Sports Illustrated recently made headlines when the company announced massive layoffs that ripped a majority of its staffers’ jobs away.
The company’s layoffs are a result of a missed $3.75 million payment that the publisher of Sports Illustrated, The Arena Group, was meant to present to the sport magazine’s license holder, Authentic Brands Group. The failure of this check led Authentic to terminate its deal with Arena.
Richard Deitsch, who formally wrote for Sports Illustrated from 1997 to 2018, disclosed on X (formerly Twitter), receipts of the email that was sent to Sports Illustrated staffers on Friday, Jan. 19.
“On Thursday, January 18th, we were notified by Authentic Brand Group (ABG) that the license under which the Arena Group operates the Sports Illustrated (SI) brand and SI related properties has been officially revoked by ABG. As a result of this license revocation, we will be laying off staff that work on the SI brand,” the email from Deitsch’s post announced.
The employees who were impacted by this decision were told that they would receive severance pay and were allowed to any applicable WARN or notice period as outlined in the Union agreement. The screenshot of the email also went on to detail that while some employee’s last day would be Jan. 19, others would be kept on through the end of the notice period.
“We appreciate the works and efforts of everyone who has contributed to the SI brand and business,” the end of Deitsch’s screenshot read.
Any employee who remains on staff until the end of the 90 days notice will be laid off, unless the licensing issue becomes resolved.
Authentic purchased the licensing rights for Sports Illustrated from “Meredith” five years ago. The licensing deal – which the Arena broke – started in 2019 and it gave Arena the right to publish Sports Illustrated both digitally and in print. Arena’s failure to pay the necessary $3.75 million triggered a massive fee for the company.
“Upon such termination, a fee of $45 million became immediately due and payable by the Company to ABG pursuant to the terms and conditions of the Licensing Agreement,” the United States Securities and Exchange Commission stated.
Authentic’s revocation of the deal comes weeks after Arena’s CEO, Ross Levinson, was terminated. The company named Manoj Bhargav, the founder of 5-Hour Energy, as interim Chief Executive Officer in early December.
It remains unclear whether or not Authentic will search for a new publishing operator or let Arena fix and renegotiate its previous deal.
“Sources tell FOS, though, that Authentic’s goal is to move the process along as quickly as possible. One way or another, says one insider, ‘Authentic will see Sports Illustrated through a necessary evolution’,” Front Office Sports disclosed. “In addition to Friday’s SI layoffs, Arena fired more than 100 employees on Thursday throughout its organization.”
However, it was not the recently appointed Bhargav who made these cuts. In fact, Bhargav stepped down from his position as interim CEO on Jan. 5, 2024, not even one month into his reign. This step-down stemmed from Bhargav’s wish to avoid conflicts of interest.
Instead, the cuts were carried out by Arena executives, its board of directors, and Jason Frankl of FTI Consulting. Frankl was appointed as Arena’s chief business operator the same day that Manoj Bhargav stepped down.
“My immediate focus is to collaboratively design a growth-oriented media company, ensuring the financial stability necessary to cultivate and grow the brands we cherish,” Frankl released in a statement.
The newly appointed chief business operator plans to share more details about moving forward soon.
For more information, please visit: investors.thearenagroup.net/node/11171/html, twitter.com/richarddeitsch/status/1748392933013795327 and frontofficesports.com/sports-illustrateds-publisher-lays-off-entire-staff-future-unclear/
