Grand Slam Track declares bankruptcy
Michael Johnson's league has filed for Chapter 11 Bankruptcy in the U.S. while still owing athletes and vendors an estimated US$19 million
After a rocky inaugural season, Grand Slam Track (GST) has officially filed for bankruptcy. On Thursday, league founder Michael Johnson filed for relief on Thursday under Chapter 11 of the U.S. Bankruptcy Code, also known as “reorganization” bankruptcy, in the U.S. Bankruptcy Court for the District of Delaware.
The news comes as no surprise after GST encountered countless financial hurdles throughout the year; an estimated US$19 million is still owed to athletes and vendors.
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The Chapter 11 filing will allow GST to continue operating with reorganized finances rather than shutting down completely; GST will also be protected from lawsuits and permitted to borrow new money with court approval. Per GST’s press release and proceedings information, the process is intended to “stabilize [GST’s] finances, implement a more efficient cost and operating model and reposition the league for continued operation and long-term, sustainable growth.”
In a statement GST’s Instagram, Johnson refers to the move as a “court-supervised reorganization.” He believes GST can return for future seasons and see long-term success following a “rightsized financial profile.”
“GST was founded to create a professional platform that reflects the talent and dedication of this sport’s athletes,” Johnson’s statement reads. “While GST has faced significant challenges that have caused frustrations for many–myself included–I refuse to give up on the mission of GST and the future we are building together.”
Johnson’s filing states that the business has an estimated 200 to 999 creditors, holds up to US$50,000 in assets and carries between US$10 million and $50 million in liabilities. Athletes, classified as “unsecured creditors,” are likely to be among the last in line to be paid through the court process. (Creditors such as registered businesses or banks are considered secured creditors.)
Grand Slam Track receives emergency funding to pay half of what athletes are owed
A financial disaster
The first hint at GST’s financial issues came in June, when the league abruptly cancelled the final meet of its inaugural season, which had been set for L.A. Concern grew the following week when several athletes said they still hadn’t been paid, despite the first Slam having taken place 11 weeks earlier. In July, reports emerged that GST also owed nearly US$80,000 in rental fees to the City of Miramar for its Miami Slam event, which took place in early May.
In late July, Johnson acknowledged that just days after the league’s opening Slam in Jamaica in April, a major investor had backed out of a deal worth tens of millions of dollars, creating a “major, major cash flow issue.” Until then, Johnson had denied financial troubles.
The league secured eight figures of emergency funding in October, which it used to pay athletes half of the $11 million they were owed. GST offered vendors only 50 per cent of the $8 million it owed in an effort to avoid bankruptcy. World Athletics, reportedly owed nearly US$40,000 for licensing fees, rejected the proposal and insisted that athletes be prioritized.
Information about GST’s Chapter 11 proceeding can be found here.
