going to start with the fabrications. They're going to keep the lightest and most durable and strongest and advantaged uniforms on the planet that we can give and put our student-athletes in. Secondly, with that, from time to time if there's things we can do to be exciting and change directions, that's something that we'll do at the discretion of Coach Alvarez as well as the coaches here as to what they are looking for from us, and you know, we'll deliver on that when asked. But we're obviously going to push, and I think that's our job is to push hard. We've got a saying at Under Armour, which is we'd rather tame a tiger than try to teach a kitten. We're going to make -- we're going to push hard on lots of these things and see what we can do to try to continue to be aggressive. Q. Mr. Plank, how comfortable are you with UW being able to look at your inspection reports for your manufacturing facilities? KEVIN PLANK: Yeah, I think that -- listen, University of Wisconsin has a really strong history and reputation of holding suppliers to the highest standards, and it's frankly nothing that we shy away from, and I think it's something that will only encourage us to be better. These days we are employing 11,000 direct teammates at Under Armour. In addition to that, at any given time, we have somewhere between 200,000 to 225,000 people making our goods at any given time. When I mentioned the close to 2x growth over the next just three years, think about adding another 200,000 to 300,000 additional jobs. I can tell you the one thing is why we are making things in other places, one of the initiatives we have is the ability for us to create some of those jobs back in cities like Baltimore and Detroit, Milwaukee, et cetera. We can help reestablish our manufacturing bases because I believe that local for local is something that's not just a domestic manufacturing story for America but one that's going to be required globally to be proactive and on-time with the demands of the consumer and the speed to market that's going to be needed. And so, look, we have exhaustive processes in place today. We have one of the most diligent teams I can imagine, and we're growing at a very aggressive clip right now. But we look forward, I think, to working with the member groups that are here on campus, as we have before the deals at University of Wisconsin, and working closely with them to ensure that we're providing best practices and frankly also providing thought leadership as to the best ways for the best conditions to really empower people around the world. FastScripts Transcript by ASAP Sports   |
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