Daniel Tollar
Mr. Reuter
A1 Economics
May 8, 2016
Sports Authority Bankrupt?
Recently, Sports Authority has filed for chapter 11 bankruptcy. Since they’re $1.1 billion in debt, it looks like this is a smart move. Sports Authority have decided to sell all of their assets as they’re auctioning off most of them on May 16, 2016. They will be closing 140 out of 450 stores around the country and will be closing two distribution centers. But, since Forbes is reporting that “Sports Authority officials have notified the United States Bankruptcy Court that the company would be unable to reorganize — and would instead pursue a sale — meaning all 450 Sports Authority stores nationwide will close.” According to the retailer, they posted a net loss of $156.6 million with total revenue of $2.6 billion in the fiscal year ended Jan. 30. Obviously, in this case, Sports Authority was yet to make a profit since the early 2000’s.
Over the last decades, there have been newer, more appealing competitors. Such as: Dick’s Sporting Goods, Dunham’s Sporting Goods, Gander Mountain, Burghardt Sporting Goods, etc. Since this is the case, the demand for sporting goods will be increased since Sports Authority is closing their stores and their customers will have to go elsewhere. With all of Sports Authority’s employee’s left unemployed, this results in future outlooks for future businesses that are hiring. Dunham’s Sporting Goods, Gander Mountain, Burghardt Sporting Goods, etc., will all have an increase in revenue this next year due to the future loss of their biggest competitor in a business perspective.
The question is out there whether or not the 2008 recession sparked this downfall of Sports Authority. With the recent competition that Sports Authority have been brought up against, it also makes people think that they drove them out of business. According to a business article on The Denver Post, the main reason Sports Authority had developed this huge debt and their bankruptcy is because the retailer’s failure to adapt to changing consumers taste.
Works Cited:
Forbes. Forbes Magazine, n.d. Web. 15 May 2016.
"Is Sports Authority Closing All Its Stores?" Florida Today. N.p., n.d. Web. 10 May 2016
"Why Sports Authority Is Headed for Bankruptcy." - The Denver Post. N.p., n.d. Web. 15 May 2016.
I haven't shopped at Sports Authority for the longest time so I could see why a lot of them are going to go out of business. Actually, I don't know anyone that goes there anymore. My family only goes to Burghardt's or Dicks sporting goods, and I'm pretty sure that's where a lot of my friends go as well. So overall it will not have a major effect on me that they are closing down.
ReplyDeleteThere's so many other stores now that carry the same things as Sports Authority, so I can see why it's hard for them to keep up in today's' society. If I remember correctly, Sports Authority has higher prices for goods compared to other sporting places around. I feel as though there will be little impact on people because of the 140 shut downs because there's so many other sporting places that people are able to go to. They all pretty much carry the same types of goods so it's really just a matter of price to decide where most people would go.
ReplyDelete-Kristie
In the long run, the closing of Sports Authority in most stores wouldn't necessarily effect me. However, it would be kind of sad to see them go. Ever since I was little, I would always go to Sports Authority to buy clothing, sports gear, etc. Today though, I do have several other places that I could go to instead of Sports Authority which is why it wouldn't have too much of an effect on me. Until now, I never knew that they were going out of business. I was unaware of the fact that they were $1.1 billion dollars in debt. Good article.
ReplyDeleteWith Sports Authority closing many of its doors, many of the products will have to go on sale in order to increase consumer interest/willingness to buy. Personally, I was excited to hear about them closing their doors because that meant lower prices on clothes or shoes or whatever is in the store. For instance, OfficeMax on Capital just recently began closing their doors and the sales shot through the roof because of all of the discounts offered. I went into the store looking for a new phone case there because I knew that the prices would be low, and, sure enough, they were. I ended up getting what was originally a $40 phone case for only $8. With the closing of Sports Authority’s doors, I’m hoping for the same kind of deals, as any customer would want, because that means that I get more for my dollar.
ReplyDeleteFinding out that Sports Authority is going bankrupt and closing 140 stores nation wide was quite shocking to me because they seemed to be doing well with all their commercials and such. On the other hand it also make sense a little bit because other sporting goods store meet consumers demands better by lowering prices or putting items on sale, where every time I went to Sports Authority they had their inventory at full prices. There was a good point in the blog post that asked if the 2008 recession could have possibly caused the downfall of this company and I want to say yes to this question because customers found cheaper options for their sporting good needs and never went back. All in all the closing of Sports Authority's around the country really won't affect me because I haven't shopped there recently but it will affect some of their more frequent consumers and partners.
ReplyDeleteI didn't know that Sport Authority was doing that bad I honesty thought it was the complete opposite. With them closing all there store they are going to have to somehow make people still come to them with less stores open. I think they are going to have to have a lot more sales and lower prices so that more people come to make up for the other store. They also are going to have to make up for all the customers that they are going to lose, to other stores now because of the stores that have closed. Therefore I think it is going to be a bumpy road ahead for Sports Authority. Other than that good blog post.
ReplyDeleteI didn't know that Sport Authority was doing that bad I honesty thought it was the complete opposite. With them closing all there store they are going to have to somehow make people still come to them with less stores open. I think they are going to have to have a lot more sales and lower prices so that more people come to make up for the other store. They also are going to have to make up for all the customers that they are going to lose, to other stores now because of the stores that have closed. Therefore I think it is going to be a bumpy road ahead for Sports Authority. Other than that good blog post.
ReplyDeleteI am not surprised at all by the fact that Sport’s Authority is bankrupt, many other sporting goods stores are coming in and sweeping the consumers with a more enticing marketing campaign. Now that a lot of the shopping nowadays is done online as well I feel like the market for Sports Authority, in my opinion who doesn’t have a good website, will begin to fall further and further down the whole before all the stores are closed. However, on the bright side, the stores will have a good number of items for sale way below market standards that may be good finds for thrifty shoppers.
ReplyDeleteI was unaware that sports authority was closing. You named a lot of the competition, and all the other big competitors have much lower prices than Sports Authority. Maybe the consumers have stopped spending more their because they think equilibrium is closer to the other competitors. Closing their doors might raise the prices of other sports stores since Sports Authority is one of the most expensive, and with less competition, stores can raise the prices of sporting goods and ultimately make a greater profit. The closing of Sports Authority doesn’t really affect me, but it is definitely good for other sports stores.
ReplyDeleteI had heard about the closing of Sports Authority recently and was mildly surprised. You presented a lot of possible reasons in your post but it would have been nice to have a clear explanation. At the end you stated that most people believe the bankruptcy is the result of the business's inability to adapt to changing consumer cases but this seems incorrect without further elaboration. What do other sporting goods stores have that Sports Authority doesn't offer? You also stated that the closing would increase demand for sporting goods which isn't the case. Demand for a specific brand of sporting goods, however, will increase as consumers go elsewhere.
ReplyDeleteI find it crazy that a franchise as big as sports authority is going out of business. I never would've imagine that someplace that I shop- and that tends to be slightly overpriced- would be filing for bankruptcy. I do not think that it is the aggregate demand that is decreasing their revenue so I wonder if you could've found out what was going into this decision. I'm very sad that it is going out of business and it looks like I will have to start taking my business elsewhere now.
ReplyDeleteGreat topic to write about as this is huge news. Most people are unaware of this event and now can take advantage of the huge sales. I liked the way you related this to the recession and how that initial impact may have played a part in this falling out. It was also eye opening to see how much debt that had created for themselves and that they have had deficits since the early 2000's.
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