Under Armour has a crisis of Olympic proportions
Elite athletes reject its high-tech skinsuit, enveloping the company in controversy exactly when it needed to shine on the world stage.
Last Tuesday, U.S. Speedskating executive director Ted Morris was approached outside the rink here by a member of his Olympic squad with a problem. Someone on the staff was worried the team's new high-tech skinsuit might be slowing down skaters on the ice.
"I started laughing," he said. It was "an opinion unsubstantiated by fact," Morris says he replied.
A week later, the only facts staring at the U.S. team are the skating results, among its poorest in recent Olympics, which have created a host of lingering questions about the suits. Produced by Under Armour, (UA) a popular and rising star in the sporting garment business, they were designed to be fastest in all of speedskating, a feat of aerodynamics developed with the help of a defense contractor.
Instead, as stars like Shani Davis and Heather Richardson failed to medal, the suits known as Mach 39 quickly became a lightning rod for a demoralized team and a prominent headline coming out of Sochi itself.
According to interviews with skaters and coaches, a key decision in the suit controversy -- that the skaters wouldn't wear them in competition before the Games -- was largely agreed to by the athletes and coaches. They hoped to provide Team U.S.A. with a competitive edge in a suit that had a custom fit, special texture and five synthetic materials.
Instead, spooked by early results, the American athletes began fretting that they were formally racing for the first time, on their sport's biggest stage, in a suit with a possible design flaw. Panicked, they pressured U.S. Speedskating to abandon its prized new suit -- putting the speedskating federation in an awkward situation with its most visible sponsor.
With a global TV audience watching, the losing continued after the team reverted to a previous Under Armour model. The team is now likely to leave Sochi without winning a single medal -- the worst Olympics in three decades for American speedskaters.
To be sure, no one knows what role, if any, the Mach 39 played in the team's performance. Some insiders say that once doubts about the suit were planted in the team's psyche, the skaters' collective mental focus was broken. Team U.S.A. itself has pored over a multitude of other factors that could have contributed to their poor showing: race tactics, skate blades and the decision to hold their pre-Olympic camp at high altitude.
The dramatic turnabout, meanwhile, has created a crisis for Under Armour. With revenues of $2.3 billion, the Baltimore-based company has skyrocketed to prominence in recent years with sleek skin-gripping sports apparel that made it a darling of athletes and investors alike. Long term effects are yet to be known, but on Friday, the stock fell 2.38 percent.
In an interview, Matt Mirchin, executive vice president of marketing at Under Armour, said Monday the company still believes the skinsuit gave the skaters "the strongest chance of winning."
But the controversy hit the company where it hurt most -- its credibility in high quality athletic apparel -- exactly when it needed to shine on the world stage. With more than 90 percent of its revenues coming from North America, its partnership with the U.S. speedskating squad was supposed to help the company vault into new international markets.
"That's why this is so troubling," he said. Neither the company nor the U.S. Speedskating federation would comment on whether the contract with Under Armour would continue beyond these Olympics.
In the world of sports endorsements, the typical risk for companies is that a sponsored athlete might land in legal trouble or in a doping scandal. Under Armour has a different nightmare: Its elite athletes were rejecting the product the company had made for them.
The road to the Sochi Games wasn't smooth for U.S. Speedskating. The organization was marred by a cheating scandal on the short-track side in 2011, which led to a coach, cleared of the accusation, eventually leaving the team. With other disarray pending, the federation was threatened with decertification by the U.S. Olympic Committee.
Compounding U.S. Speedskating problems were various financial concerns. According to tax records, the federation was $752,000 in debt for the fiscal year ending May 31, 2012, and that grew to $785,000 for the year ending May 31, 2013. When Morris came on as executive director in September, he said improving U.S. Speedskating's financial health as well as broadening its sponsorship base were issues he hoped to improve. "We want to be more self-sustainable," Morris said.
Meanwhile, the sportswear maker was on a tear. Driven chiefly by successes in performance apparel, the brand had great appeal to football fans and weekend-warrior types in the U.S. Its stock price has climbed ever higher over the past four years, hitting an all-time high after beating estimates in its latest earnings call in January. But it had yet to make a splash overseas, which is where U.S. Speedskating came in.
As part of their initial deal, Under Armour provided competition suits for the team. And with the Sochi Olympics approaching, they began developing something special.
Working with skaters, Under Armour produced dozens of prototypes stitched together with five different synthetic materials, each selected to reduce drag and friction on different parts of the suit. They built fiberglass mannequins and logged more than 300 hours in a high-speed wind tunnel. Defense stalwart Lockheed Martin (LMT), which declined to comment, was brought in for its aerodynamic expertise. A person familiar with the matter said the resources poured into the effort totaled nearly $1 million.
When Under Armour announced the suit last fall, U.S. Speedskating's technical staff and athletes were so impressed that they decided to keep the details of it secret, according to Morris and several people familiar with the matter. They figured that in a culture of "suit watching" in speed-driven winter sports, including speedskating and skiing, the suits would catch their rivals' eyes. The decision was unanimous, athletes and Morris said: The skaters wouldn't compete in the Mach 39 until the Olympics.
The skaters then got their first look at the suit on Jan. 1 at the Utah Olympic Oval, in Salt Lake City, where the skating federation is based, according to several people present. Under Armour marked alterations for each athlete and sent the suits back to Baltimore that day, said Mirchin.
But with the Olympics only five weeks away, the skaters didn't know how they would feel on the ice. Many of the athletes wouldn't see the suits again for three weeks. Still, at the time, none of the athletes worried about it, said Brian Hansen, a middle-distance speedskating specialist for the U.S. team. The team didn't actually skate in the Mach 39s until Jan. 22, when they arrived at a pre-Olympics training camp in Collalbo, Italy, and when the first day of competition in Sochi was 17 days away.
The camp, where they wore the suits in simulated races, posed other problems. The rink was outdoors and at altitude, nothing like Sochi's indoor, sea-level rink.
Looking back, coaches and athletes said they had a hard time gauging their overall performance because of all the variables. "It's cold, it's windy, the ice isn't as smooth," said skater Joey Mantia. Hansen's private coach, Nancy Swider-Peltz, said she had pleaded with U.S. Speedskating at the time to reconsider the whole trip. "You don't know what's a good time."
The team arrived in Sochi on Jan. 31 and practiced in the suits at the Olympic Park's Adler Arena. Four Under Armour technicians arrived on Feb. 7, the day of the opening ceremony, to attend to last-minute alterations, if needed.
Competition began on Feb. 8, and for three days, the new suit didn't generate complaints. Davis, in fact, said he felt good on Feb. 10 in his 500-meter race, in which he wasn't expected to medal.
But a day before the competition moved to longer races that Americans were supposed to win, the first concerns reached Morris through a member of the staff.
Then Davis, a two-time Olympic champion in the 1,000 meters, finished eighth in a race he was started as a favorite. U.S. national coach Ryan Shimabukuro was stunned.
"The fact that we're that far out, something's up," he said that day. Running through the list of possibilities, some athletes turned their attention to the suits. Were they causing drag? Should they have competed in them sooner?
The whispers soon reached Under Armour in Baltimore, when Mirchin says one of the company technicians in Russia phoned him to pass on what he was hearing. A few hours later, Mirchin spoke to Morris, of U.S. Speedskating.
Morris said they spoke about the "rumbling around the athletes and that there was not a whole lot we were going to be able to do to control that. The psychological aspect of it was in the athletes' heads. We were going to let the athletes decide."
Coaches still insisted that despite the poor finishes, Davis and the rest were actually skating faster than when they had competed at the same arena in Sochi at the 2013 World Single Distance Championships. Davis improved his time in the 1,000 meters by 0.18 seconds, for example, but finished five places worse.
But other teams skated faster too. And their improvements made Davis' look modest: While he picked up fractions of a second, the Sochi gold medalists were whole seconds quicker on this ice than they were 11 months ago.
Several people close to the team told The Wall Street Journal on Wednesday and Thursday that there were concerns about the suits. By Thursday night, the team was in full-blown panic, a person close to the team said. And the suit alteration team from Under Armour was suddenly much busier.
Skaters Richardson and Brittany Bowe had the vents on the back sewn shut. The Under Armour seamstresses toiled until 6:30 a.m. Friday patching vents with rubber before that day's 1,000-meter event.
The untested fix didn't help. That evening, favorites Bowe and Richardson finished seventh and eighth, but neither blamed the suits. "Unfortunately, we have not had the results we would have wanted, but it is hard to pinpoint one or two reasons," Bowe said.
But behind the scenes, team officials and coaches worried about the growing interest in the topic. They worked into the small hours of Friday coming to grips with the medal drought that had cold-cocked them.
Mr. Morris says he spoke several times a day to Under Armour's Mirchin, who felt strongly that the function of the suit wasn't the issue.
"We didn't believe that it was the right thing to change the suits," Mirchin said. "We didn't believe it was the right thing to cover the vents. But we did what we could to give confidence to the athletes."
Meanwhile, damage control was under way. Coaches emailed the team on Friday with "talking points" to manage the media attention.
"Many factors determine Olympic success, and we are constantly making adjustments to improve results wherever and whenever we can," said the memo, which was reviewed by the Journal. It also urged athletes to stress "our long-term successful partnership" with Under Armour.
Diane Pelkey, a spokeswoman for Under Armour, said that the company wasn't aware of this directive.
Friday afternoon, divided coaches and federation executives held a series of emergency meetings. The sense from the athletes was that a majority was ready to make the suit swap.
"It was good, but it was intense," said Matt Kooreman, a coach who works for the Utah Olympic Legacy Foundation and who partners with U.S. Speedskating.
The problem with the suits was mainly psychological, not functional, those in favor of a switch argued. If skaters didn't believe the Mach 39 could help them perform, then that would be enough to knock them off their games.
Another question hung over the discussion, too: Could U.S. Speedskating really afford to offend Under Armour? Their partnership is up for renewal after the Games. "We were super concerned about upsetting Under Armour," Kooreman said. "They've been a great partner and we need them."
Under Armour stood by the Mach 39 but deferred to the skaters' preference as it became clear a change was coming. "The focus is on the athlete, putting them on the ice in a suit they're confident in," said Kevin Haley, the company's senior vice president of innovation.
By 10:30 p.m., the discussion was over. They were switching to the World Cup suit. But at the following day's 1,500-meter race, the story didn't change. Hansen finished seventh. Davis slipped into 11th.
Two days of internal debate and external scrutiny had taken a psychological toll on the team. During the meetings on Friday night, Hansen said, things had gotten "a little crazy."
The serene focus they needed to perform at their best went the way of the Mach 39s.
The next day, Richardson and Bowe suffered the same result in the 1,500, finishing seventh and 14th, respectively. Both denied that the suits had caused any of the distraction. "Like I said, that's just one little factor out of a million," said Bowe.
Problem isn't the suits. Problem is a low-quality speed skating program. Aside from the financial issues, the speed skating program is not recruiting the number and caliber of athletes and coaches it needs to be, at a minimum, competitive. Then there's competition. There's no speed skating circuit in the US where US skaters can compete and earn a living; if you want to skate against the best skaters in the world, and earn a living doing it, you need to skate in Europe and Asia. There isn't even a development/feeder program to draw kids in at a young age and build them into world-class speed skaters.
Compare speed skating to track and field. A second-tier US sprinter can earn a very good living, state-side and abroad, by racking up a pile of sixth place finishes against people who are legitimate Olympic and world championship medal contenders. This is the pool you need to look at for potential speed skaters. But why would they give up a guaranteed paycheck and sponsorship to take a chance with a program that can't get its act together.
As for Under Armour, this won't hurt them one iota. They simply make the best product of its kind. I've used the product for years. If you want cold weather gear that gets the job done, go with Under Armour. If you want to freeze your balls off, buy a $5 set of cotton thermal underwear from your local jobber, and hope you can pull the pants up past your ankles.
Who wrote this sentence by sentence? Coulda done it in three paragraphs. It was like reading something by James Patterson. Boring. Repetitious. Kept waiting for it to go somewhere. Ended like it started. How much of the article was used describing who somebody is. Just a lot of words. Boring. Nothing new in today's market. It seems we outsource the job of proofreading to a country that puts sentences together differently than America.
At this level of competitive sports, Athletes should be practicing with the equipment they plan to use in the competition. So being unfamiliar with the dynamic characteristics of the suits could have played a role.
But the aero dynamics of the suits? Any wind resistance that can get underneath the fabric will cause a drag; be it a clothing material or the skin of a airplane. So I'll side with the athletes on this one- they have to not only be comfortable in them but confident as well.
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