BioSteel Sports Nutrition Inc. recently filed for creditor protection as they face financial challenges, despite years of high-profile sponsorship deals with sports leagues, teams, and athletes. A newly released list of creditors reveals that BioSteel owes millions of dollars to some of the biggest names in pro sports.
Founded in 2009, BioSteel has grown largely on the back of partnerships within the sports world. Their electrolyte-infused sports drinks have become ubiquitous thanks to endorsement deals with the NHL, MLB, NBA, NFL, US Soccer, and hundreds of individual athletes. Patrick Mahomes, Connor McDavid, Luka Dončić and Sidney Crosby are just a few of their high-profile athlete partners.
However, a preliminary list of creditors filed after BioSteel obtained creditor protection last week indicates significant financial issues bubbling under the surface. In total, BioSteel owes more than $439 million to various businesses and partners. But most eye-opening are the millions owed directly to major pro sports organizations.
NHL Enterprises Tops List of Creditors
The NHL tops the list with BioSteel owing their merchandising and licensing arm NHL Enterprises $8.7 million. This massive debt likely stems from the NHL’s reported 7-year partnership with BioSteel signed in 2018, making it the official sports drink of the hockey league.
The NBA’s premier franchise, the Los Angeles Lakers, are owed $2.5 million by the struggling nutritional brand. Eastern conference contenders Miami Heat are short nearly $1 million from BioSteel. And recent NBA finalists, the Brooklyn Nets and Philadelphia 76ers, are owed $367,000 and $297,000 respectively.
On the soccer front, the US Soccer Federation has $676,000 in outstanding debts with BioSteel. USA Hockey is short $197,000 in payments. And the NHL’s Carolina Hurricanes are looking for $96,000 still owed to the team.
Even Micheal Cammalleri, former NHL player and BioSteel’s co-founder, is still waiting on $12,000 compensation from the company he helped build over a decade ago.
BioSteel’s Buying Spree Leads to Profitability Issues
In 2019, Canadian cannabis producer Canopy Growth Corp. acquired a majority share in BioSteel for $221 million. The goal was to diversify Canopy Growth’s portfolio beyond simply cannabis products.
However, as profits proved elusive, Canopy has since looked to sell off BioSteel. The company confirmed they are in talks with potential buyers for the sports drink maker they bought just a few years back.
Earlier this year, Canopy’s CEO cited ongoing profitability challenges with BioSteel as a factor in deciding to sell. It seems BioSteel’s debts owed to major sports partners detailed above provide more context on the monetary struggles they face behind the scenes.
Despite closing major deals with leagues like the NHL, NBA, and MLB, the company is struggling to monetize those big name sponsorships into actual profits. The large sums owed to creditors indicate BioSteel has been spending heavily on athlete and league partnerships while seeing lower than expected returns so far.
This is a common tale when niche brands experience rapid expansion. BioSteel aggressively pursued deals with major sports names but couldn’t match that with profitable growth.
What Led to BioSteel’s Cash Crunch?
BioSteel’s story illustrates the potential pitfalls when a small sports nutrition brand balloons through major publicity partnerships but the dollars don’t follow. Here are some of the likely contributing factors to BioSteel’s current cash crunch:
Overextension on Sponsorship Deals Too Early – Inking so many deals with huge sports entities came with big financial commitments that a still small company may have struggled to truly afford.
Failure to Convert Deals into Profits – While the brand gained visibility through partnerships, those didn’t automatically equate to surging sales and profits to cover increased costs.
Possible Mismanagement of Finances – Sudden major cash influxes require oversight to align expansion plans with fiscal responsibility. BioSteel may have spent too freely.
Economic Downturn Impacting Sales – Inflation, supply chain woes, and consumers’ diminished discretionary spending ability have broadly hurt brands especially in discretionary sectors like sports nutrition.
Regardless of the reasons, it’s now clear BioSteel’s unchecked growth and optimistic partnerships have created a sizable gap between income and debts now owed to major creditors.
Uncertain Future for BioSteel After Creditor Protection Filing
BioSteel and Canopy Growth hope the planned sale of the company will allow them to pay back creditors and turn things around financially. But the company’s future remains clouded.
Their sports drink still maintains strong brand equity and visibility through all those sponsorship deals. This could attract serious buyers who see unrealized potential if profits can be improved.
However, for any potential new owner, making BioSteel profitable likely means scaling back those pricey sports partnerships and associated costs significantly. The alternative is to keep status quo and risk spiraling further into debt.