Is The Sport Authority Bankruptcy Part Of A Larger, Darker Trend?
With Sports Authority filing bankruptcy on Wednesday—and other retailers struggling along with it—it's hard not to notice a trend surfacing.
In 2006, the sporting goods retailer was purchased for $1.3B by LA-based private equity firm Leonard Green & Partners, one of a large wave of companies taken private just before the economic downturn of 2008.
And the retailer isn't the only company out of that wave now struggling, the New York Times reports.
The biggest deal to fail was the $44.3B buyout of Dallas-based TXU Corp by the Texas Pacific Group, Kohlberg Kravis Roberts and Goldman Sachs in 2007.
The company—now Energy Future Holdings—filed for bankruptcy in 2014 with roughly $50B in debt. Similarly, Apollo Global Management and TPG Capital dropped $27.4B to acquire Harrah's Entertainment, now named Caesar's Entertainment.
Caesar's had an IPO in 2012, but has since been embroiled in a courtroom battle with bondholders who claim the company guaranteed debt issued by its bankrupt operating unit.
And then there's Hilton Hotels, which was acquired by Blackstone for $26B in 2007. Since its 2013 IPO, shares have dropped 20%. Now Hilton plans to spin off hotels into a REIT, a strategy that's become so common that Congress is looking to put a clamp on it. Meanwhile, Sports Authority will close or sell 140 stores in the next three months. [NYT]