Bauer Bankruptcy Case Could Screw NHL Stars on Endorsement Deals

One of the most popular and historic brand names in hockey may soon disappear, and vanishing along with it could be millions of dollars in endorsement money owed to some of the NHL's biggest stars.

Bauer hockey's parent company, Performance Sports Group Ltd., officially filed for bankruptcy protection in Canada and the United States on Monday. The company, which was once owned by Nike, is reportedly seeking protection from its debts and creditors under Chapter 11 of the US bankruptcy code as well as the Companies' Creditors Arrangement Act—the Canadian equivalent.

Several big-name NHL stars—including Alex Ovechkin, Jonathan Toews, Steven Stamkos, and Auston Matthews, among others—could be looking to replace their secondary income streams as they may soon lose equipment and apparel endorsements with Bauer, multiple outlets are reporting. Bauer's list of NHL clients is extensive.

"A bankruptcy judge can simply cancel those endorsement contracts and list the players as creditors, as easy as that," a source close to the situation told Rick Westhead of TSN. "Bauer may simply not be in a position to be able to afford to pay those contracts."

Westhead noted that Bauer has asked the courts for permission to continue paying salaries and bonuses of its employees on both sides of the Canadian-American border. And Performance, according to Reuters, said it expected its operations to continue even during the bankruptcy process, thanks to a $386 million debtor-in-possession financing provided by existing lenders and investors Sagard Capital and Fairfax Financial, which are seeking to make a joint bid on the company.

While in protection, people owed money by the company cannot collect on debts owed by seizing assets without a court order. This would mean athletes under endorsement deals would not be able to collect the money they're owed despite being under contract, in some cases for multiple years. In Monday's filings, PSG reported assets of between $500 million and $1 billion, with liabilities in the same range.

Three of Bauer's biggest names, Ovechkin, Toews, and Patrick Kane, reportedly earn between $300,000-$500,000 per year to represent Bauer and its brand, while younger, less-established players like Auston Matthews and Jack Eichel reportedly earn in the neighborhood of $200,000 per year from the company.

The situation with PSG—which also owns Easton and makes baseball equipment—is just the latest in what has been a tumultuous year across the entire sports retail industry. Nike dropped out of the Golf equipment business in August while popular Canadian retailer Golf Town went bankrupt and was subsequently sold in early September.