SportsClub Files for Chapter 11; Efforts to Add Brands Stall

All American SportsClub, a California warehouse retailer of sporting goods that has been struggling to obtain name-brand merchandise since it opened in 1986, sought protection from creditors Tuesday while it seeks to reorganize under federal bankruptcy laws.

SportsClub Inc. of Long Beach, which does business as All American SportsClub in eight retail stores here and in Northern California, listed about $36 million of assets and $24 million of liabilities in its Chapter 11 filing in U.S. Bankruptcy Court in Los Angeles.

Company representatives said the firm will continue normal operations and expects to reorganize in about four months. It said customers’ membership rights will not be affected. The firm has about 600 employees.

Robert J. McNulty, SportsClub chairman and chief executive, founded the company on the same pattern on which he built the successful Home Club retail chain of home improvement warehouses: discount prices and no-frills warehouse locations. He took Home Club public before selling it for $151 million in 1986.

It was not long after opening All American SportsClub stores that the firm was battling in court with a number of national manufacturers of sports equipment, alleging that they would not sell their products to SportsClub because it was not one of their authorized dealers.

McNulty said in a November, 1986, interview that he was able to obtain certain name brands outside regular channels through brokers and so-called diverters.

In announcing the filing, the firm said it has “suffered recently from the refusal of several national branded sporting goods manufacturers to sell to it, possibly because of the company’s competitive pricing structure.”

Barry S. Glaser, the firm’s special bankruptcy counsel, said the company’s problems in buying merchandise would be a major issue in the bankruptcy court proceeding.

That some national manufacturers sold goods directly to SportsClub is indicated by the fact they are listed in the Chapter 11 filing as among its unsecured creditors. They include: Brooks Shoes Inc., owed $410,000; Wilson Sporting Goods, owed $331,000; Asics Tiger Co., owed $193,000; Jansport, owed $151,000, and Huffy Corp., owed $113,000.

Counterfeiting Alleged

The Chapter 11 filing lists pending lawsuits, including SportsClub’s Nov. 17, 1986, suit in U.S. District Court in Los Angeles alleging antitrust violations against some of its retail competitors as well as national manufacturers.

The defendants, which including New Balance Athletic Shoe Inc., denied the suit’s allegations.

Also pending in the same court is a suit earlier this year by Reebok International Ltd.

“Reebok has alleged that the company is selling counterfeit Reebok shoes,” the SportsClub bankruptcy papers said. “The company denies the shoes are counterfeit and the company has obtained a certificate of authenticity for the shoes from the wholesaler.”

The company’s first meeting of creditors is expected in about two weeks.