Grand Slam Track Seeks Emergency Funding From Key Creditor Amid $31 Million Debt Crisis

The troubled track and field startup, Grand Slam Track, has disclosed debts exceeding $31 million and warned it could collapse "within weeks" without an emergency high-interest loan from one of its primary backers.

Founded by Olympic champion Michael Johnson, the league held three events this spring, attracting top athletes with promises of substantial appearance fees and a total prize pool of $12.6 million.

However, after cancelling its fourth meet in July, Michael Johnson revealed that a major investor had backed out of a deal, creating a "major, major cash flow issue." This contradicted earlier statements that the league had secured over $30 million in funding.

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The league narrowly avoided collapse earlier this fall when existing investors provided emergency financing. This allowed Grand Slam Track to pay athletes approximately half of what they were owed.

However, a similar offer to vendors was rejected by some, leading to a Chapter 11 bankruptcy filing on December 11, a move aimed at restructuring rather than complete liquidation.

Recent bankruptcy filings paint a grim picture of the league's financial health. According to the Front Office Sports, Grand Slam Track is now seeking court approval for additional funding from Winners Alliance, an investor that has become its financial lifeline.

While such a move is a standard procedure in bankruptcy cases, the documents have brought to light previously undisclosed details about the company's precarious finances.

One filing shows the company has only about $143,000 in cash, all of which is designated as collateral owed to Winners Alliance, a secured creditor.

Winners Alliance, the for-profit arm of the Professional Tennis Players Association chaired by billionaire Bill Ackman, led the league's initial funding round and has been its largest creditor.

According to the filings, Grand Slam Track's total liabilities amount to approximately $31.4 million. This includes about $11.4 million owed to Winners Alliance ($5.3 million secured, $6.1 million unsecured), $7 million to athletes, and $13 million to various vendors.

To navigate the Chapter 11 process, companies often secure fresh loans, known as debtor-in-possession (DIP) financing. These loans are typically provided by existing secured creditors and come with priority repayment status and higher interest rates.

After approaching 11 different entities, Grand Slam Track reported that only Winners Alliance agreed to provide a DIP loan.

"In many cases, it makes sense that the pre-petition secured creditor is at least the first option, if not the only option, to lend more money to the debtor," explained Jimmy Zack, a bankruptcy attorney at Ballard Spahr, as quoted by Front Office Sports.

Under the proposed plan, Winners Alliance would provide $2.9 million in new financing at a 14.5% annual interest rate.

This loan would be disbursed in two stages: an initial $1.1 million, followed by an additional $1.8 million upon final court approval.

The proposal also includes a "roll-up" provision, which would convert a portion of Winners Alliance's existing secured debt into new, higher-priority DIP debt.

This arrangement ensures that if and when Grand Slam Track can repay its creditors, the new high-interest loans from Winners Alliance will be paid first.

Any remaining pre-petition secured debts would follow, leaving unsecured creditors like athletes and vendors at the back of the line.

"The general theory would be that all creditors would be best served by the debtor emerging from bankruptcy reorganised," Zack noted.

"If it doesn’t have the cash right now to be able to get there, then it needs to borrow some cash post-petition. Otherwise... there probably wouldn’t be a viable bankruptcy proceeding."

The financing proposal is scheduled for a hearing in a Delaware bankruptcy court.