There’s been a lot of drama around Sports Illustrated over the last month, and Ross Levinsohn has been a key player there. Levinsohn was initially named the CEO of the SI media line in 2019 when The Arena Group (then known as TheMaven) signed an agreement with SI owner Authentic Brands Group to run the magazine and its digital operations, then took over as CEO of all of Maven in 2020.
But Levinsohn exited that role in December, with that move coming after fallout over AI-generated articles at SI and around reported tensions with Arena shareholder and 5-Hour Energy founder Manoj Bhargava. (It’s unclear exactly what Bhargava’s role in Arena is right now; we’ll discuss that more below.) And Levinsohn resigned his board seat this month around news of Arena laying off everyone at SI in the wake of Authentic pulling their publishing license (although those sides are still in talks, and Authentic is talking to other potential publishers as well).
Levinsohn announced that move on LinkedIn. He said there “The actions of this Board and the destruction of Sports Illustrated’s storied brand and newsroom are the last straw,” and “To watch in horror what is transpiring now is one of the most disappointing things I’ve ever witnessed in my professional life.” And he perhaps went even stronger in an internal letter resigning from the board, which is available through a SEC filing. Here’s the full text of that letter:
To The Arena Group and the Board of Directors thereof:
Effective immediately, I am resigning my position as a board member of The Arena Group.
The abhorrent actions of this board over the past six weeks leave me no choice but to resign, despite the years of my life I have put into this company and my fear that the actions which have been taken over the past several months have put this company, its employees, and shareholders at significant risk. The feckless actions and boards inability to stand up to the demands of a minority shareholder and his two board representatives has placed the company in severe distress, and watching what is transpiring in real time makes it impossible to continue to serve. Today’s obliteration of Sports Illustrated’s storied newsroom and the union busting tactics is the last straw. These actions and the inaction of this board are illegal, riddled with self-dealing, and will almost certainly lead to shareholder lawsuits. In my more than 30 years inside of public and private companies, I’ve never witnessed more negligence in my career.
Ross Levinsohn
While Levinsohn does not spell out the “minority shareholder” and “his two board representatives,” an outside reading of that letter would suggest he may be referring to Bhargava. And even the “minority shareholder” reference there is interesting, as Bhargava reportedly bought a 65 percent stake in the company in August (through his Simplify Inventions) for $50 million in cash and a five-year, $65 million guaranteed ad commitment.
But the exact status of that deal has never been clear. A “definitive agreement” was only announced in November , although Bhargava did speak to all SI employees later that month. And Bhargava took over as interim Arena CEO after Levinsohn’s December exit, but then stepped down earlier this month “to avoid any conflicts of interest which may arise as part of the pending transactions.” So it’s possible he put in at least some of the money already and got at least some of the equity. But Josh Kosman of The New York Post reported Wednesday “That deal has not yet closed,” so that would make Bhargava still a minority shareholder for the moment.
As per the “two board representatives,” that’s less clear. Arena’s website lists six board members, with only two (chair Cavitt Randall and Chris Fowler) joining more recently than 2021. However, their appointments were announced in December as being made on Nov. 29, but only “effective upon the closing of the Simplify Purchase Transactions,” and to fill the seats of Todd Sims and Daniel Shribman, who were resigning “effective upon the closing of the Simplify Purchase Transactions.” With those transactions not yet closed, it’s unclear if those members are already on the board somehow and are the ones Levinsohn is complaining about, or if he’s complaining about someone else.
Regardless of the exact targets here, though, Levinsohn (known for sometimes-controversial past tenures at Yahoo, Scout, The Los Angeles Times, and more) is making some serious allegations. Saying company action and board inaction is “illegal, riddled with self-dealing, and will almost certainly lead to shareholder lawsuits” is a bold statement, especially in a SEC-filed letter of resignation. And so is saying “I’ve never witnessed more negligence in my career.”
Of course, just because a board member says something doesn’t mean it’s true. But the “illegal” accusation in particular may have some watchdogs taking perhaps even a closer look at Arena than they might already have been around this SI saga. And that will be worth keeping an eye on.
The other point worth some discussion here is the line of “the union busting tactics is the last straw.” That’s seen some talk around these SI layoffs, with former SI employee Jessica Smetana recently attributing much of the motivation for the company-wide layoff moves to a plan to get rid of the union (in comments on The Dan Le Batard Show with Stugotz, where she currently works) and either bring employees back as contractors or bring in new non-union employees. And it got more talk still in Kosman’s Post piece Wednesday:
Stuck between the battling barons [Bhargava and Authentic’s Jamie Salter] — with net worths of roughly $1.5 billion and $1.1 billion, respectively — are the roughly 100 Arena workers, most of them in the SI union, who may be cast aside in the next two months if the two can’t work out a deal.
…A source said part of Arena’s decision to enact the massive layoffs was to get rid of high-paid writers, eight of whom allegedly make a combined $2 million. The company sent out a mandatory 60-day WARN notice to SI staff last week and fired some workers immediately.
The magazine’s few remaining big-name writers include Tom Verducci, Jon Wertheim, Chris Mannix, Greg Bishop and Pat Forde. 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 sources said.
“Manoj does not like high salaries,” the insider said. “This needs to be on a different platform to ensure great journalism.”
We’ll see what happens there, and whether SI will again be published by Arena or by another company (as per Kosman, Authentic has also had talks with Penske Media, Vox and Essence). But what may be really interesting to track is if anything comes of Levinsohn’s claims on “illegal” actions by Arena.
[SEC.gov]
