Sports Authority Closes Its Doors
By Griffin Jende
As of recently Sports Authority, a major nationwide sporting goods store, has officially declared chapter 11 bankruptcy after racking up over $1.1 billion in debt. This will have both a profound effect on the sporting goods marketplace and a smaller effect on the total economy. Although the Obama administration refuses to acknowledge that the economy is receding, Sports Authority’s closing along with major store closings of 12 other major retail stores such as Sears, Macy's, Wal-Mart and others suggests that it may be still on the decline. Even though Sport’s Authority is the only of the major retailers closing completely it may simply be the first.
As a part of their bankruptcy they expected to release about 4,000 of their 15,000 current employees. These 4,000 people will contribute to cyclical unemployment which is further evidence of a recession and although it may not directly change the unemployment rate too substantially we could see this rate increase as other major retailers contribute with their own downsizings. The unemployment increase could also have an increase in the MPS or marginal propensity to save. As workers are laid off they would not do as much spending increasing MPS and decreasing MPC which could lead to a further recession. If the cycle of less spending and more layoffs starts it could become a major issue and may need government intervention. 
Another issue facing the economy as a result of Sport Authority’s latest move is the effect on the real estate market. This industry will also take a major hit as Sport’s Authority a once staple tennet in many buildings will be emptying over 140 stores nationwide.
This hurts the real estate market as there are few large retailers willing to fill the huge space that the stores would previously occupy. This not only reduces revenue from the single store but makes other spaces less appealing due to the empty space lowering the value of the overall mall or property area.
All in all Sports Authority’s failure to respond to changing consumer habits and a decline in the economy led to its demise. All we can hope is that other stores will heed the warning of Sports Authority and change their consumer habits before we enter into this cycle.
Works Cited:
Sports Authority Files for Chapter 11 Bankruptcy, Debts Exceed $1.1 Billion. The Denver Post. N.p., 2016. Web. 02 June 2016.
Under Armour Said Late Tuesday That It Was Lowering Its Sales, Profit Outlook For The Year Due To The Bankruptcy, and Liquidation Of Sports Authority. Sports Authority Closing Hurts Sneaker Sales.CNNMoney. Cable News Network, n.d. Web. 02 June 2016.
Economic Recovery? 13 Of The Biggest Retailers In America Are Closing Down Stores. Zero Hedge. N.p., n.d. Web. 02 June 2016.
I find it to be very interesting that many of the large retail store are closing stores. Using some common sense, if hundreds of stores are being closed and there's businesses that are closing that's been around for over 100 years (Sports Authority) really shows the strains that are within the United States economy. This is interesting because as mentioned in the article, the Obama Administration will not admit to a poor economy. The demand for items hasn't changed but rather the physical store location has decreased in demand when you can shop from the comfort of your own home . Anyways, good job on this article.
ReplyDeleteAs the majority of Americans are supportive of a free market, it's a natural occurrence for businesses to die out when something that is better takes the demand away from that company. Many of other companies are on the rise, and this system is going to continue this way until the end of capitalism. No system is perfect, but depending on the majority's preferences, it will remain the way it is now.
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