Fairfax Financial and CI Investments have agreed to buy retailer Golf Town from the chain's U.S. parent, which is seeking protection from its creditors.

The deal is scheduled to close on Oct. 31. Fairfax and CI already own 40 per cent of the debt of Golfsmith International — Golf Town's U.S. parent.

Golf Town currently has 55 locations in Canada, but that number is expected to shrink as all Golf Town locations not included in Wednesday's deal will be closed. It's not immediately clear how many Golf Town locations the two Canadian investment firms are buying.

Ontario-based pension fund OMERS bought the then publicly traded Golf Town in 2007 for $240 million, and then added U.S.-based Golfsmith to the company for an additional $97 million US in 2012.

According to bankruptcy filings, Golfsmith today has liabilities of up to $500 million US. The chain is filing for creditor protection in the U.S. and Canada.

Dwindling demand

The chain has been caught up in an industry-wide financial crunch following a period of rapid expansion. While golf is still a popular pastime in Canada and the U.S., many apparel makers and sellers and individual courses have closed in recent years

"Golf Town seemed to buck that trend for the past 15 years," said Marvin Ryder, a marketing professor at the DeGroote School of Business at McMaster University in Hamilton. "We saw Nike get out of the business earlier this year, so it's no surprise to see a retailer is hurting — there's just not enough demand to carry that big of a chain."

Ryder said he thinks there's probably a future for the chain, but on a much smaller scale. "The big-box store model requires a big turnover of equipment, shoes and clubs," he said.

While there are more rounds of golf being played today than ever before, those rounds are largely being played by the same people as few new players are taking up the sport. That means less demand for golf apparel and equipment that stores such as Golf Town sell.

"Even though golfers are very passionate, they're still the same number," Ryder said.