Sports Authority was a well-known name in sports equipment. The company began with a specific goal—to provide athletes and enthusiasts with all the necessary equipment. Its growth was rapid, and it expanded from a single store to hundreds, quickly becoming America’s go-to retailer for sporting goods.
The stores were well-stocked, the employees wore bright red shirts, and the cash registers were constantly busy. It was a golden era when anyone needing anything from a baseball bat to running shoes knew precisely where to shop.
This wasn’t just a tiny retailer but a leader in the sporting goods industry. It was a hub where young players, hobbyists, and professional athletes converged. Sports Authority was the primary choice, the major player, and the brand frequently mentioned by athletes.
In a press release regarding its bankruptcy, Sports Authority attributed most of its difficulties to financial burdens that became too great to manage. The company mentioned that it had consulted with advisors for several months before its Chapter 11 filing to perform a strategic review of its operations and assess options for improving its financial standing.
But what led to the downturn of Sports Authority? This is a common question. In this article, we’ll explore the answers.
The History of Sports Authority: From Growth to Bankruptcy
Gart Sports was founded in 1928 by Nathan Gart, who started by selling fishing rod samples. In 1981, he opened a large store called Sportscastle in Denver. Meanwhile, the Sports Authority was created in Fort Lauderdale, Florida, in 1987 by Jack Smith, a former CEO of Herman’s World of Sports. Developed by Kmart into a chain, it had 136 stores by 1990. Although initially unprofitable, by 1991, Sports Authority had grown to eight stores with revenues of $240 million and an operating income of $3.3 million, supported by Kmart’s financial investment.
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During the early 1990s, Sports Authority expanded rapidly, increasing sales significantly and opening many stores. By 1993, it had separated from Kmart and had established stores in key markets. In 1994, Kmart took Sports Authority public to alleviate its financial problems. Sports Authority also expanded internationally, including to Japan and Canada.
The late 1990s brought difficulties, with new CEO Martin Hanaka addressing falling sales and rising debts from 1998. The company pulled back from international markets by 2000. Despite these setbacks, Sports Authority continued operating and even planned new openings into the early 2000s. In 2003, it merged with Gart Sports.
In 2006, Leonard Green Partners bought the company for $1.4 billion. Sports Authority tried to adapt to changing market conditions by launching a new store brand, S.A. Elite, in 2010, focusing on high-end sports apparel. However, it declared bankruptcy in 2016 and closed all its stores, ending its operations after a period of significant growth and challenges.
The Rise and Fall of Sports Authority: How Competition and Market Shifts Led to Its Closure
Formerly one of the biggest sports retail chains in the U.S., Sports Authority saw a decline as competitors like Dick’s Sporting Goods and REI gained market share. Unable to find a buyer, Sports Authority closed its over 460 stores nationwide.
With sites in 41 states and Puerto Rico, the Colorado-based firm was once the nation’s most prominent sports goods shop chain. In March, it filed for Chapter 11 bankruptcy with the intention of restructuring. However, the case was moved to Chapter 7 bankruptcy a few months later. After liquidators purchased the company’s assets on May 18, 2016, CEO Michael Foss announced on May 25 that all locations would close by the end of August 2016.
Sports Authority attributed its financial decline partly to the rise of online sales. Additionally, the entry of specialized competitors into a market previously dominated by only a few players has also contributed to its challenges.
Despite Sports Authority’s struggles, the global sporting goods industry is expanding, valued at approximately $150 billion annually. The sector reached $63.7 billion in the United States alone in 2014, marking a 24% increase since 2009 and a 2% growth from the previous year. The company also grappled with stiff competition from traditional sports retailers. The diversification of the sports retail market has introduced numerous specialized vendors that offer both conventional sports attire and “athleisure” — casual wear inspired by sportswear, which has become increasingly popular.
Consumers now have numerous choices ranging from budget workout clothing at retailers like Target and Walmart to athletic shoes and outdoor gear at traditional sports stores. These stores also face competition from fashion brands such as Gap and Abercrombie.
In 2015, Sports Authority reported a loss of $256 million, illustrating that there are other sports retailers affected by the competition from larger stores and the shift toward online shopping.
Overall, Sports Authority’s bankruptcy was caused by multiple issues, including significant debt, ineffective merchandising, strong competition, and a failure to adapt to changes in consumer behavior and the growth of e-commerce. However, the company’s real estate assets were in demand rather than a cause for concern.
Two major retailers, Burlington Stores and Dick’s Sporting Goods, each took over 38 former Sports Authority locations. These now account for about 20% of all locations repurposed after the bankruptcy. In the past five years, approximately one-third of the new Dick’s stores and one-fourth of new Burlington stores have opened in these former properties.
Other retailers have also occupied these locations. Over 40 are home to furniture stores like Bob’s Discount Furniture and Ashley HomeStore, while Hobby Lobby has taken over 17 sites. Around 75% of these stores are occupied by a single tenant rather than divided into multiple smaller units.
For those divided sites, more than a third now house TJ Maxx and related brands such as HomeGoods, Marshalls, Sierra Trading Post, and Home Sense. Grocery chains like Sprouts, ALDI, and Total Wine and More have moved into more than a quarter of these spaces. About 10% have been converted into unique uses like medical offices and self-storage facilities. The Sports Authority location in Park City, Utah, has been turned into The Ray, a 500-seat theater managed by the Sundance Institute.
The former Sports Authority site in Queens, New York, is being redeveloped into a high school for 3,000 students.
Despite closing nearly 40,000 retail stores during the same period, the former Sports Authority properties have succeeded. These locations are typically large, modern, and strategically located in suburban areas with limited new construction, making them adaptable for various retail and other uses. Only about 10% of these properties were in malls.
This efficient re-tenanting process shows that retail real estate problems do not necessarily indicate broader industry issues. While some retailers fail, others are ready to take their place. This situation also emphasizes the ongoing value of large retail spaces and shows that well-located, high-quality real estate will likely be continually used and maintained.
The closure of Sports Authority’s stores allowed other retailers to expand and for property owners to improve and stabilize their assets for future sustainability.
About Sports Authority
Sports Authority, Inc., was a prominent sports retailer headquartered in Englewood, Colorado. The company once operated over 460 stores across 45 U.S. states and Puerto Rico. Its operations extended to an online platform hosted on the GSI Commerce platform, supporting its physical stores and other sales channels. Sports Authority also partnered with ÆON Co., Ltd. to run branded stores in Japan through a licensing agreement.
However, the retailer encountered financial difficulties, leading to a Chapter 11 bankruptcy filing on March 2, 2016. This case was later converted to Chapter 7, indicating liquidation. By May 18, 2016, Sports Authority’s assets were sold to liquidators, and CEO Michael Foss confirmed that all stores would shut down by the end of August 2016. Subsequently, on June 30, 2016, Dick’s Sporting Goods acquired Sports Authority’s brand name and intellectual property after winning an auction.
The transition concluded on July 15, 2016, when Sports Authority’s online store ceased operations and began redirecting its customers to the Dick’s Sporting Goods website. The formal transfer of intellectual property to Dick’s Sporting Goods was finalized on July 21, 2016.
Final Thoughts
The story of Sports Authority is a cautionary tale of a retail giant that once dominated the sporting goods market but ultimately fell victim to various challenges. From its origins in the late 1980s to its rise as a market leader, the company expanded rapidly and became a household name. However, financial missteps, intense competition, and an inability to adapt to the evolving retail landscape led to its bankruptcy and closure.
Sports Authority’s decline highlights the importance of strategic financial management and the need for businesses to stay agile in response to market changes. While the company is no longer in operation, its former locations have been repurposed, demonstrating the resilience of the retail real estate market. The story serves as a reminder that even the most successful businesses must continuously innovate and adapt to survive in a competitive environment.
