14 September 2023 , 20:44
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Sports drink company BioSteel has filed for bankruptcy protection in the United States and Canada.
The hydration drink only became the official partner of the National Hockey League in 2022, and the Los Angeles Lakers switched to BioSteel from Gatorade in 2021. Patrick Mahomes is an investor in the company while it also sponsors some of the biggest sports stars across North America.
Connor McDavid, Connor Bedard, Jalen Ramsey, Ezekiel Elliott and Sophia Smith are just some of the athletes who have an active endorsement deal with the company. But it was announced Thursday that they're operating in a "negative cash flow" and have failed to make payments to their partners, and they've even deleted their page on Twitter.
"BioSteel made the decision to conserve cash and put the business into hibernation to preserve its assets," BioSteel said. "BioSteel sought creditor protection under the CCAA to conduct a court-supervised sale process for its business and property for the benefit of its stakeholders."
BioSteel missed a payment to the NFL on September 1, and they owe another $12million (£9.6m) between October and March of next year after becoming their official hydration partner. However, filings show that they do not intend to make any of these payments due to the situation.
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Court filings show that the company is currently losing $15m (£12.09m) per month, and they're set to let go almost all of their 190 employees. Only nine will remain, although it's not been explained what will happen with their roles.
BioSteel was set up in 2009 by entrepreneur John Celenza and former NHL player Mike Cammalleri, and it rose to success as they acquired deals with teams from the NHL, NBA and NFL shortly after forming. It was taken over by cannabis company Canopy Growth in 2019 as they acquired a 72 per cent stake for $50.7m (£40.85m).
The NHL could be looking for a new hydration partnerTheir plan was to use their products in more beverages across North America, with cannabis use legalised in Canada and quickly being accepted in more states across the United States. But the direction hasn't gone as planned, and Canopy has spent $366m on BioSteel since taking over.
Strangely enough, BioSteel's sales are booming as they made $24 million in sales in the first three months of 2023, which is more than double what they recorded in 2022. But it's the finances needed to support the business that aren't feasible.
The cost to the business to generate the $24 million in sales topped $90m, and extra expenses totalled $114m. Extra promotions and commercial advertising cost another $12m in the first quarter of 2023. Finding a new buyer is now key, and the company is under the Companies Creditors Arrangement Act after filing for it on Wednesday.