Future Looks Bleak For The Sports Authority

Last week, The Sports Authority gave up hope it could re-organize under bankruptcy protection. Now, the company is planning to auction itself off to the highest bidder. The company is planning to sell almost all of its assets at a court supervised auction on May 16. The Sports Authority has not yet said whether it will shutter its entire fleet of stores. The company currently employs approximately 15,000 workers in 41 states.

In January, Sports Authority failed to make a $20 million debt payment. In March, the retailer filed for Chapter 11 protection in federal bankruptcy court in Delaware. In the filing, the company said that it would close about 140 of its 463 stores, as well as two distribution centers. Sports Authority cited the growth of online sales as a major reason for its financial problems. Now, the sporting goods retailer is choosing to liquidate, rather than restructure its finances.

At a hearing in bankruptcy court last week, a lawyer for The Sports Authority said that the company “will not be able to reorganize under a plan, but will instead pursue a sale.” The bankruptcy court judge was told that existing takeover offers were barely enough to cover its $100 million in administrative and liquidation costs. Sports Authority currently owes creditors roughly $1.1 billion.

A number of parties have expressed interest in buying some of The Sports Authority’s stores. Some Sports Authority locations could live on under a different name. No one has stepped up to buy the retailer in its entirety while maintaining the brand. A decade ago, The Sports Authority had annual sales of about $3 billion. The company lost an estimated $256 million in 2015.

Sports Authority has been facing financial trouble for the past several years. However, the company is not the only sporting goods retailer in trouble in the current economic environment. Two weeks ago, Vestis Retail Group announced the closure of its Sport Chalet retail chain as part of a Chapter 11 bankruptcy protection filing. Cabela’s is also up for the sale. Dick’s Sporting Goods reported that comparable sales at its namesake chain fell 2.5 percent during the holiday quarter.

The sporting goods industry as a whole accounts for an estimated $150 billion per year globally. The industry was worth $63.7 billion in the United States i2014, the most recent year available for figures. That figure was a 2 percent increase over the numbers a year prior and a jump of 24 percent since 2009.


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