Dive Brief:

• New York-based Modell’s Sporting Goods is backing off a potential deal with bankrupt rival Sports Authority that would have kept some stores operating under the Sports Authority brand, Bloomberg reports. Sources said no agreement on price could be reached.

• With Modell's the only known bidder that would have kept at least a few Sports Authority stores open, liquidation now looks like the most likely scenario facing the retailer.

• Bids for Sports Authority's assets and leases are due Wednesday. Bankruptcy auctions are scheduled for May 16.

Dive Insight:

Sports Authority landed in bankruptcy thanks to a few major self-inflicted wounds, including a huge debt load, failures to weather market fluctuations and an inability to compete online with the likes of Amazon, sporting goods rivals such as Dick’s and general merchandisers like Target.

Since filing for bankruptcy on March 1, Sports Authority has struggled to keep shelves stocked and give its stores some semblance of a chance to rebound as it jousted with lenders and vendors. While just last week Sports Authority attorney Robert Klyman reportedly insisted in court that "liquidation is not in our vocabulary,” Bloomberg notes that creditors who own the retailer’s $300 million term loan maturing in November 2017 are pushing for liquidation, "anticipating that lenders would receive a better recovery than what Modell’s was offering."

Sports Authority refuses to admit defeat. “We have received expressions of interest from a number of potential buyers,” the retailer reiterated in a statement to news outlets. “We are optimistic about the results of the M&A process, which runs through the end of May.”

Details of Sports Authority's struggles emerged earlier this year. News of missing payments to suppliers and a failure to make a $20 million interest payment soon followed, culminating in store closings and employee layoffs. 

Dick’s Sporting Goods could come away with as many as 180 new stores when Sports Authority auctions its leases and remaining assets next week, according to a forecast issued Monday by investment bank Canaccord Genuity. Canaccord says that if Dick's acquires the 80 Sports Authority stores that do not have competitors within a 10-to 25-mile radius, Dick's could gain $500 million in incremental sales.