Free Essay

Sports Authority

In: Business and Management

Submitted By svelarde23
Words 1796
Pages 8
Sports Authority
MGMT 430
Professor Finger
Steven Velarde
December 2, 2015

Table of Contents Executive Summary……………………………………………………………………………………………………………….Pg. 3 Problem.…………………………………………………………………………………………………………………….………….Pg. 4 Background………………………………………………………………………………………………….……………………….Pg. 5 Discussion of Findings……………………………………………………………………………..……………………………Pg. 6-7 Conclusion and Recommendations………………………………………………………………………………………Pg. 8 References…………………………………………………………………………………………………………………………..Pg. 9

Executive Summary

Sports Authority is one of the largest sporting goods retailer in the United States and in certain of the world. The store is well known for supplying sporting apparel, sports equipment, footwear, and exercise equipment. The important key people for this company is CEO Michael Foss and CFO Thomas Hendrickson. Over the past decade, the retail store has been successful with their sales at the beginning and being able to sponsor a lot of programs and organizations. The problem they have now is their sales and revenue lack increasing (Sports Authority 2015).
This research will focus on the following questions: * How does the alliances with outside vendors contribute to the decision of closing? * Why did the company lack making some changes over the years knowing their sales were decreasing? * How can Sports Authority negotiate with their partners to avoid closure?
Resolutions the company needs to focus on, are the contact they already have. You would think with so much promoting their sales would increasing they should now renegotiate with the people they sponsor. Being a sponsor can also be a revenue to help the cause of all this debt. Also it sounds like changes need to be done in done head quarter because if they haven’t been increasing in sales someone hasn’t been doing their job right. Even though they are at high risk of the business going into closure they could do some changes to help save the company (Sport Authority SWOT).

Problem

Sports Authority has been known to have the most success with their variety of brands and sporting goods. They were also known for being one the largest sporting goods in United States in the 1990’s. Their success kept increasing and it seemed like sky was the limit for them. But that slowly came to a halt in the past few years now where they have seemed to fallen into a hole in financial needs. This financial problem has accumulative over the years and the company thought they could handle it but clearly it’s overwhelming the company. With all the other competitors they have now in the retail industry of sporting goods have become smarter than Sports Authority with how they make their sales. It has affected the industry with decreasing numbers in sales and revenues. Being one of the largest company have many cost and expenses and if numbers in revenue are low then covering the cost is a big issue. This issue had arose so much now that the company is in a large debt that now puts them in the possibly position of going out of business unless changes are made now to help save the incorporation (Isidore 2015). Background

Technically the sporting goods store has been around for quite a while now. It actually began back in 1928 as a small store by the name of Gart Sports that first opened. Then later on as the years went by the store evolved and got taken over by different owners and in the year of 1987 the retail store by the name Sports Authority came into the picture. The incorporation was founded in Lakes Mall in the city of Lauderdale Lakes, Florida. In Florida, that when they started to spread as an incorporation trying to become successful with the new name. With the several key founding executives they were able to follow the right path opening over a hundred stores over the next five years. But it was a great break through when in the years of 1991 was a memorable year because this was the year they were able to make a good amount of profit as an operation of sporting goods. As the years passed the incorporation was doing well in sales and revenue because of what they were selling. The company was able to get a mass variety of brands for sporting goods to sale and that brought the attention to everybody that shopped there. The retail store continued to bloom expanding their stores all across the United States and as of today they have over 450 store and over 14,500 employees under the incorporation. They have also be known for sponsoring many team organizations and professional teams. They are most know for the sponsorship of the Mile High Stadium in Colorado, home of the Denver Broncos professional football team (Sport Authority about Us 2015). Discussion of Findings The company is at a rough stage right now and things are needed to be change or else many people are about to get disappointed that such a strong incorporation has now lost everything. In the past years the company have a debt of over 300 million dollars accumulating as of today and now could be less than one years away from defaulting (Isldore 2015). Competition When Sports Authority was first introduced, the people were astonish of the variety and quality of products they brought to customers. So early years the company they were well known for customers to go to for any sporting goods needs. But over the years now new companies with the same business concept are now competing against Sports Authority. Sports Authority was still the power house at the beginning when the competition began but once the other companies started to settle in the company slowly started to feel the pressure. From the start these companies had new technology and fresh executive minds to put their own companies in the best position possible (Gustafsoon 2015). Sponsorship Sponsorship for this company is important because it gets their name out their and well know but the expensive of sponsorship has now taken a wrong turn. Sports Authority is well known for owning the corporate naming rights to Sports Authority Field at Mile High, a stadium in Denver Colorado, home of the National Football League team of the Denver Broncos. Having the naming rights to the field was expensive and if any logos or sign of the company need to be changed around the stadium the expense of it comes from the company. That is the biggest sponsorship they have besides all the other variety of sporting events either big or small that they sponsor. They haven’t realize that sponsorship cost money for them to just hand it out to help organizations or events with cost. It is good advertising having their logos everywhere in the event but if sales and revenues are lacking them they are sponsoring out money they don’t have especially with this large debt involved (Isidore 2015). Store Branches The company started off small when it first was introduced but when the stores started making millions of dollars in revenue the executive members thought it would great to expand. Their reasoning to expand what that if the amount of stores they had now made that much revenue they got excited from the number they would be expecting for opening up new stores which they. In the 1990’s and early 2000’s it was going great for Sports Authority and they were right the revenue did increased enormously. But once the competition of other stores started to take effect of the revenues and sales of the company slowly came to a halt. Now as a whole company they had more than 450 stores in over 41 states. As years went by competition kept putting on the pressure and the sales and revenues started decreasing very slowly. The expenses of keeping these stores running started to become an issue as well (Pringle 2014). Structure The executive members all listen to the CEO which at the time was Roy M. Cohen. He was in charge of all the decisions that led up to the large debt. He made poor decisions that are costly to company now putting them at risk of default. Analyst Michael Zuccaro wrote in an article that “At these operating levels, Sports Authority capital structure is unstainable over the longer term, and the risk of a default…is high.” The expenses they make are from the executive board so maybe the executive members are the ones that need to be changed for the benefit (Isidore 2015). Conclusion and Recommendations Sports Authority has been the most successful retail sporting goods store out there but in the past decade, they have made some poor decisions with expenses. The expenses where overwhelming them so quickly that sooner than they knew it put them in the risk of default. The risk was because of the competition, sponsorships, store branches, and the structure. They were the reasons mainly because they all had in common with dealing with expenses. These sales and revenues couldn’t keep up with the accumulation of the expenses. They are things that need to be changed and it starts with the executive board members. Recently in an article the CEO actually stepped down and was replaced with a more positive and fresh minded person by the name of Michael Foss believes they can resolve the issues and make it better and is believed that is something they need in the company to get out of the financial hole they are in (Murpy 2014). They need to negotiate the expenses they have and try to get them limited or cut off any sponsorships they have now until problems are fixed. Even though these problems and be hard negotiate maybe company’s or partnerships can find a neutral they work out because if Sport’s Authority does file for bankruptcy then many organizations and events are stuck without a loyal sponsorship. They also need to work up to the level of the competition because at one point this company was a power house in retail for sporting goods they just need to use the new methods of marketing to find the solutions of making sales. With these changes, the company can beat this financial deficit and pull through keeping Sports Authority one of the largest retail sporting goods on the market (Robbins 2009). References IsIdore, C. (2015, February 20). Sports Authority said to be at 'high' risk of default. Retrieved October 7,2015. Gustafsoon, K. (Ed.). (2015, July 21). Sports Authority's play to take on Dick's. Retrieved October 7, 2015. Murpy, K. (2014, February 7). Sports Authority's New CEO Outlines Past Issues, Plans For Future Success. Retrieved October 7, 2015. Pringle, S. (2014, March 26). Sports Authority attempts to make a comeback. Retrieved October 7, 2015. Robbins, S., & Judge, T. (2009). Organizational behavior (13th ed.). Upper Saddle River, N.J.: Pearson Prentice Hall. Sports Authority - About Us. Retrieved October 7, 2015. The Sports Authority, Inc. SWOT Analysis Library Database

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