The Sports Authority brand name will continue to live on after all — but under the Dick’s Sporting Goods flag. In an auction to sell off Sports Authority’s remaining assets, Dick’s Sporting Goods placed a winning bid of $15 million for its rival’s intellectual property.
The deal still has to be finalized and approved by a U.S. bankruptcy court judge, with the hearing scheduled for July 15. Additional details from the auction, held June 29, indicate:
Sports Direct International submitted a bid of $13 million for the intellectual property;
Dick’s also won 31 Sports Authority store leases with an $8 million bid (initial reports had the retailer seeking only 17 stores); and
TJX, Target, Best Buy and Bob’s Discount Furniture all scooped up individual Sports Authority stores.
Given that Dick’s paid almost twice the amount for Sports Authority’s intellectual property rights than for its store leases, the stores’ value clearly has diminished. Other bidders felt the same way; although Modell’s Sporting Goods and Sports Direct had discussed making a joint bid on as many as 200 Sports Authority stores, the retailers didn’t actually go through with the deal.
With the intellectual property rights, which include Sports Authority’s e-Commerce site, a loyalty program with 28.5 million members and a database of 114 million customer files, Dick’s has the opportunity to tap into a new consumer base and further establish itself as the top player in sporting goods. With Dick’s having opened approximately 200 new locations within the past five years, the retailer already has plenty of stores, and likely doesn’t want to risk taking on a large number of Sports Authority properties that failed — even if most of them weren’t located near a Dick’s store to begin with.
Given that Dick’s traditionally has placed a heavy focus on its omnichannel strategies, the additional customer data will further assist the merchant as it attempts to tailor its offerings to a wider audience.
Sports Authority, which filed for Chapter 11 bankruptcy in March, agreed to liquidate its business upon failing to reach an agreement with creditors regarding more than $1 billion in debt. Instead of reorganizing the company, the retailer began offering going-out-of-business sales at all of its 464 stores in May, with promotions at the unsold stores expected to run all the way through the end of August, before the stores officially close.
Sports Authority hired intellectual property asset valuator Hilco Streambank to conduct the bankruptcy auction.