BALTIMORE — In this city, Under Armour’s logo — like those of Old Bay Seasoning and National Bohemian Beer — is everywhere, in what feels like a citywide campaign against Nike.
Founder Kevin Plank built a $27 billion empire here of sweat-resistant T-shirts and super-light sneakers. And its success inspires triumph in a city where social and economic scars run deep.
Yet as the titan of athletic apparel nurtures ever grander ambitions for Baltimore, some look on warily.
In the spring, Plank announced that he had acquired more than 100 acres in the Port Covington industrial area, along the Patapsco River in south Baltimore. He has plotted a $5.5 billion development project, one of the largest in the country, comprising 45 city blocks and more than two miles of riverfront.
One fruit of this venture opened recently, a manufacturing and design center with a body scanner, 3-D printers and dozens of workers in white lab coats tasked with fashioning gear for elite athletes.
At the unveiling, a robot from a local start-up cut the ribbon. Former Ravens star Torrey Smith spoke. Elected officials and two White House staffers beamed. “We are the best daggone city, not just here in America but all over the darn planet,” Plank roared to the crowd.
As much pride as Baltimore residents take in Under Armour, with its logo adorning sports uniforms and the city’s skyline from atop company headquarters, the gap between the winners and losers in Baltimore neighborhoods has never seemed greater.
Plank’s proposal and his request for an unprecedented amount of city funding — $535 million in bond financing — has turned a spotlight on fissures exposed on national television last spring after the fatal injury of 25-year-old Freddie Gray in the back of a police van led to protests and looting in the city.
In all Plank has requested $1.1 billion in public funding, with the balance coming from state and federal sources, for a development project that would cover 236 acres.
The idea that a billionaire should receive that kind of funding for a real estate project seemed unfathomable to residents gathered at an East Baltimore church days after Plank unveiled his design center.
Outside, broken stoplights dangled above the intersection, and plywood sealed entire blocks of townhouses. Residents of the heavily African American neighborhood wondered why — if the city had a half-billion dollars to throw around — the sidewalks were covered with trash, why no one cut the grass in the park and why something hadn’t been done to prevent more than a dozen homicides this year.
“It used to be if you said you were from Baltimore to people, that meant something,” said Charlene Jennings, 62, of Northeast Baltimore. “Now being from Baltimore is viewed as no good, as terrible.”
In recent years, booming downtown real estate markets have contributed to widening gaps in wealth and opportunity in major urban areas.
Some American business leaders have made splashy attempts to narrow those gaps, with mixed results, buying up swaths of cities and trying to recast their abandoned factories and mills.
During the past five years, for instance, Quicken Loans founder Dan Gilbert has invested more than $1.5 billion in Detroit and brought more than 12,000 jobs. Meanwhile, Zappos founder Tony Hsieh made a $350 million investment in Las Vegas, one that has not lived up to his vision of a transformed downtown. And Facebook just announced that it will build 1,500 housing units as part of a headquarters expansion in Silicon Valley.
Port Covington would put Plank, who grew up in the D.C. suburb of Kensington, Md., and played football at the University of Maryland, in that company.
Twenty years after Plank started making T-shirts in his grandmother’s Georgetown basement, Under Armour is an empire, its brand hawked by such superstars as basketball’s Stephen Curry and Bryce Harper of the Washington Nationals.
But pride in Baltimore and the things it makes does little to ease racial and economic tensions in a city where Afrian American residents are more than twice as likely as whites to be unemployed, where their children are three times as likely to live in poverty and where 13.7 percent of black adults have a bachelor’s degree, compared with 49 percent of whites.
People are afraid of being left behind.
“Baltimore is going to be fine. That’s not the question,” said Rep. Elijah E. Cummings (D-Md.), a city native. “The question is whether all of Baltimore will rise together. And I think we need to be very careful to do everything in our power to make sure that we don’t end up with small population of the haves and a huge population of the have-nots.”
Plank’s project, when completed in 25 years, would dwarf Baltimore’s celebrated Inner Harbor, delivering a new Under Armour headquarters, tech and manufacturing businesses and 40 acres of parks. It would also yield hundreds of millions of dollars in projected tax revenue and provide an estimated 25,000 jobs.
But as the City Council begins to consider Plank’s request for $535 million in financing, some leaders remain unconvinced that what’s good for Under Armour or Plank is good for Baltimore.
“There are a lot of depressed areas, there are a lot of very strong areas,” said council member Carl Stokes, who heads the committee that is considering the request. “It’s an old phrase, it’s clichéd, but it’s still very much a tale of two cities. And when Port Covington is developed, it may well be a tale of three cities.”
Real estate, horse racing and whiskey
Under Amour was taking in well over $1 billion in annual revenue when Plank went to the board of directors in 2012 and said that, in addition to building a new headquarters to accommodate the company’s growth, he wanted to buy and develop a much larger section of Baltimore.
The answer was: Under Armour isn’t a real estate developer, stick to shirts and shoes.
So Plank set out to do it on his own.
Through his privately held Plank Industries, a holding company, he established a variety of other enterprises, focused on venture capital, horse racing, making whiskey and other pursuits. One of them, Sagamore Development, was dedicated to quietly acquiring land.
Plank Industries’ chief executive, Tom Geddes, and Marc Weller, president of Sagamore, led the effort. After a false start near Plank Industries’ current headquarters, they began knocking on the doors of Port Covington landowners while dodging questions about who was bankrolling the offers to buy them out.
They came away with 27 properties, including a concrete plant, a lumberyard, a pier leased to federal emergency ships, an abandoned Sam’s Club store and the Baltimore Sun’s printing plant. The total haul was 171 acres, and the total cost was about $114 million, according to Sagamore.
Plank unveiled a plan calling for 18 million total square feet, including offices, hotels, shopping, attractions and at least 7,500 residences in Port Covington, a peninsula isolated from the city by Interstate 95.
An analysis of the project by Municap, a firm hired by the city, estimated that the project would create 25,000 jobs and yield $1.8 billion in additional tax revenue over the 41 years it would take to pay off the bonds.
With City Council approval, Baltimore would issue $660 million in bonds, creating $535 million in proceeds that could be used for streets, sidewalks and other infrastructure needed to create a street grid for the development.
Some of Sagamore’s work reviving Port Covington is well underway. It is building a 49,000-square-foot rye whiskey distillery (a nod to Baltimore’s dominant pre-Prohibition export), and it plans to open a hotel in February at the 102-year-old Fells Point Recreation Pier.
In a former Port Covington bus depot, Sagamore opened City Garage, home to the Lighthouse design center, an incubator for tech and manufacturing companies, and the Foundery, a workshop with industrial-grade tools and skills training.
In one way or another, all of it builds on Baltimore’s identity as a place where people made things.
“People of Baltimore, if you want to simply learn a new trade, if you want to join the Foundry, it’s a membership. It’s like joining a gym, and you can go and meet other entrepreneurs like you,” Plank told the crowd at the opening. “You can talk about how to get financing. You can take a class on how to sew. You can take a class and say, ‘I want to be an electrician.'”
As he sees it, this is just the beginning.
“We want to shine a light on this great city of Baltimore ” he said. “I can tell you, I love this city. I love my company. I believe in this city. I believe in what’s going to happen. And ladies and gentlemen, I can promise you, at Under Armour, we are truly, truly just getting started.”
Plank has generated a tremendous amount of goodwill locally sponsoring youth events, sports teams and other causes through his Cupid Foundation.
Two years ago, he gave $25 million to the University of Maryland for an football practice complex, and he recently gave $5 million to build an East Baltimore Community Center, now under construction. This month, Sagamore agreed to provide $39 million toward dozens of community benefits (including a recreation center, job training and after-school programming)
to six south Baltimore neighborhoods near Port Covington. A citywide benefits package is also being discussed.
Cummings said because Baltimore is so lacking in safe places for kids to play sports and be otherwise active outside, the donations may go further than they would in other cities.
“I’m telling you it makes a big difference here,” he said.
Unlike executives at Marriott International – who are openly considering a move out of Bethesda – Plank is not pressing the state and city for millions in incentives to keep his company’s 2,000 Baltimore jobs here. Instead, Geddes said, he has more in common with Quicken Loans’ Gilbert, with whom he’s met and discussed their respective visions for the Motor City and Charm
“This is for Baltimore,” Geddes said. “Under Armour could have started a competition and begun a [bidding] process for its headquarters. That’s what a board of a public company usually does, say, ‘Let’s see who writes the biggest check.’ ”
Plank’s prowess as a marketer is on display in TV, social media, radio and print advertisements promoting the project. Plank’s pitch, like Under Armour’s presence, is everywhere: “We will build it. Together.” Analysts told the Baltimore Sun that the campaign probably cost more than $1 million and that Sagamore did more advertising at times during the mayoral primary than the candidates did.
Many a prominent Baltimore figure is on Plank’s team. Sagamore hired Orioles great Cal Ripken to design athletic fields for the project. Under Armour spokesman and Ravens great Ray Lewis stopped by to celebrate a construction milestone.
At the opening of the design center,WJZ-TV (Channel 13) reporter Jessica Kartalija played emcee, telling the crowd, “What you are about to witness is nothing short of phenomenal!” before taping her story.
Mayor Stephanie Rawlings-Blake, who chose not to run for reelection, signed agreements with Sagamore that set nonbinding goals for affordable housing, jobs and the hiring of local businesses.
In the deals, Plank’s team makes commitments intended to mitigate the causes and effects of Baltimore’s having become – like other big cities across the country – more racially segregated an economically unequal. For instance, Sagamore offers to contribute $10 million over five years toward education and training programs.
But critics say the mayor should have driven a harder bargain on certain points. Sagamore agrees to a goal of having 20 percent of all workers on site and at least half of all new hires be city residents, but the goal is not enforceable. The firm also agrees to try to make 10 percent of all housing units available at affordable levels, but an inclusionary zoning law typically requires a rate of 20 percent.
Pros and cons
Sagamore executives argue that the financial support they are requesting from the city is critical. Through a process called tax increment financing, the city would borrow money for the project and then pay it back with property tax revenue created by the project.
Without it, Sagamore will struggle to get hundreds of millions of dollars for highway connections, two light-rail stations and other improvements. Federal transportation officials already turned the company down once.
“For Under Armour to grow in Baltimore, it has to happen” Geddes said.
Stephen M. Kraus, a high-level city finance official, said even under a doomsday scenario Baltimore could assume ownership of the Sagamore properties and use their value to pay off the bonds.
Kraus said the investment would create tax revenue that otherwise wouldn’t exist. The project could help redefine the city, he said, and is well worth the risk. “When you come up 95 and you approach the tunnels from the harbor there, and you look to the south, this thing is going to be a gem,” he said.
Stokes, the committee chair, isn’t convinced and said he doesn’t plan to even bring the financing up for a vote without getting a more “independent” assessment.
“This is the problem: Private businesses treat the government as if they are stupid,” Stokes said. “That they should not do their due diligence. And often government treats itself this way,” he said.
There remain concerns that Sagamore will use public dollars to create an exclusive private neighborhood, including the 50-acre Under Armour campus, with its 3.9 million square feet of office, studio, recreation and other improvements. One of those improvements would be a small stadium along the river, where the company could hold sports competitions and exhibitions.
Cynthia Gross, an East Baltimore resident who’d joined the gathering at the church, said she has not benefited from other city projects and was not impressed by the mayor’s agreements.
“I’m hearing things like goals, maybe, could be,” she said. “We don’t see any benefit from that.” A Rawlings-Blake spokesman declined to comment.
Cummings said in an interview that every time he called about something Baltimore needed, Plank delivered and that he expected the same this time. But he also said Under Armour couldn’t solve all the city’s problems and shouldn’t be expected to.
“Kevin says, you know, ‘I want the city to do well,'” Cummings said. “But he also says that he is not the mayor and he can’t do it all. His job is to make T-shirts and tennis shoes and make sure Under Armour does well. But if in the process of doing that he can help the city, then that pleases him very much”
Cummings’s trust in Plank and Under Armour was memorably demonstrated during the unrest that followed Gray’s death. With buildings in flames and the National Guard patrolling the city, the 65-year-old congressman, appearing on CNN, made use of an Under Armour advertising slogan.
“Under Armour has an old slogan. It says: ‘Protect this house.’ We must protect this house,’ ” Cummings said. “And I promise you, we will protect this house.”
Follow Jonathan O’Connell on Twitter: @oconnellpostbiz