Sports Authority Closing
The national sporting goods chain, Sports Authority, filed for bankruptcy yesterday in response to a massive $1.1 billion in debt. At this point, the future of the company, which has been contracting for several months, is uncertain. Namely, they have two options: reorganize or find a buyer to acquire some or all of the 450 stores that bear the brand’s name.
With trouble looming for several months, Sports Authority’s decision to file paperwork early Wednesday morning comes as a result of its failure to make a $20 million debt payment back in January. Their decision declare bankruptcy and subsequently close 140 stores throughout the country was made in an attempt to break leases on money-losers as well as give them the leverage to borrow an additional $595 million to fund their operations over the next several months.
Earlier today, The Consumerist poured through the legal documents filed Wednesday to generate a list of the stores on the chopping block over the next several months. Consumers can find that list here.
What Went Wrong for Sports Authority and Why
Sports Authority is just one of a string of brick and mortar stores to recently contract and, ultimately, declare bankruptcy in an economy that has become increasingly reliant on online shopping. Traditional purchases, such as fan gear, for example, are easier to acquire online. Plus, retailers like Amazon make the process simple, fast, and often have a wider variety of items to choose from. Furthermore, while the need to try on a baseball glove, get the feel of a golf club, or walk around in a new pair of running shoes, will never go away, Sports Authority’s largest competitor, Dick’s Sporting Goods, has outpaced them in transforming customers’ in-store experience. Dick’s has successfully rebranded itself as a place to go for a higher-end shopping experience.
By contrast, Sports Authority, which gained prominence by buying up its competition, does not even provide a consistent customer experience across its stores. Locations range in size from the smallest strip mall space at only 8,000 square feet to large megastores that top 80,000 square feet. Even the inventory Sports Authority offers is inconsistent from place to place. The final nail in Sports Authority’s coffin, however, came a decade ago when, as the nation’s largest sporting goods retailer, its private owners sold out to a hedge fund. Operating with a debt load, which is always associated with this type of leveraged buyout, stifled the company’s growth and left little room for reinvention.
At this point, Sports Authority’s future is highly uncertain. While they do have the opportunity to remake themselves as a smaller entity, competitors like Dick’s are already interested in buying up their store space – if only to eliminate them completely from the field of competition. Furthermore, with a 25-year deal to have its name on the Super Bowl champion Denver Bronco’s stadium, determining if and how to bring this brand into the future may rely on more than just selling sporting goods.