The long-running battle to keep the Sports Authority brand alive appears to have finally come to a close, with the sporting goods retailer set to close all of its 450+ stores, according to a U.S. bankruptcy court filing.
Sports Authority representatives have not commented on the details of the store closings.
Three liquidators — Tiger Capital Group, Gordon Brothers Group and Hilco Trading Co. — won a joint bid to purchase the retailer’s remaining inventory assets, furniture and fixtures in order to run going-out-of-business sales. The closing sales will take place in stores starting May 25, 2016, and will be set to conclude on August 31, 2016, according to the filing.
With the bid, the retailer will be able to pay off an asset-backed loan that was as much as $345 million when Sports Authority filed for Chapter 11 bankruptcy in March. Capital from the bid also will cover a separate, $95 million loan, according to sources quoted by Bloomberg.
Sports Authority initially filed for bankruptcy to reorganize the company, first revealing that it intended to close approximately 140 of its stores. However, the retailer instead opted to liquidate all of its assets in April after failing to reach an agreement with creditors regarding its $1.1 billion debt.
The winning bid beat out a joint venture proposal from SB Capital Group, The Great American Group, 360 Merchant Solutions and Yellen Partners. Rival merchants Dick’s and Modell’s Sporting Goods also came up with offers for the stores, with the latter offering to keep some of the stores open under the Sports Authority brand. Modell’s backed away from the deal before the May 11 bid deadline took place.
Since the Sports Authority brand name — and the naming right to sponsor the football stadium of the Denver Broncos — failed to sell at the asset auction, the retailer also will remain on the hook for $36 million owed to the team through 2035.
Dick’s Expected To Lead In Sports Authority’s Absence
Dick’s appears to be the major winner here, even as the retailer’s Q1 earnings showed a dip of 10% in net income. An auction for the Sports Authority store leases is expected to be held at a later date that has yet to be set, with Dick’s expected to bid on approximately 30 locations. In total, approximately 80 stores leases have received bids thus far, according to the Wall Street Journal.
In the company’s quarterly earnings report, Dick’s CEO Edward Stack acknowledged the retailer’s adjustment to the present sporting goods climate: “Given the expected near-term liquidation activity in the market, we have adjusted our guidance to contemplate this dynamic. Over the longer term, we remain confident in our ability to aggressively capture displaced market share and to strengthen our leadership position.”