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Under Armour announces record deal: what it means for the stock

The battle over college sports is heating up.

Today Under Armour announced a 15-year footwear and apparel deal with the University of California, Los Angeles. At $280 million, it is the largest college-deal in history.

But with the stock under pressure this year--shares are down 8% since January--will the deal's high price benefit the stock? What, if any, long-term effect will the partnership have for shareholders?

On the "Halftime Report" today, the desk debated the potential merits--and pitfalls--of the deal.


Pete Najarian believes the partnership is a step in the right direction for the company. Under Armour is focused on growing its footwear sales, and its celebrity endorsements have so far been a positive driving force. So while he concedes it was a lot of money to spend, he believes the deal could lead to an upside in sales, and ultimately in the stock.

"If you look at all the sponsorships, they [Under Armour] have been in the right place at the right time...they're showing incredible growth in footwear, so they're doing all the right things. They are spending a lot of money, but that's something that Kevin Plank talked about. They've got to invest, so they've got to spend that money to get this exposure out there," Najarian argued.

Like his brother, Jon Najarian believes the partnership will lead to increased visibility for the brand.

"It [college football] is something that people watch live, which is then a greater value to the people running commercials...a lot of us that are interested in the sport have to watch it live, and that's great for the commercials," Jon Najarian argued.

Steve Weiss, on the other hand, isn't sold on the benefits of Under Armour's deal.

"We don't know what the economics are. The numbers keep going up higher and higher, and you don't know what the payoff is since it's a 15-year deal."

That said, Weiss does note that the longevity of the deal keeps other players--except for Nike--out of the market. "It's basically a two-horse market, and there's a value to that," he said.

Like Weiss, Joe Terranova believes the deal is hard to evaluate. "A lot of these deals are new to the marketplace for companies like Under Armour...we're going to know 3-5 years from now if they spent way too much."

Trader disclosure: On May 24, 2016 the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Halftime Report" were owned by the "Halftime Report" traders:

Jon Najarian: Long CCI, CHS, DIS, MGM, NFLX, PEP,PFE, RAX. Long calls BURL, DIS, FIT, FSLR, GDX, LVS, M, MDLZ, MO, MSFT, NFLX, QCOM, SCTY, SYF, YHOO

Pete Najarian: Long AAPL, BAC, BMY, CSCO, DIS,DISCA, GE, KMI, KMI.A, KO, LUX, MRK, PEP, PFE, SAVE, VIAB, ZIOP. Long calls: AAL, AKS, AMJ, CRM, EGO, EWZ, FEYE, GLW, GS, GSAT, HAL, HBAN, KGC, LLY, MT,NLNK, POT, SLV, SRPT, SVU, UAL, YHOO Long Puts: BBY, BID, FCX, PBR, VLO

Joe Terranova: Long BLK, DPZ, FB, NXPI, ORCL, PNC, VIRT, VRTS

Steve Weiss: Long AAL, AGN, ATVI, BAC, CVC, DAL, MDVN, SCHW