The Arena Group, the publisher of SI, recently defaulted on a $3.75 million payment owed to SI’s license holder, Authentic, prompting Authentic to sever ties. On Friday, Arena commenced the process of staff reduction.
Sports Illustrated employees were informed on Friday about extensive layoffs—some immediate, others scheduled over a short period, with the potential of the entire workforce being dissolved within three months.
Authentic, the licensing entity that acquired Sports Illustrated for $110 million from Meredith half a decade ago, has officially terminated the agreement with The Arena Group for publishing SI in both print and digital formats. This termination follows Arena’s failure to make a $3.75 million payment, breaching the SI licensing agreement that commenced in 2019. (An SEC filing on Friday revealed that Authentic’s termination notice triggered an immediate $45 million fee.)
In response, Arena notified SI staff on Friday, stating, “… We were notified by Authentic Brands 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.”
According to SI union sources, guild members facing termination will be given a 90-day notice, during which the licensing issue may potentially be resolved. Non-guild employees, on the other hand, will be released immediately. Despite significant confusion about the extent of the layoffs by midday Friday, a 2 p.m. staff call clarified that anyone remaining after 90 days would face termination, unless the licensing matter was resolved.
“Some employees will be terminated immediately, and paid in lieu of the applicable notice period under the [the union contract],” Arena’s email to staffers mentioned. “Employees with a last working day of today will be contacted by the People team soon. Other employees will be expected to work through the end of the notice period, and will receive additional information shortly.” (An Arena spokesperson did not immediately respond to FOS when contacted about the layoff plans.)
In a Friday afternoon statement, the Sports Illustrated Guild posted on X (formerly Twitter): “We have fought together as a union to maintain the standard of this storied publication that we love, and to make sure our workers are treated fairly for the value they bring to this company. It is a fight we will continue.”
Authentic’s decision to terminate Arena’s license and Arena’s subsequent elimination of SI’s staff indicate a shift in the company operating SI. This comes weeks after Manoj Bhargava, the founder of 5-Hour Energy, introduced himself as the new leader to Arena employees, including SI. Subsequently, Authentic has engaged in exploratory discussions and reached out to multiple parties about the potential of taking over Arena’s role with SI, as per industry sources familiar with the situation.
The trajectory ahead remains uncertain. It is unclear whether Authentic will pursue the establishment of a new operator or allow Arena to renegotiate its current deal. Sources suggest that Authentic’s objective is to expedite the process. One insider noted, “Authentic will see Sports Illustrated through a necessary evolution,” echoing Authentic’s late Friday statement: “We are committed to ensuring that the traditional ad-supported Sports Illustrated media pillar has the best-in-class stewardship to preserve the complete integrity of the brand’s legacy.”
SI has encountered financial challenges in the digital age, highlighted by a November report revealing AI-generated reviews on its website without disclosure. This was followed by a perplexing town hall in December led by Bhargava, during which he stated, “No one is important. I am not important. … The amount of useless stuff you guys do is staggering.” Bhargava’s Simplify Inventions agreed to a $50 million deal in August, purchasing roughly 65% of Arena.
Authentic acquired SI from Meredith in May 2019. The Arena Group, initially operating as Maven before a name change in 2021, paid Authentic $45 million upfront as part of a 10-year licensing agreement. Until a month ago, Ross Levinsohn led SI and Arena as Arena began acquiring struggling media outlets like Men’s Journal.
Sources close to the situation indicate Authentic’s discontent with Arena in recent years, citing multiple layoffs at SI, the departure of top talent like Grant Wahl, and constant leadership changes. Authentic’s outreach to potential replacement operators predates Arena’s recent missed payment.
In addition to Friday’s SI layoffs, Arena fired over 100 employees on Thursday throughout its organization. However, Bhargava, named Arena’s interim CEO on Dec. 11, did not initiate those cost-cutting moves. Bhargava stepped down from that position on Jan. 5 “to avoid any conflicts of interest,” according to an SEC filing. The conflict arose as Bridge Media Networks, wholly owned by Bhargava, is negotiating “a substantial investment” in Arena, according to the Arena news release announcing Thursday’s cuts.
Instead, Arena execs, its board of directors, and Jason Frankl of FTI Consulting, appointed as Arena’s chief business transformation officer on the same day Bhargava resigned, carried out the layoffs. According to SEC filings, Frankl stated, “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. While this week’s layoffs were regrettably necessary, I look forward to sharing detailed plans soon.”