The future of Sports Illustrated rests in a high-stakes game of chicken between the magazine's billionaires, The Post has learned.
In one corner stands Manoj Bhargava, founder of 5-Hour Energy and majority shareholder of SI publisher The Arena Group. He took the risky gamble of withholding license fee payments in order to renegotiate the terms of his contract until 2029.
Another is Canadian licensing magnate Jamie Salter, whose Authentic Brands owns the prestigious title, who has called Bhargava's bluff but said he hopes the tactic will embolden other Authentic licensees. People close to the situation told the Post they are fearful.
Caught between the competing giants, with net worths of $1.5 billion and $1.1 billion, respectively, are about 100 arena workers, most of them members of the SI union, according to Forbes. If they are treated unfairly, they could be fired within the next two months. Unable to close a deal.
“Manoj wanted to negotiate a new licensing deal, but Jamie said no,” a source familiar with the matter told the Post.
“Manoj was certainly surprised,” another source added. “It was a gamble that didn't pay off.”
Authentic, which had allowed Arena to continue publishing SI, said it would continue to carry the SI brand even after revoking Arena's license. The two sides continue to hold talks, sources told The Post on Wednesday.
Salter has also held talks with Penske Media, Vox and Essence to take over the Sports Illustrated license, the Post exclusively reported last week.
Arena said it was unable to comment as it was in discussions with Salters Authentic Brands.
Mr. Bhargava and Mr. Salter declined to comment.
Authentic owns more than 50 brands, including prestigious retail brands such as Aeropostal, Brooks Brothers, Forever 21, and Izod, as well as the rights to deceased celebrities such as Elvis Presley, Bob Marley, and Marilyn Monroe. Masu.
Another person said the new publisher may be interested in retaining the veteran reporters and long-form journalism that made SI famous.
Part of Arena's decision to implement large-scale layoffs was to let go of its highest-paid writers, eight of whom were said to have earned a combined $2 million, according to people familiar with the matter. The company sent SI staff a mandatory 60-day warning last week and immediately fired some employees.
The magazine's few remaining big-name writers include Tom Verducci, John Wertheim, Chris Mannix, Greg Bishop, and Pat Ford. They remain on the payroll, but the plan is to fire them and offer to bring them back on a contract basis, one of the people said.
“Mr. Manoj does not like high salaries,” the source said. “To ensure good journalism, we need to do this on a different platform.”
In its heyday, SI boasted a circulation of 3 million copies per week, but has been reduced to 12 copies per year for a $20 annual fee. There are also about seven special issues a year. Arena won't say how many print subscribers remain for the magazine, which featured some of the country's best writers when it was launched nearly 70 years ago.
SI's website has about 70 million monthly users, according to the listed company. It generates about two-thirds of the arena's $250 million in revenue, officials said.
Two of the sources said SI was making a small profit, but a third said it was a loss for Arena.
Mr. Bhargava wants to cut his annual $15 million license fee by at least a third to $10 million as digital advertising sales decline across the publishing industry, according to people familiar with his thinking. It is said that there is.
Arena failed to pay $3.75 million in quarterly license fees to Authentic on Jan. 2 to force Salter's hand.
Authentic could sue Arena for a $45 million penalty if it fails to pay, the people said.
Bhargava, 70 years old, Letter of intent to acquire Arena Group in August. That deal hasn't closed yet.
Arena's stock was trading at more than $14 just 14 months ago, but has fallen below $1 since news broke that Authentic would be revoking its SI license.
SI's stewardship of the legendary brand came under fire last November after it was reported that it published AI-generated content.
Arena CEO Ross Levinson was fired soon after, and Bhargava took over as CEO last month, but resigned on January 4, two days after the conflict with Authentic began. Due to conflict of interest.
The company has appointed FTI consultant Jason Frankl as chief business transformation officer.
