The Sports Authority is Ready for Coast-to-Coast Growth

With the biggest merger in sports retailing history under his belt, TSA vice chairman and CEO Doug Morton is determined to succeed where others, most notably Herman's World of Sports, have failed, and build the country's first true coast-to-coast, full-line sports chain.

Morton and his executive team are already on the move. They plan to add regional buying offices in New York, Florida and California, and have secured a four-year, $600 million revolving line of credit, the bulk of which will be used to upgrade store designs and fixtures. "We have a lot of dry powder," says Morton of his huge line of credit, "and we plan to invest it."

Approximately 120 of the chain's 389 stores are already slated for an upgrade, Morton notes, and TSA will open 11 new stores between now and the end of the year. There are also plans to open another 20 doors in 2004. Morton expects to close about 30 stores in markets where the merged entities now have too many stores, and says the biggest net gain of stores will occur in California and in the Northeast.

Currently, the chain is operating stores under four nameplates: The Sports Authority, Gart Sports, Oshman's and Sport Mart. The store upgrade plan calls for The Sports Authority name to be phased in across all stores. Initially, all the stores will be subtitled "The Sports Authority," and eventually the old store names will be removed and The Sports Authority will become the name of all stores across the country. And while the TSA name will eventually be applied to all stores, Morton is moving to ensure stores in various regions can adapt to local trends and regional differences.

"By having people on the ground in California, New York and Florida, we'll be able to ensure that our merchandise assortments are in tune with those markets," Morton says. "We'll be in touch with local trends and we'll react to the successes and failures of local sports teams."

Several years ago, Morton was in New York in October when the Yankees won the World Series. The next day he picked up the paper and saw an ad from Modell's promoting the availability of Yankee World Championship hats and shirts, while a TSA ad in the same paper promoted sneakers and fitness equipment. "That won't happen with this new structure in place," Morton asserts, noting that Sport Mart and Gart Sports stores won high grades from the licensed sports industry when the Angels won the World Series last year, and when the Colorado Avalanche won the Stanley Cup in 2001.

Morton and TSA president Elliott Kerbis will be supported in TSA's expansion and renovation efforts by more than 140 executives who relocated to the new Englewood, CO, headquarters from TSA's former home in Lauderdale Lakes, FL. In fact, recounts Morton, "[The relocation effort] was the biggest surprise of the merger and our biggest home run thus far." The 142 execs who relocated include Kerbis, two SVPs of finance, as well as numerous buyers and merchandisers. "Getting all those people to come to Colorado gives us great intellectual knowledge and it removes a lot of the risk of the merger. These people are good and they have a handle on everything that has gone on for a number of years," he says.

The major influx of talent from the "old" TSA also fits in with Morton's goal of creating a new culture after acquisitions?a strategy that won high marks after Gart Sports purchased Sport Mart in 1998 and Oshman's in 2001.

Morton's desire to merge cultures may well stem from his own dissatisfaction over the way Herman's handled the acquisition of Sunset Sports some 15 years ago, when he was a senior exec there. Sunset was a Western regional power with great stores that carried everything from blue jeans to hunting and fishing gear. After the acquisition, Herman's re-did the stores using a merchandising formula that had worked on the East Coast, but proved to be a flop out West. Herman's eventually developed financial problems and filed for Chapter 11 bankruptcy.

One potential clash of TSA and Gart cultures could occur in the area of vendor relations. While most vendors give the "old" Gart team high marks, they say the "old" TSA team was very tough. Ever the diplomat, Morton says the new structure will fall "somewhere in the middle." He adds, "We believe in strong vendor relationships and we'll work to develop and maintain them."

Morton admits that working out the details of the merger was not always easy. "Parties from both companies are passionate about the business and both wanted to be great companies," he says. "The cultural differences came about because we took different paths to that goal but ultimately, we both wanted the same thing."

Tanned and relaxed after a recent weekend in California with his family, and 45 pounds lighter from the Atkins diet, Morton is convinced that the "new" TSA is a better, stronger organization because it includes employees from all the stores it has acquired.

"It's not a question of who was buying better," he says. "It's a question of what works best." ?MARK SULLIVAN