Dick's set to win auction for Sports Authority brand: Sources

Sports Authority Liquidation Sales Start Today

June 30 (Reuters) - Dick's Sporting Goods Inc, the largest U.S. sporting goods retailer, is set to win the auction for the intellectual property of bankrupt competitor Sports Authority with a bid of $15 million, according to people familiar with the matter.

Dick's shares jumped as much as 6 percent after Reuters first reported the development, which ensures it will no longer be competing against the Sports Authority brand. Dick's shares added 2.7 percent to $44.46 in afternoon trading in New York.

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Dick's and Sports Authority still have to finalize paper work on the deal, and a U.S. bankruptcy court judge has to approve it, two sources said on Thursday.

The intellectual property of Sports Authority includes its e-commerce website, SportsAuthority.com, a loyalty program with 28.5 million members, and a list consisting of 114 million customer files, according to an advertisement for the intellectual property auction.

Sports Direct International Plc submitted a bid of $13 million for the intellectual property, one source said. The British firm would be a back-up bidder if Dick's is unable to close the deal, though that is not expected, the source added.

Dick's also plans to take over the leases for 31 Sports Authority stores for an additional $8 million, said another person familiar with the auction.

RELATED: Sports Authority stores around the country

Sports Authority stores around the country
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Sports Authority stores around the country
DENVER, CO - APRIL 26: Customers come and go from the Sports Authority flagship 'Sports Castle' at 1000 Broadway in Denver on Tuesday, April 26, 2016. Sports Authority has abandoned hope of reorganizing and exiting bankruptcy and instead will count on buyers to save parts of its sprawling retail chain, company lawyer Robert Klyman told a judge Tuesday.(Photo by Kathryn Scott Osler/The Denver Post via Getty Images)
A Sports Authority store is shown in Encinitas, California on March 2, 2016. Sports Authority Inc. said it had filed for Chapter 11 bankruptcy protection and hired liquidators to begin closing up to 200 of its 463 locations. REUTERS/Mike Blake
MIAMI, FL - MARCH 02: A Sports Authority store is seen as the company files for Chapter 11 bankrupty on March 2, 2016 in Miami, Florida. The chain of stores owned by private equity firm Leonard Green & Partners will seek to sell or close about 140 stores. (Photo by Joe Raedle/Getty Images)
GREENFIELD, WI - NOVEMBER 28: Shoppers wait in temperatures in the mid teens as they wait to get their holiday shopping season going at the annual Black Friday sales event at the Sports authority store November 28, 2014 in Greenfield, Wisconsin. (Photo by Darren Hauck/Getty Images)
A pedestrian walks past a Sports Authority Inc. store in New York, U.S., on Saturday, Feb. 6, 2016. Sports Authority, once the biggest sporting-goods chain in the U.S., is preparing to file for bankruptcy. Photographer: John Taggart/Bloomberg via Getty Images
Retail sign. Sports Authority store in Lakewood, California.
SKISALES01-- Tents a set up, Wednesday Sept. 01, 2010, for people waiting in line to be the first shoppers inside for Sports Authority's Snigrab Labor Day weekend ski and snowboard sales, at Sports Authority's store on Broadway Ave. in Denver. RJ Sangosti/ The Denver Post (Photo By RJ Sangosti/The Denver Post via Getty Images)
NILES, IL - JANUARY 24: A sales associate walks past a Sports Authority sign near an athletic-shoe display at a Sports Authority store January 24, 2006 in Niles, Illinois. Sports Authority has announced that it has reportedly entered into an agreement to be acquired by a group of investors organized by Green Equity Investors IV, L.P. Englewood, Colorado-based Sports Authority is reported to be one of the country's largest sporting goods stores with about 398 retailers in 45 states under various store names. (Photo by Tim Boyle/Getty Images)
UNITED STATES - DECEMBER 20: Chicago Bears merchandise is on display at a Sports Authority store in Chicago, Illinois on Tuesday, December 20, 2005. The Chicago Bears' unexpected run at the National Football League playoffs with a division-leading 9-4 record, including the longest winning streak since the team's last Super Bowl title in 1985 -- 8 games -- is boosting business for sports bars and team-merchandise sellers. (Photo by Joe Tabacca/Bloomberg via Getty Images)
Staff Photo by John Ewing, Wed, Jan 30, 2002: New England Patriots merchandise has been a big seller at the Sports Authority store at the Maine Mall as fans look forward to this weekends Super Bowl game. (Photo by John Ewing/Portland Press Herald via Getty Images)

Other big box retailers scooped up Sports Authority leases. Best Buy Co Inc took a single location, one source said. Target Corp said it is looking at two locations in California.

The naming rights to a football stadium in Denver, Colorado, home of the National Football League's Denver Broncos, are still up for grabs, one of the people said.

The sources asked not to be identified because the outcome of the auction is not yet public. Dick's, Sports Authority, Sports Direct and Best Buy did not immediately respond to requests for comment.

Sports Authority, with 464 stores across the United States, had been a formidable competitor to Dick's. But the retailer struggled with a heavy debt load and competition from online giant Amazon.com Inc, as well as retailer Wal Mart Stores Inc.

Dick's could create an off-price chain under the Sports Authority brand, said Matt Powell, a sports industry analyst at the NPD Group. Discount is a growing sector in retail, he said.

Sports Authority held a bankruptcy auction for its assets on Wednesday, and the process wrapped up early Thursday morning, the people said.

It filed for bankruptcy in March. (Reporting by Jessica DiNapoli in New York; Additional reporting by Tom Hals in Wilmington, Del.; Editing by Jeffrey Benkoe)

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